Fresh trouble brews over N Chandrasekaran’s reappointment

Tata Trusts has once again challenged N Chandrasekaran’s reappointment as Tata Sons chairman, saying it did not comply with the company’s Articles of Association (AoA).

The Trusts also sharpened its criticism on September 20, calling the interpretation of the AoA being used to support Chandrasekaran’s reappointment “untenable.” It warned against attempts to alter the existing Tata structure, describing them as “taking a sledgehammer to crack a nut.

Okay, so what’s the AoA: think of it as the company’s internal rulebook. It lays down how the company is run, including how important decisions are made and approved.

What’s actually happening: Tata Trusts says the rules require the support of a majority of directors nominated by the Trusts for Chandrasekaran’s reappointment to go through.

There are currently two Tata Trust-nominated directors on the Tata Sons board. According to the Trusts, that means both directors needed to vote in favour. But Tata Trusts Chairman Noel Tata voted against the proposal.

The Trusts also argued that there was no deadlock in the vote, so the chairman’s casting vote, essentially an extra vote used to break a tie, could not be used to change the outcome.

The dispute is now getting more serious. Senior advocate Abhishek Singhvi said on September 20 that he is joining the matter as the lead lawyer for Tata Trusts. He described it as a matter of ‘sadness and regret’ that the dispute could not be resolved amicably.

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