Mumbai, September 20 (Daily Kiran) : Tata Trusts has raised objections to the reappointment of N. Chandrasekaran as Chairman of Tata Sons, asserting that the Articles of Association (AoA) require a majority vote from directors nominated by the Trusts for any proposal to pass. This challenge comes after a board meeting on September 17, where one of the two directors appointed by Tata Trusts voted against Chandrasekaran’s reappointment, indicating that the necessary conditions for approval were not met.
In a statement, Tata Trusts emphasized that both of its nominated directors must support any proposal for it to be approved. They clarified that the term “majority” implies two votes, not one. The Trusts also denied any internal conflict within the group, stating that the board raised a question, and the AoA provided a clear answer. Utilizing rights granted by the company’s constitution does not equate to a deadlock; rather, it reflects the intended functioning of that constitution.
Regarding the voting rights of the Chairman, Tata Trusts explained that the Chairman’s vote can only be cast when there is an equal split among the board members. This regulation does not apply to the nominee directors from Tata Trusts. The outcome of the vote, whether 4:1 or otherwise, is irrelevant; what matters is whether the stipulated conditions were fulfilled, which, in this case, they were not.
Tata Trusts further stated that the AoA cannot be selectively relied upon when convenient and ignored at other times. Tata Sons cannot adopt a contradictory stance, as it has previously maintained a different position and has even won a case in the Supreme Court concerning Cyrus Mistry’s ousting. The case centered around the “affirmative voting rights” of the Trust’s nominee directors under Articles 104B and 121, which the National Company Law Appellate Tribunal deemed oppressive. Complainants had sought to have these rights removed or limited.
During that time, Tata Sons opposed the move, defending these rights as a legitimate safeguard established among shareholders. The company argued that these rights are not oppressive but rather a legitimate entitlement of the Trusts as majority shareholders. The Supreme Court of India upheld the company’s argument, overturning the previous ruling that deemed the Articles oppressive. Consequently, the company cannot retract the protections it sought to uphold in court.
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