A major battle has broken out at Tata Sons after Tata Trusts on Thursday called the board’s decision to reappoint N Chandrasekaran as chairman for another five-year term “illegal”, setting up a potential legal and governance dispute at the top of the Tata Group.The Trusts said the resolution approving Chandrasekaran’s reappointment was a “legal nullity” because Noel N Tata, chairman of Tata Trusts and one of the Trusts’ nominee directors on the Tata Sons board, voted against it.The Tata Sons board had on Thursday approved a fresh five-year term for Chandrasekaran, weeks after he told directors that he did not intend to seek reappointment when his current tenure ends on February 20, 2027, according to people familiar with the matter.The board also agreed to move ahead with the listing of Tata Sons, the holding company of the Tata Group, news agency PTI reported. Both decisions will have to be approved at the company’s AGM.
Tata Trusts says Chandrasekaran’s decision had attained finality
In a statement issued on Thursday, Tata Trusts said it maintained that Chandrasekaran’s decision not to offer himself for reappointment at the end of his current tenure had already been accepted and had “attained finality”.According to the Trusts, Chandrasekaran communicated his decision to the Tata Sons board on August 12. It said the decision was “freely taken, clearly expressed and not the outcome of any process of review”.The Trusts said the decision was made public without prior intimation or deliberations with the company’s shareholders.“Once such a decision has been publicly communicated, it has consequences which cannot be afterwards undone, since the Group’s employees, its lenders and counterparties, the market and the majority shareholder have all proceeded on it,” the Trusts said.Tata Trusts said it formally accepted Chandrasekaran’s decision the following day and advised Tata Sons to begin the process of setting up a Selection Committee to appoint his successor in accordance with the company’s Articles of Association.The Trusts said its position was reiterated by Noel Tata at Thursday’s board meeting.
Why Tata Trusts says the reappointment is illegal
The Trusts said the resolution to reappoint Chandrasekaran was approved with four directors voting in favour and Noel Tata voting against it.It argued that the Articles of Association of Tata Sons require a majority of the Trusts’ nominee directors to vote in favour of the appointment of a chairman.According to the Trusts, this requirement applies both to a first appointment and to the reappointment of an existing chairman.It further said the board could not lawfully hold a meeting or pass a resolution on the appointment or reappointment of a chairman unless both nominee directors were present, and that both would have to vote in favour for such a resolution to be valid.“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 Trusts said.Noel Tata also submitted a legal opinion from Justice Dr DY Chandrachud, former Chief Justice of India, regarding the correctness of the Trusts’ position, according to the statement. The Trusts said the opinion was not taken note of by the Tata Sons board.The Trusts said its detailed statement on the reappointment proposal had also been presented to the board.
Board reverses course after RBI rejects Tata Sons’ exemption bid
The dispute follows the Reserve Bank of India’s rejection on September 11 of Tata Sons’ application to surrender its registration as a core investment company.The RBI had classified Tata Sons as an “upper layer” NBFC in 2022, a designation requiring the company to list within three years. That deadline lapsed in September 2025 while its application to surrender the registration remained under review.Tata Sons had repaid more than Rs 21,000 crore in debt in an earlier effort to qualify for an exemption from the listing requirement.The RBI’s decision revived the prospect of a stock-market listing for Tata Sons, and the board on Thursday agreed to move ahead with the listing, according to people familiar with the matter cited by PTI.The board’s shift on both Chandrasekaran’s tenure and the listing came after the RBI decision, with sources cited by PTI saying directors believed leadership continuity would reassure prospective investors ahead of a potential listing.Tata Sons’ Nomination & Remuneration Committee will formally ask Chandrasekaran to reconsider the decision he communicated in August.
Noel Tata opposed reappointment and listing
Noel Tata voted against Chandrasekaran’s reappointment on Thursday, but the resolution was passed by a majority of the board.Tata Trusts, together with affiliated trusts, control about 66 per cent of Tata Sons.The Trusts have now said the board resolution was legally void, raising the possibility of a challenge to the decision. Earlier also, it was being speculated that the Trusts could contest the board’s decision.Noel Tata has also opposed the listing of Tata Sons. According to PTI, that position had been in place since at least February, when keeping Tata Sons unlisted was reportedly among the conditions attached to his support for Chandrasekaran’s earlier term renewal.The Shapoorji Pallonji Group, which holds roughly 18 per cent of Tata Sons, has favoured a listing.The listing question has also exposed differences within the Tata Trusts.The Sir Dorabji Tata Trust had sought to bind nominee director Venu Srinivasan to vote against the listing, but Srinivasan refused, citing his independent duty as a director and joint nominee.
Succession process now faces fresh uncertainty
The Trusts had already advised Tata Sons to begin the process of selecting a successor after Chandrasekaran announced his decision to step down at the end of his current term.The Sir Dorabji Tata Trust had initiated a formal process to identify a successor, with names including Tata Steel chief executive TV Narendran, Tata Sons group chief financial officer Saurabh Agrawal and National Stock Exchange chief executive Ashish Chauhan being discussed.That process was expected to be paused or discontinued following Thursday’s board vote.The Tata Trusts, however, said on Thursday that the Selection Committee would proceed in accordance with the Articles of Association.“The Tata Trusts remain committed to ensuring an orderly and timely leadership transition in the long-term interests of Tata Sons and the Tata Group,” the Trusts said.Chandrasekaran has led Tata Sons since February 2017 and was unanimously reappointed for a second five-year term in 2022.Tata Trusts had backed a third term for him as early as 2025, but the proposal stalled in February 2026 after Noel Tata raised concerns over losses at businesses including Air India and Tata Digital and set out conditions, including keeping Tata Sons unlisted, for supporting the renewal.An eventual Tata Sons listing could rank among the largest IPOs in Indian history. Even a 1 per cent stake sale has been estimated at Rs 15,000-20,000 crore, implying an overall valuation of around Rs 20 lakh crore, or roughly $230 billion, for Tata Sons.