A statutory filing made by Tata Sons omits reference to the specific articles under which it reappointed N Chandrasekaran, in a departure from past practice when it named them while appointing and reappointing him as chairman.
While Tata Sons had named the specific articles—Articles 118 and 105—earlier, its latest filing makes only a general reference to the articles instead of naming them, a Mint review found. The development assumes significance since Tata Trusts chairman Noel Tata, who has the reappointment, has stated that the board did not follow the conditions of Article 118 as before.
Article 118 of Tata Sons’ Articles of Association (AoA) requires the formation of a selection committee to find a new chairman, which was not done in the reappointment of Chandrasekaran.
In a filing to the ministry of corporate affairs last week, Tata Sons wrote,” “Resolved that in accordance with the provisions of Section 196 and other applicable provisions, if any, of the Companies Act, 2013 and pursuant to the Articles of Association of the Company, Mr N. Chandrasekaran be and is hereby re-appointed as ‘Executive Chairman’ of the Company, with substantial powers of management, for a period of 5 years, effective from February 21, 2027 up to and inclusive of February 20, 2032.”
On 17 September, Noel Tata, Tata Trusts chair and nominee on Tata Sons, opposed the board resolution on the reappointment, while the second Trusts nominee, Venu Srinivasan, voted in favour. With the two nominees casting opposing votes, Tata Sons’ nomination and remuneration committee chief Harish Manwani made his casting vote, clearing the reappointment. Tata Trusts says there was no affirmative voting majority among the Trusts nominees as provided under Article 118, making the decision invalid. Tata Sons has cited legal advice to defend the process.
Tata Sons wasn’t shy of specifying the relevant articles before.
The board resolution of 12 January 2017 appointed Chandrasekaran “in accordance with Article 118 read with Article 105.” The 11 February 2022 resolution, which reappointed him as chairman, cited Companies Act Section 196 “and pursuant to Article 105 and Article 118,” according to a Mint review of the resolutions filed with the MCA. Apart from the dates and the reference to the articles, the latest filing repeats the 2022 text almost exactly.
Why it matters
The missing article numbers matter because Article 118 explains how Tata Sons picks its chairman. It requires a selection committee to suggest a candidate. The board can appoint that candidate only if Article 121 allows it, which requires an affirmative majority of the Trusts’ nominees.
Article 118 makes someone chairman, and Article 105 makes that chairman executive, as it lets the Tata Sons board set his remuneration and management powers.
After the 17 September board meeting, Noel Tata, in two letters to the Tata Sons board, maintained that the board applied one rule in 2022 and a different one in 2026. On 18 September, he wrote to Suprakash Mukhopadhyay, group corporate secretary, Tata Sons:
“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 and of no legal relevance, efficacy or effect whatsoever.” Ab initio is Latin for “from the beginning.”
He attached the minutes of the 2022 board meeting. “As those minutes record, that reappointment of chairman was effected under Article 118 of the Articles of Association,” he wrote. “That is precisely the position I stated, repeatedly, at the meeting held on 17 September 2026, and which was disputed by you.”
“It is thus clear that for the reappointment of chairman, the operative provision is Article 118,” he added. “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.”
Emails sent to Tata Sons and Noel Tata seeking comment went unanswered.
“They can’t break away from the past practice,” said senior Supreme Court lawyer H.P. Ranina. “If the appointment and reappointment happened under Article 118 to be read with Article 105, and the same was communicated to the MCA, then Tata Sons needs to clarify what Articles were relied on when it reappointed the Chairman and why the specific Articles have not been disclosed”. “If they (Tata Trusts) had sought my advice, I would have suggested that they contest this reappointment with the MCA, as it is illegal,” said Ranina.
An AoA is a contract between the company and its members, said Gaurav Pingle, partner at Forefront Legal Consulting LLP, a Pune-based corporate law firm. “The re-appointment resolution appears to be an open-ended resolution, without specific reference to Article 118,” he said.
“The open-ended drafting provides a bigger canvas to challenge the re-appointment. However, there are very few provisions in Companies Act which provide for giving specific reference of Act/Rules/Articles in drafting resolutions or minutes. The precedent of forming the Selection Committee according to Article 118 of the Articles of Association is also an important aspect in the procedure for re-appointment and also drafting of the resolution.”
Dispute to board revolt
Starting in February with Noel’s opposition to the reappointment, followed by talks in May and June, Tata Sons could not decide on reappointing Chandrasekaran. Finally, on 12 August, Chandrasekaran and the media in a statement that he would not seek another term because they could not agree on his reappointment. The Sir Dorabji Tata Trust, the largest shareholder of Tata Sons with 27.98%, then to set up a selection committee to find a successor.
However, in a surprise move, four of the six Tata Sons directors voted in favour of Chandrasekaran’s reappointment. Noel Tata voted No, while Chandrasekaran did not vote. Besides Chandrasekaran, Noel and Srinivasan, the Tata Sons board includes group chief financial officer Saurabh Agrawal and independent directors Harish Manwani and Anita Marangoly George.
For now, Chandrasekaran’s reappointment depends on his continuance as a Tata Sons director. Chandrasekaran’s term as director ended on 18 August, when the company was to hold its annual general meeting. However, the AGM could not be conducted and had to be deferred because of a lack of quorum. The Registrar of Companies has given Tata Sons until 31 December to hold its shareholder meeting.
Tata Trusts, which owns 65.9% of Tata Sons, could not jointly nominate members to attend the AGM because a 15 May order from the Charity Commissioner stopped Sir Ratan Tata Trust (SRTT), which owns 23.56% of Tata Sons, from holding meetings or making decisions after Srinivasan alleged that its three permanent trustees had exceeded the state rule limiting such trustees to one-fourth of the total. SRTT currently has five trustees.