In a significant corporate development, Tata Sons has formally rejected objections raised by Tata Trusts Chairman Noel Tata concerning the reappointment of N. Chandrasekaran as its executive chairman. The conglomerate affirmed its board's decision to grant Chandrasekaran a fresh five-year term, asserting that the resolution was valid and adhered to the company's Articles of Association (AoA).
The dispute centers on Article 118 of the Tata Sons AoA, which outlines a specific mechanism for selecting a new chairman. This provision mandates a selection committee, including representatives from the Sir Dorabji Tata Trust (SDTT) and Sir Ratan Tata Trust (SRTT), when Tata Trusts collectively hold at least 40% of the company’s paid-up ordinary share capital.
Noel Tata contended that this special selection process should have been initiated for Chandrasekaran's continuation in the role. However, Tata Sons maintained that Article 118 applies exclusively to the initial appointment of a new chairman, not to the reappointment of an incumbent.
In a letter dated September 24 to Noel Tata, Tata Sons stated that its board had followed all applicable legal and governance procedures in approving Chandrasekaran’s new term. The company emphasized that its interpretation of the AoA was based on expert legal counsel.
To further solidify its position following Noel Tata's objections, Tata Sons sought opinions from prominent legal figures, including former Chief Justice of India Uday Lalit and former Supreme Court Judge BN Srikrishna. Both legal opinions reportedly supported Tata Sons' interpretation, confirming the validity of the board resolution for N. Chandrasekaran's reappointment.
Board Upholds Reappointment Decision
The company clarified that N. Chandrasekaran's continuation as a director would be considered separately at a general meeting, in line with Section 152 of the Companies Act, 2013. The board's decision to reappoint Chandrasekaran was achieved by a majority vote, underscoring the company's confidence in its established governance framework.
Legal Interpretations Support Tata Sons
Senior advocate Sudipto Sarkar's legal position also supported Tata Sons' stance, reinforcing the argument that the special selection committee process described in Article 118 was not applicable in this instance. This collective legal backing has allowed Tata Sons to firmly reject the objections raised and proceed with the executive chairman's renewed tenure.