Tata Trusts Under Fire Over ‘Nil Value’ Tata Sons Shares; Top Trustees Named

• A legal notice questions the validity of a 1989 transfer of Tata Sons shares from a trust to Naval H. Tata

• The notice alleges lack of approvals, documentation, and fair consideration in the transfer

• The issue gains importance ahead of an upcoming Tata Trusts board meeting on May 16

Troubles are mounting for Tata Trusts after a legal notice was served on trustees of the Sir Ratan Tata Trust (SRTT), including Noel Tata and N Chandrasekaran, questioning the legality of a 1989 share transfer involving Tata Sons.

According to a copy of the notice reviewed by Moneycontrol, advocate Katyayani Agrawal, representing Sunil Tulsiram Patilkhede, has alleged that 833 equity shares of Tata Sons were transferred from the Navajbai Ratan Tata Trust to Naval H. Tata without proper consideration, trustee approval, or valid documentation.

The notice also claims that the share register recorded the transaction value as “nil,” raising concerns over how the transfer was executed.

What the Notice Alleges

As per the notice, the NR Tata Trust was created in 1974 as a charitable trust focused on education and public welfare. It states that shares of Tata Sons were later transferred to the trust as part of its corpus.

The notice further claims that after Naval H. Tata stepped down as trustee in January 1989, the same 833 shares were transferred to him personally within a week.

It alleges there was no trustee resolution approving the transfer and no statutory transfer form filed under the Companies Act, 1956. The notice also describes the move as a possible breach of fiduciary duty, saying trust assets were transferred without clear benefit to the trust or its purpose.

What is the Issue?

The notice argues that the transaction violates provisions of the Companies Act, Tata Sons’ Articles of Association, and the objectives of the charitable trust. It calls the transfer a “void transaction” and demands that the alleged loss be compensated within 15 days, failing which civil and criminal proceedings may be initiated.

The petitioner, Sunil Tulsiram Patilkhede, had earlier also approached the Bombay High Court seeking to halt a Tata Trusts meeting scheduled for May 8. However, the court refused to grant any injunction. The meeting was later postponed.

Why the Issue Matters Now

The issue has gained significance as it comes ahead of the Tata Trusts board meeting scheduled for May 16. According to a PTI report citing sources, the decision to postpone the meeting was taken by Noel Tata, although no reason was given for the move.

The upcoming meeting is being closely tracked by investors, with attention on whether Tata Sons may eventually move towards a public listing, especially amid regulatory pressure from the Reserve Bank of India (RBI). The agenda is also likely to include a review of board nominations at Tata Sons.

In addition, discussions are expected around the stance of two trustees on the potential listing of Tata Sons on stock exchanges. As per The Indian Express, the board may also deliberate on the issue of perpetual or lifetime trustees, following a complaint submitted to the Maharashtra Charity Commissioner’s office.

The legal challenge also gains significance as the Sir Ratan Tata Trust holds a major stake in Tata Sons, the holding company of the Tata Group.