Tata Trusts chairman Noel Tata has strongly objected to N Chandrasekaran’s reappointment as Tata Sons chairman, calling the process contrary to the company’s Articles of Association (AoA) and arguing that the resolution was invalid from the outset.
Chandrasekaran secured another five-year term after the Tata Sons board voted on the matter on September 17. Noel and fellow Tata Trusts nominee Venu Srinivasan voted against the reappointment. Harish Manwani, who chaired the proceedings, then used his casting vote in favour of Chandrasekaran.
In letters sent after the meeting, Noel questioned both the procedure followed by the board and the decision to publicly announce the reappointment.
“At the outset, I record that I maintain that the vote taken on the captioned matter, and the entire process followed by the company in relation to it, was contrary to the Articles of Association of the company, and that any resolution claimed to have been passed is null and void ab initio (a term in Latin, which means void from the beginning) and of no legal relevance, efficacy or effect whatsoever,” said Noel.
Article 118 vs Article 121
The dispute centres on two provisions in Tata Sons’ AoA—Article 118, which specifically deals with the selection of the chairman, and Article 121, which covers wider strategic matters.
Noel said Article 118 was used when Chandrasekaran was reappointed in 2022. He said the same provision should have governed the latest reappointment.
He also referred to the minutes of the February 11, 2022 board meeting after the company secretary disputed his position during Thursday’s meeting.
“As those minutes record, that reappointment of chairman was effected under Article 118 of the Articles of Association,” Noel wrote.
He further argued that the relevant provision was not placed before the board before the latest vote.
Legal opinion becomes another flashpoint
Noel said the board had agreed to obtain a legal opinion on three issues—whether Article 118 applied, whether the reappointment could proceed despite his opposition, and whether Manwani could use a casting vote to break a tie.
Noel had presented an opinion from former Chief Justice of India D.Y. Chandrachud. According to Noel, it stated that a majority of Tata Trusts nominees on the board was required to choose the Tata Sons chairman.
The board instead relied on an opinion from lawyer Sudipto Sarkar. Mint reported that it could not independently confirm the basis for Sarkar’s view that Manwani could break the tie.
Tata Trusts also rejects the board’s decision
Tata Trusts later backed Noel’s position and disputed the use of the casting vote.
“A casting vote cannot revive a stillborn resolution,” said Tata Trusts. “The affirmative support of Tata Trusts nominee directors as mandated by the AoA was not given. The condition failed, and so did the resolution”.
A Tata Trusts spokesperson also said the reappointment was a “legal nullity” and alleged that the board had exercised powers it did not have under the AoA.
Noel also said the board had agreed that nothing would be made public until a legal opinion was obtained and Chandrasekaran’s directorship was approved at a properly held annual general meeting. Tata Sons, however, announced his reappointment after Thursday’s meeting.