Tata Sons has formally rejected the objections raised by Tata Trusts Chairman Noel Tata regarding the reappointment of N. Chandrasekaran as executive chairman for a third five-year term.
In a communication sent to Noel Tata, the holding company maintained that the board’s decision is fully valid and compliant with corporate governance and the company’s legal framework.
Key Pillars of the Dispute and Response
1. Interpretation of Article 118
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The Objection: Noel Tata argued that the reappointment violated the Articles of Association (AoA)—specifically Article 118, which outlines a special selection committee process for appointing a chairman when Tata Trusts hold at least 40% of ordinary share capital. He noted that Chandrasekaran had previously stated he would not seek another term, and contended that starting a fresh selection process was necessary.
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Tata Sons’ Stance: The board countered that Article 118 applies specifically to the first appointment of a new chairman, rather than the reappointment of an incumbent chairman. Consequently, the special selection procedure was not legally required for Chandrasekaran’s continuation.
2. Legal Backing and Board Majority
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The Vote: During the contentious board meeting, the resolution to reappoint Chandrasekaran passed by a majority vote (4-to-1 among participating directors), with the meeting’s chair using a casting vote to break the division after Noel Tata and fellow Trust nominee Venu Srinivasan split their votes.
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Legal Validation: To reinforce its stance, Tata Sons cited supporting legal opinions from three prominent jurists: former Chief Justice of India U. U. Lalit, former Supreme Court judge B. N. Srikrishna, and senior advocate Sudipto Sarkar. All three reportedly affirmed the validity of the board resolution and the utilization of the casting vote.
3. Handling of Directorship and Governance
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Director Status Separated: Addressing concerns that the move was premature without resolving Chandrasekaran’s board directorship, Tata Sons clarified that his continuation as a director will be handled separately through a general meeting under Section 152 of the Companies Act, 2013.
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Dismissing AGM Links: The company also rejected any connection between the board’s decision and the earlier August annual general meeting (AGM) adjournment, calling any suggestion of linkage “plainly untenable.”
