Nationalist Congress Party (SP) chief Sharad Pawar on Tuesday called for the institutional role of Tata Trusts to be protected amid an intensifying dispute over recent decisions taken by the board of Tata Sons, the holding company of the Tata Group.
Pawar said the group's governance framework and its philanthropic legacy must be preserved, stressing that the affirmative voting rights of Tata Trusts' nominee directors should be respected when decisions concerning the leadership of Tata Sons are taken.
In a post on X, accompanied by a Marathi graphic titled "Preserving the Tata Group's Legacy is the Need of the Hour", Pawar said Jamsetji Tata and the Tata family had given Indian industry a value-based direction centred on social service.
He said preserving the social commitment and institutional role of Tata Trusts was essential and that the processes governing decisions on the leadership of Tata Group should be followed.
"The social commitment and institutional role of the Tata Trusts must be preserved. When decisions are made regarding the leadership of the Tata Group, it is essential to respect the institutional processes and the role of the Trusts," Pawar said.
He added that the Tata Group's legacy was connected not only with Maharashtra's development but also with India's wider economic progress and social life.
Tata Trusts' 66 per cent stake at the centre of governance debate
Pawar pointed out that philanthropic entities including the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust together hold approximately 66 per cent of the equity in Tata Sons.
The ownership structure, he said, enables dividends from the corporate group to support several institutions with national importance based in Maharashtra. These include Tata Memorial Hospital, the Tata Institute of Fundamental Research (TIFR), the Tata Institute of Social Sciences (TISS) and the National Centre for the Performing Arts (NCPA).
The comments come against the backdrop of a dispute over a September 17 Tata Sons board meeting, at which the company approved N Chandrasekaran's continuation as executive chairman for another five-year term beginning in February.
The board also initiated steps linked to a potential public listing of Tata Sons. The developments have brought the relationship between Tata Sons and its principal shareholder, Tata Trusts, under renewed scrutiny. Reuters reported that Tata Sons' board backed both the continuation of Chandrasekaran and steps towards a listing, while Tata Trusts chairman Noel Tata opposed the key decisions.
4-1 vote raises question over Trusts' affirmative rights
The Chandrasekaran resolution was backed by four directors, while Noel Tata, one of the two Tata Trusts-nominated directors, voted against it. The other Trust-nominated director, Venu Srinivasan, voted in favour.
Pawar argued that this raised a question over compliance with Tata Sons' Articles of Association. According to his interpretation, the rules require the affirmative consent of a majority of the Trust-nominated directors for the appointment of the chairman.
With two Trust-nominated directors present at the meeting, Pawar said, both would have had to support the proposal for that requirement to be met. He therefore questioned the validity of the resolution from the outset.
Tata Trusts has subsequently taken the same position, saying that its nominee directors' affirmative support is a separate requirement under the Articles of Association and that a simple overall board majority cannot override it. The Trusts said the two nominees are Noel Tata and Venu Srinivasan and argued that, with one voting against the resolution, the required condition was not satisfied.
The Trusts have also rejected the suggestion that the split vote amounted to a board deadlock that could be resolved through a chairman's casting vote. It has argued that such a casting vote applies to an overall equality of votes on the board and cannot override the separate requirement concerning Trust-nominated directors.
The dispute has also revived attention on Chandrasekaran's earlier decision regarding his tenure. Tata Trusts said he had informed the Tata Sons board on August 12 that he would not offer himself for reappointment when his existing term ends on February 20, 2027, and maintained that the decision had attained finality.
Pawar said corporate governance principles require Tata Sons' Articles of Association to be followed strictly. He also referred to the Supreme Court's 2021 judgment in the dispute involving Cyrus Mistry, in which the court recognised the validity of affirmative voting rights available to nominee directors representing institutions holding a majority of shares.
The Supreme Court judgment noted that the affirmative voting rights under Article 121 constituted a limited right of directors appointed by the Tata Trusts and recognised the significance of the Trusts' 66 per cent shareholding in Tata Sons.
The latest dispute centres on how those provisions should operate when the two Trust-nominated directors disagree. Tata Trusts has maintained that the September 17 resolution was not validly passed, while the opposing interpretation holds that the board's overall majority and the use of a casting vote can sustain the decision.
Pawar urged all stakeholders to preserve the institutional integrity and value-based legacy of the Tata Group, which he said had contributed to India's development.
"It is our collective responsibility" to preserve the group's legacy, Pawar said.