Tata Trusts says 'Chandrasekaran's reappointment is invalid', rejects casting vote argument

Tata Trusts on Sunday stepped up its challenge to N Chandrasekaran’s reappointment as executive chairman of Tata Sons, declaring that the September 17 board resolution was invalid from the outset and arguing that a chairman’s casting vote could not overcome opposition from one of its nominee directors. The Trusts, which own about 66 per cent of Tata Sons, said the company’s Articles of Association require affirmative support from a majority of Tata Trusts-nominated directors for a decision on the appointment or reappointment of the chairman. Since there are two such nominee directors on the Tata Sons board, the Trusts argued that both must support the resolution.

At Thursday’s meeting, four directors voted in favour of giving Chandrasekaran another five-year term after his current tenure expires in February 2027, while Noel Tata — chairman of Tata Trusts and one of its two nominee directors — voted against it.

Why Trusts call vote invalid

At the heart of the dispute is the interpretation of Tata Sons’ Articles of Association and the special voting rights available to directors nominated by Tata Trusts.

In its latest statement, the Trusts said the Articles do not allow decisions to be determined merely by counting the overall votes of directors. It argued that affirmative support from a majority of Trust-nominated directors constitutes a separate condition that must be fulfilled before a resolution of this nature can become valid. With only two Trust nominees on the board, Tata Trusts maintained that a majority among them means two votes rather than one. Noel Tata’s opposition therefore meant that the required condition had not been satisfied, according to the Trusts.

It consequently described the resolution reappointing Chandrasekaran as having “no legal effect” and “void ab initio” — a legal expression meaning invalid from the beginning.

Casting vote disputed

The latest intervention also directly challenges an argument that a casting vote could resolve the disagreement. Tata Trusts said the chairman’s casting vote becomes relevant only when there is an equality of votes at the overall board level. It argued that such a vote cannot substitute for the separately required affirmative support of the Trusts’ nominee directors. The Trusts also rejected suggestions that opposition from one nominee director had created a deadlock capable of paralysing Tata Sons. According to its interpretation, the absence of the required affirmative support simply meant the proposed resolution had failed under the company’s own Articles.

The distinction is crucial because the disagreement is no longer simply over whether Chandrasekaran should remain chairman. It has developed into a dispute over how Tata Sons itself is governed and the extent of the majority shareholder’s special rights within the holding company.

Chandrasekaran had planned exit

Chandrasekaran, 63, has led Tata Sons since 2017. On August 12, he informed the board that he would not seek another term after his current tenure ends on February 20, 2027. Tata Trusts accepted that decision the following day and called for the process of selecting a successor to begin.

Tata Sons, however, has outlined a different sequence leading to Thursday’s vote. It said Tata Trusts had unanimously passed a resolution in July 2025 appreciating Chandrasekaran’s stewardship and supporting another five-year term for him. The Tata Sons board subsequently agreed in principle to his reappointment in September 2025. Formal approval was deferred in February this year after unanimity could not be reached, and discussions at subsequent board meetings also failed to resolve the matter.

After Chandrasekaran announced in August that he would not seek another term, Tata Sons’ Nomination and Remuneration Committee met on September 3 and unanimously asked him to reconsider. Chandrasekaran agreed at the September 17 board meeting, following which the board voted 4-1 for his reappointment.

Former CJI opinion cited

The Trusts’ position has also been backed by a legal opinion obtained from former Chief Justice of India D Y Chandrachud and placed before the Tata Sons board by Noel Tata.

The opinion concluded that the affirmative voting rights of Tata Trusts’ nominee directors constitute an independent requirement and cannot be replaced by a chairman’s casting vote. It also took the position that granting an incumbent another term amounts to a fresh chairmanship for the purpose of the relevant provisions.

Tata Trusts has additionally invoked the long-running Cyrus Mistry litigation, arguing that Tata Sons had previously defended the special affirmative voting rights contained in its Articles and that those protections survived scrutiny in the Supreme Court proceedings. The Trusts contend that Tata Sons cannot now disregard provisions whose validity it had earlier defended.

Wider Tata rift

The disagreement over Chandrasekaran’s tenure comes amid a broader divergence between Tata Sons and its controlling shareholder over the future of the group holding company.

The September 17 board meeting also saw Tata Sons decide to initiate steps towards complying with applicable Reserve Bank of India guidelines and seek guidance from the RBI, Tata Trusts and other stakeholders on the requirements. The possibility of listing Tata Sons has itself emerged as another point of disagreement.

Tata Trusts has opposed a listing, while the issue has assumed urgency because the RBI classified Tata Sons as an upper-layer non-banking financial company. The latest statement therefore pushes the dispute beyond a disagreement over an individual chairman. With Tata Sons maintaining that its board approved Chandrasekaran’s fresh five-year term and Tata Trusts insisting that the resolution never became legally valid, the contest now centres on who ultimately has the authority under the company’s Articles to determine the leadership of India’s largest business group.