Tata Trusts Rejects ‘Deadlock’ Claim, Says Chandrasekaran Reappointment Vote Is Void

• Tata Trusts has rejected the suggestion that a deadlock at the Tata Sons board allowed a casting vote to decide N Chandrasekaran’s reappointment.

• The Trusts said the required affirmative support from its nominee directors was not obtained on September 17.

• It also cited Tata Sons’ earlier defence of the Trusts’ voting rights before the Supreme Court.

Tata Trusts has rejected the suggestion that a deadlock at the Tata Sons board allowed the chairman of the meeting to use a casting vote to approve N Chandrasekaran’s reappointment, saying the resolution did not meet a separate requirement under the company’s Articles of Association (AoA).

In a statement issued on September 20, the Trusts said Tata Sons’ AoA require the affirmative support of a majority of the directors nominated by Tata Trusts, which collectively holds around 66% of the company. It argued that since one of the two Tata Trusts nominees voted against the resolution on September 17, the required condition was not met.

The statement comes days after the Tata Sons board approved Chandrasekaran’s reappointment for another five years in a reported 4-1 vote, with Tata Trusts nominee Noel Tata voting against the proposal. Tata Trusts has challenged the validity of the resolution.

Tata Trusts Says There Was No Board Deadlock

According to the Trusts, the chairman’s casting vote can be used only when there is an equality of votes at the overall board level. It said the casting vote could not be used to overcome the separate requirement relating to Tata Trusts’ nominee directors.

Tata Trusts said the 4-1 outcome was therefore not relevant to whether the requirement under the AoA had been met. It described the September 17 resolution as invalid and said it had “no legal effect”.

The Trusts also rejected the argument that the absence of support from one of its nominees created a deadlock that could affect the functioning of Tata Sons. It said the board had put a question to a vote and the company’s own AoA provided the answer.

Tata Trusts Cites Tata Sons’ Supreme Court Case

Tata Trusts also referred to the legal dispute following the removal of former Tata Sons chairman Cyrus Mistry, in which the voting rights of Trust nominee directors under Articles 104B and 121 had been challenged.

The Trusts said Tata Sons had defended these provisions before the Supreme Court as legitimate protections available to the Trusts as a majority shareholder. The Supreme Court subsequently set aside the finding that these Articles were oppressive.

Based on that history, Tata Trusts argued that Tata Sons cannot now take a different position on the protections contained in its own Articles. The Trusts said the provisions either remain part of the AoA or they do not.

The statement also pushed back against the argument that listing Tata Sons would improve corporate governance. Tata Trusts said the company has voluntarily followed several governance practices associated with public companies, including having independent directors and audit and nomination and remuneration committees.

The Trusts said the current dispute is ultimately about who can speak for the millions of underserved and excluded Indians who, it said, have been at the centre of Tata Trusts’ work for more than 130 years.