Noel Tata challenges N. Chandrasekaran's reappointment as Tata Sons chairman, calls board resolution void

Chandrasekaran had said on 12 August that he would serve out his present term, which ends in February 2027, without seeking another. Noel Tata says that decision had already been accepted and that Tata Sons should have begun the search for a successor. The reversal in September is what started the dispute.

Noel Tata's grounds

The letter makes three main points.

• The agenda: He says that the reappointment was not part of the original agenda for the 17 September meeting, which was limited to a debriefing by the nomination and remuneration committee. The proposal was taken up out of turn.
• The Articles of Association: He argues that under the articles of Tata Sons, the resolution needed the affirmative vote of the Tata Trusts' nominee directors to be valid. He also says that the prescribed process for selecting the chairman was not followed.
• Conflict of interest: The letter raises questions about reported commercial arrangements between TVS Motor and Hanno One Warehousing, a company whose directors include Chandrasekaran's wife, Lalitha, and son, Pranav. He argues that Srinivasan, who is linked to TVS Motor, should have disclosed these dealings and stayed out of the committee's discussions and the vote. These claims are made in the letter and are not proved.

He has asked for an unedited video recording of the board meeting, as well as board records, details of the voting, conflict-of-interest declarations and legal opinions, with a seven-day deadline and a warning that adverse inferences may be drawn if they are not provided.

The response

Tata Sons has said that the resolution is valid and has cited legal opinions. Reports do not carry a statement from Chandrasekaran. Tata Trusts, which owns about two-thirds of Tata Sons, has also questioned the validity of the reappointment, which means that the largest shareholder is on one side of the dispute and the board majority on the other.

Tata Sons is the holding company of the Tata group, which includes Tata Consultancy Services, Tata Motors, Tata Steel, Air India and many other businesses, and the person who runs it has a large say in the direction of the group. The ownership structure is unusual. The Tata Trusts, which are charitable, hold a majority of the shares and have the right to nominate directors, and the question of how much say the trusts have in appointments has been a source of tension in the past.

The dispute turns on a point of corporate law and procedure. If a resolution was passed on an item that was not on the agenda, its validity can be challenged, and the Articles of Association can require special votes for certain decisions. Whether the articles required the vote of the Trusts' nominees for this one is the central question, and it will be answered by reading the articles and the minutes, which are not public.

The first step is the reply to the seven-day demand for documents, which will show whether Tata Sons is ready to share the records. If it is not, the matter could go to the company law tribunal or the courts, which would make a private dispute a public one. The other course is a negotiation between the two sides, with the Trusts and the board looking for a settlement, perhaps on a successor or on the terms of an extension.

The timing is awkward for the group. Chandrasekaran's present term has about four months to run, and the group has several large projects under way. Investors in the listed Tata companies will look for signs that the dispute is being contained, and employees will want to know who will lead the group from February.