Tata Trusts call Chandrasekaran's reappointment as Chairman 'illegal'

Mumbai: Tata Trusts on Thursday termed the Tata Sons board resolution to reappoint N. Chandrasekaran as Chairman “illegal”, maintaining that his earlier decision not to seek another term after his current tenure ends on February 20, 2027, had been accepted and had attained finality.

The development came after the Tata Sons board reportedly backed a fresh five-year term for Chandrasekaran and approved plans to proceed with the company’s long-pending listing.

In a statement, Tata Trusts said Chandrasekaran had communicated to the Tata Sons Board on August 12 that he had decided not to offer himself for reappointment. The Trusts said the decision was freely taken, clearly expressed and was not the outcome of any review process.

According to the Trusts, the decision was made public without prior intimation to or deliberations with the company’s shareholders. It said the decision had consequences as the Group’s employees, lenders, counterparties, the market and the majority shareholder had proceeded on the basis of it.

The Tata Trusts said they formally recorded their acceptance of the decision the following day and advised Tata Sons to initiate the process of forming a Selection Committee to appoint a successor, in accordance with the Articles of Association of Tata Sons.

The Trusts said their position remained unchanged and represented the considered judgment of the majority shareholder. It said the position was reiterated by Tata Trusts Chairman Noel N. Tata at Thursday’s board meeting.

The Trusts said the resolution seeking to reappoint Chandrasekaran, which was supported by four directors while Noel Tata voted against it, was a “legal nullity” under the Articles of Association of Tata Sons.

It further said the Board could not lawfully hold a meeting or pass a resolution on the Chairman’s appointment or reappointment unless both nominee directors were present. It also said such a resolution could not be validly passed unless both nominee directors voted in favour.

“Given that Mr Noel Tata, being one of the Trust nominee directors, voted against the proposal, it was rendered legally void and without any basis,” the statement said.

Noel Tata also submitted a legal opinion obtained from former Chief Justice of India Justice Dr DY Chandrachud regarding the correctness of the Trusts’ position, it added.

The development comes weeks after the Reserve Bank of India directed Tata Sons to proceed with a listing. The RBI had classified Tata Sons as an upper-layer non-banking financial company in 2022, requiring it to list within three years.

With IANS inputs