In the boardroom battle at Tata Sons on Thursday, the Noel Tata camp was banking on Article 121A under which majority approval from the nominees of the Tata Trusts is needed on a list of specified items that are put to vote.
With just two nominees– Venu Srinivasan and Noel Tata – representing the Trusts on the Tata Sons board and the two in opposing camps, the expectation was of a stalemate during voting for .
Yet, what transpired was that Venu Srinivasan’s vote supporting the reappointment was accepted while Noel Tata’s vote opposing the move was rejected. How did this happen?
According to one of the directors who was present in the board meeting the company secretary of Tata Sons was armed with legal opinion stating that a stalemate between the two trustees could be broken by a casting vote from the Chairman. So, in effect, the Chairman of Tata Sons N. Chandrasekaran voted for his own reappointment! “The act has just started, many more scenes to go,” the director said when asked if this would be legally contested by Noel Tata.
Meanwhile, the director, who wished to remain anonymous, said that the board has decided to “comply” with the RBI directive regarding its status as an Upper Layer NBFC. “The term used was comply; what that means is something that the company has to talk to RBI and go by what the regulator says,” the director said.
The next step is for the general body meeting to be called to approve the reappointment of Mr. Chandrasekaran as Chairman. “With the freeze on Sir Ratan Tata Trust, we have to see how it goes, work out the modalities so shareholders can vote,” the director said.
He pointed out that the road ahead is not going to be easy for the company. One of the reasons that the board supported the reappointment was that it didn’t want the focus on business to be lost. “There’s tremendous work to be done in Air India, on the semiconductor projects; and, the digital business needs to be turned around,” the director pointed out.
Asked if this is going to be long-drawn boardroom fight, the director said: “There are multiple issues. I hope that sense will prevail. There’s a long way to go and I don’t think anybody can predict as to what will happen,” he said.