Tata Sons had approved Chandrasekaran’s reappointment for another five years by a 4:1 vote. Tata Trusts chairman Noel Tata was the lone director to vote against the resolution.
The Trusts, which collectively hold about 66% of Tata Sons, said the board’s overall vote count was not the deciding factor.
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What the Articles of Association say
According to Tata Trusts, the AoA requires any such decision to have the affirmative support of at least a majority of the directors nominated by the Tata Trusts.
There are two Tata Trusts nominee directors on the Tata Sons board. One voted in favour of the resolution, while the other voted against it. “Majority amongst two is two and not one,” the Trusts said.
Since one of the two nominees voted against the resolution on September 17, the required support was not given, it said. “The condition failed, and so did the resolution,” the statement said.
Tata Trusts also rejected the argument that Tata Sons chairman’s casting vote could resolve the issue. It said the casting vote is available only when there is an equality of votes at the overall board level and does not apply among the Trusts’ nominee directors.
“Whether the result of the vote was 4:1, or any other figure, is irrelevant,” the Trusts said. “A condition is either met, or it is not. In this case, the condition was not met.”
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Tata Trusts also rejected the suggestion that its refusal to support the resolution created a deadlock that could paralyse Tata Sons.
“There was no paralysis and there was no deadlock,” it said. “The Board put a question, and the AoA answered it in the negative. The exercise of a protective right conferred by a company’s own constitution is not a deadlock; it is that constitution working as it was written to work.”
“The resolution to reappoint Chandrasekaran as the Chairman of Tata Sons, considered at the Board meeting on September 17, 2026, was not validly passed and has no legal effect. In the eyes of the law, it
is void ab initio,” the statement added.
The Trusts have also maintained that Chandrasekaran’s August 12 decision not to seek another term had already been accepted and had attained finality. Tata Sons has said its Nomination and Remuneration Committee later unanimously asked Chandrasekaran to reconsider and recommended another five-year term, which he accepted.
Tata Trusts cites Supreme Court case
The Trusts also said Tata Sons cannot now disregard the same protections in its AoA that it had defended before the Supreme Court during the dispute over the removal of Cyrus Mistry.
The affirmative voting rights of the Trusts’ nominee directors under Articles 104B and 121 were at the centre of those proceedings, it said.
The National Company Law Appellate Tribunal had held those rights to be oppressive, while the complainants had sought their deletion or restriction.
Tata Sons opposed that attempt and defended the rights as a legitimate protection agreed between shareholders. It also argued that the rights represented the Trusts’ entitlement as a majority shareholder.
The SC accepted Tata Sons’ case and set aside the finding that the Articles were oppressive, according to the Trusts.
“The Company cannot now disown the protection it went to the Supreme Court to preserve,” the statement said. “They are either in the Articles, or they are not.”
‘Governance gap does not exist’
Tata Trusts also rejected the suggestion that listing Tata Sons would bring enhanced corporate governance by filling a governance gap. It said Tata Sons has for years voluntarily followed standards applicable to public companies, even though it is not listed.
Its AoA provides for independent directors, an audit committee, a nomination and remuneration committee, rules governing related-party transactions, and retirement of directors by rotation, as well as a code of conduct for preventing insider trading.
The Trusts said these provisions are recorded in Tata Sons’ annual reports and corporate governance reports and were adopted voluntarily for transparency and governance. “A company that adopted these standards by choice is not a company in need of the discipline that listing is said to supply,” it said.
The Trusts said the larger question was not which governance framework is better for Tata Sons or who governs the company better. “Rather, it is who is left in the room to speak for the millions of underserved and excluded Indians, who have been at the centre of everything Tata Trusts have done, for more than a hundred and thirty years,” it said.
