Stories
Legal Opinions Back N Chandra's Reappointment as Tata Sons Chairman Amidst Trusts' Challenge
- •Legal opinions from former Supreme Court judges Justice BN Srikrishna and Justice Uday U Lalit support the validity of N Chandrasekaran’s reappointment as Tata Sons chairman for a third term.
- •The opinions state that the provision for a Selection Committee in Tata Sons' Articles of Association applies to the appointment of a new chairman, not to the extension or reappointment of an incumbent.
- •Tata Trusts, holding about 66% of Tata Sons, challenged the September 17 board resolution, arguing it required affirmative support from a majority of Trust-nominated directors and that a chairman’s casting vote couldn't override this.
- •Justice Lalit affirmed the chairman's casting vote was valid, as four of five board members voted for Chandrasekaran, and with Noel Tata voting against and Venu Srinivasan supporting, the votes among Article 104B directors were tied.
- •Senior Advocate Sudipto Sarkar further opined that Article 118, concerning the selection of a "new Chairman," does not apply to the reappointment of an incumbent, and Article 121's casting vote provision can cover ties among Article 104B directors or the board as a whole.
Key Questions Answered
Legal opinions obtained by Tata Sons, including those from former Supreme Court judges Justice BN Srikrishna and Justice Uday U Lalit, confirm that N Chandrasekaran's reappointment for a third five-year term is valid under the company's Articles of Association. They noted that the provision requiring a Selection Committee applies only to the selection of a new chairman, and the chairman's casting vote properly resolved a tie among directors.
Tata Trusts, which owns about 66 percent of Tata Sons, argued that the Articles of Association require affirmative support from a majority of Trust-nominated directors, which a chairman's casting vote cannot override. They maintained that the split vote between their nominees meant the necessary support requirement was not met and that the resolution had no legal effect.
Justice BN Srikrishna stated that every director has both a statutory fiduciary duty to the company under the Companies Act and a contractual obligation to their nominating entity. In the event of a conflict, the statutory duty to the company must override the contractual obligation to the nominating entity.
