Tata Trusts Declares Chandrasekaran's Reappointment "Void Ab Initio"!

In a significant corporate development, Tata Trusts, the majority owner of Tata Sons, has declared the reappointment of N. Chandrasekaran as chairman of Tata Sons on September 17 to be "void ab initio," meaning invalid from the beginning.

The Trusts' challenge hinges on the company's Articles of Association (AoA), which explicitly require affirmative support from at least a majority of its nominee directors on the Tata Sons board for such a resolution to pass. This condition, Tata Trusts argues, was not met during the September 17 board meeting. According to Tata Trusts, there are two nominee directors from the Trusts on the Tata Sons board: Venu Srinivasan and Noel Naval Tata.

For the condition to be satisfied, both directors needed to provide affirmative support.

However, Noel Naval Tata reportedly voted against Chandrasekaran's reappointment, thus failing to meet the mandatory AoA requirement. The Trusts further dismissed the use of a chairman's casting vote, exercised by independent director Harish Manwani, to push through the resolution.

They clarified that a casting vote is only applicable in cases of an overall board-level equality of votes and does not override the specific affirmative support clause concerning its nominee directors. Tata Trusts emphasized that "whether the result of the vote was 4:1 or any other figure is irrelevant. A condition is either met, or it is not.

In this case the condition was not met." Addressing any suggestions of a deadlock or paralysis within the company, Tata Trusts firmly stated that there was none. They explained that the refusal of support by a nominee director is not a deadlock but rather the AoA functioning precisely as it was written to protect shareholder interests.

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 statement read. Adding historical context, Tata Trusts highlighted that Tata Sons itself had previously defended these very affirmative voting rights of the Trusts' Nominee Directors in the Supreme Court during the contentious removal of former chairman Cyrus Mistry.

In those proceedings, Tata Sons argued that these rights were legitimate protections for the majority shareholder. This historical precedent, Tata Trusts noted, implies that Tata Sons "cannot disown protection upheld by Supreme Court." As a result, the Trusts maintain that Chandrasekaran's reappointment lacks legal effect and is entirely invalid.

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