Tata Sons Vs Tata Trusts: Trusts Challenge Chandrasekaran’s Reappointment, Legal Battle Looms

A major power struggle at the heart of the Tata Group has intensified, with Tata Trusts challenging the validity of N Chandrasekaran’s reappointment as executive chairman of Tata Sons, turning a boardroom disagreement into a potentially prolonged legal and governance battle.

The Tata Sons board on September 17 approved a fresh five-year term for Chandrasekaran, whose current tenure ends in February 2027. The decision came weeks after Chandrasekaran had indicated he would not seek another term. The board subsequently backed his continuation, but the vote exposed a sharp divide between Tata Trusts and the company’s board.

Tata Trusts, which holds about 66 per cent of Tata Sons, has two nominated directors on the board — Tata Trusts chairman Noel Tata and Venu Srinivasan. Srinivasan supported Chandrasekaran’s reappointment, while Noel Tata opposed it. Four other directors backed the resolution.

The Trusts argues that Tata Sons’ Articles of Association require affirmative support from a majority of Trust-nominated directors for such a decision. With the two nominees split 1-1, it says the condition was not met and that Chandrasekaran’s casting vote could not override that requirement. The Trusts has therefore termed the resolution legally invalid.

Tata Sons has a different interpretation of the Articles and maintains that the board’s decision was valid. The dispute could ultimately require judicial determination. A legal opinion obtained by the Trusts from former Chief Justice of India D Y Chandrachud supports its interpretation, while legal advice obtained by Tata Sons reportedly supports the validity of the procedure followed.

The Cyrus Mistry case has also returned to the centre of the dispute. Tata Trusts has pointed to the Supreme Court’s 2021 judgment, arguing that Tata Sons had previously defended the special rights of Trust-nominated directors.

The confrontation is widening. The Trusts is considering legal options including the National Company Law Tribunal and Bombay High Court, while senior lawyers Abhishek Manu Singhvi and Harish Salve are associated with opposing sides.

At the same time, Tata Sons faces a separate dispute over its possible listing. After the Reserve Bank of India rejected its request to surrender its core investment company registration, Tata Sons has moved towards complying with listing-related requirements. Tata Trusts has resisted rushing into a listing.

Noel Tata had proposed monetising part of the Shapoorji Pallonji Group’s more than 18 per cent stake, potentially raising at least ₹25,000 crore, as an alternative. SP Group has since backed a Tata Sons listing after those discussions stalled.

The dispute therefore extends far beyond Chandrasekaran’s tenure. It now involves who controls Tata Sons, how its special governance provisions are interpreted, and what future ownership structure the Tata Group will adopt.