'Illegal, strong objection': What Noel Tata said on N Chandrasekaran's 'controversial' reappointment at Tata Sons | Business News

The board of Tata Sons applied two different constitutional rules in 2022 and 2026 to reappoint its chairman, Tata Trusts chairman Noel Tata claimed, after N Chandrasekaran won a third term at the helm of the conglomerate following a controversial vote.Noel also said the board made the announcement even though the directors had agreed not to disclose the matter until a legal opinion was secured, and a general meeting approved Chandrasekaran’s directorship.After nearly four hours of unusual events at Thursday’s meeting, Tata Sons released a one-page statement, saying its board had “resolved by a majority” to reappoint chairman N. Chandrasekaran for five more years.After Tata Trusts nominees Noel and Venu Srinivasan cast opposing votes, Harish Manwani, who chaired the process, made the casting vote in favour of the reappointment, in a defeat for Noel.In two letters sent after Thursday’s contentious board meeting, Noel expressed his “serious disappointment” and “strong objection” to the board’s actions.Also Read | Tata Sons board resolution on Chandrasekaran reappointment invalid, says Tata Trusts“Conduct of this kind is an affront to the board and to the basis on which its members, including myself, participated in today’s proceedings. To communicate to the public and to the market that a decision has been finally taken, when the directors of the company were assured that the matter remained conditional and unresolved, is irresponsible and carries the plain potential to mislead the shareholders, the employees, the lenders and the wider market,” Noel wrote to Suprakash Mukhopadhyay, Tata Sons group company secretary.At the heart of the matter are two key articles in the Tata Sons articles of association.While Article 118 specifically governs the selection of chairman, Article 121 covers broader strategic matters.In his letter, Noel denounced the entire reappointment as illegal from the start.The letter also reminded that at the board meeting, he had pointed out that Article 118 is the right instrument, which was used in 2022 to reappoint Chandrasekaran; however, Mukhopadhyay insisted that it was under Article 121.“At the outset, I record that I maintain that the vote taken on the captioned matter, and the entire process followed by the company in relation to it, was contrary to the Articles of Association of the company, and that any resolution claimed to have been passed is null and void ab initio (a term in Latin, which means void from the beginning) and of no legal relevance, efficacy or effect whatsoever,” said Noel.In his letter, Noel said Tata Sons used a different method to reappoint Chandrasekaran four years earlier. After the company secretary denied it at the meeting, Noel attached the minutes of the 11 February 2022 meeting to make his case.“As those minutes record, that reappointment of chairman was effected under Article 118 of the Articles of Association,” Noel wrote, sharing the minutes.“That is precisely the position I stated, repeatedly, at the meeting held on 17 September 2026, and which was disputed by you”.Also Read | ‘Tata model has to be saved’: Noel Tata pushes against public listing of Tata Sons“It is thus clear that for reappointment of chairman, the operative provision is Article 118. This material was plainly relevant to the vote taken on 17 September 2026 and was not placed before the board, which proceeded without it and at considerable speed,” he wrote.Noel’s second letter, sent after his first on Friday, focuses on two main points.First, he says the Tata Sons board agreed to get a legal opinion to answer three questions: whether Article 118 applies to the chairman’s reappointment, whether the decision could be approved even though he opposed it, and whether the chairman’s deciding vote could break a tie.Besides Chandrasekaran, Noel and Srinivasan, the six-member Tata Sons board also includes group chief financial officer Saurabh Agrawal and independent directors Harish Manwani and Anita Marangoly George.Tata Sons board did not consider the legal opinion from former chief justice of India D.Y. Chandrachud, presented by Noel.Justice Chandrachud’s opinion clearly says that only the majority of Trusts nominees on the board can choose the chair of Tata Sons.The Tata Sons board, instead, resorted to an opinion from another lawyer, Sudipto Sarkar.Mint could not independently confirm why Sarkar believed that a vote from nomination and remuneration committee chair Harish Manwani could break the tie. Sarkar declined to offer a comment. An email sent to Tata Sons seeking comment went unanswered.Second, Noel says the Tata Sons’ board agreed that shareholders would need to approve Chandrasekaran’s reappointment as director at a properly held annual general meeting.“It was further expressly agreed at the meeting that nothing would be disclosed to the public in relation to this matter unless and until both of the above conditions had been satisfied,” Noel wrote.He also asked the company to ensure that none of the discussions from Thursday’s board meeting is deleted or changed, and that they are recorded and shared with all board members.On Sunday, Tata Trusts said there was no tie after its two trustees voted differently on the chairman’s reappointment.“A casting vote cannot revive a stillborn resolution,” said Tata Trusts. “The affirmative support of Tata Trusts nominee directors as mandated by the AoA was not given. The condition failed, and so did the resolution”.Also Read | Tata Sons’s move to grant Chandrasekaran another term short of shareholder math: A look at numbersSeparately, a Tata Trusts spokesperson told Mint, “the Tata Trusts have consistently maintained that the resolution to re-appoint Mr Chandrasekaran post the expiry of his current term was a legal nullity. The board exercised powers which it did not have as per its own Articles of Association. It required the affirmative vote of a majority of the Trust nominee Directors, a requirement which could not have been overridden by a casting vote, illegally exercised by the chairman, Mr Harish Manwani. It is even more intriguing that in the exercise of this illegal vote, the Tata Sons board, while giving a go-by to their own AoA, chose to rely on the opinion they obtained from a Calcutta-based lawyer, refusing to even take on record the opinion from the former chief justice of India, Dr D.Y. Chandrachud”.