How Charity Commissioner and RBI orders derailed Noel Tata’s plan

If Sir Ratan Tata Trust (SRTT) had not been blocked by the Maharashtra Charity Commissioner from convening its board meeting, Tata Trusts would have removed vice chairman Venu Srinivasan as its nominee on the Tata Sons board and avoided neutralising Noel Tata's veto vote on the issues of reappointing N Chandrasekaran and the potential listing of Tata Sons.

The Charity Commissioner had taken the decision to block SRTT on the complaint of Venu Srinivasan himself, and its timing turned out to be critical. The Commissioner ordered the deferral and freezing of board meetings for SRTT on May 15 for an investigation into the matter of lifetime trustees of over 25% quota and even refused to give permission to convene a meeting to select a nominee for the Tata Sons Annual General Meeting (AGM). Since the quorum cannot be completed without the joint nominee from SRTT and Sir Dorabji Tata Trust (SDTT), Tata Sons has failed to hold its AGM yet.

Noel Tata, along with trustees Darius Khambata and Jehangir H.C. Jehangir, approached the Commissioner seeking permission to convene the meeting for approval of accounts, allocation of funds for charitable activities and appointment of the representative for the Tata Sons AGM. But the Commissioner refused to budge.

Another blow came from the Reserve Bank of India (RBI), which, after remaining silent for the last one-and-a-half years, came out barely a week ago (on September 11), rejecting the application to surrender the Core Investment Company (CIC) registration of Tata Sons. It put Noel Tata on the back foot as keeping Tata Sons private was the only option for Tata family and Tata Trusts to make their presence and keep their business interests in the group.

Before the RBI decision, the Tata Sons Nomination Remuneration Committee (NRC) had finalised the proposal to present the reappointment of Chandrasekaran for a third term to the Tata Sons board. The decision was not known to the public. On September 3, NRC unanimously requested Chandrasekaran to continue, while the RBI order came on September 11.

Though RBI order was against the interest of Noel Tata, who wanted to keep Tata Sons private, it increased the relevance of Chandrasekaran remaining on top for a smooth transition of Tata Sons from private to public. The final event came from RBI again as it took an unconventional step of filing a caveat in the Bombay High Court to ensure its version was heard in the Tata Sons matter before giving any interim order. RBI voluntarily approached the court when Tata Trusts was considering renegotiation with the regulator. It became another hurdle for Noel Tata, who was in consultation with lawyers.

Tata Sons said in its press release, on September 3, the NRC met to discuss Chandrasekaran's exit letter to the board members and discuss the issue of his re-appointment as chairman. "After due deliberation and in recognition of his contributions and the larger interests of the Tata Group, the NRC unanimously resolved to request him to reconsider his decision and to recommend him for re-appointment at the next Board meeting,’” Tata Sons said in its statement.

Venu Srinivasan is a part of the NRC, in addition to Harish Manwani and Anita Marangoly George. When the NRC update became part of the September 17 board meeting agenda for Tata Sons, there was speculation that Chandrasekaran's reappointment may return to the discussion table.

On Thursday, at the NRC briefing to the Tata Sons board for considering reappointment of Chandrasekaran, Harish Manwani was the chair. Noel Tata objected to the reappointment and Srinivasan supported it. So, both the veto votes cancelled out and Manwani used his casting vote to approve Chandrasekaran's reappointment, said insiders.

The RBI letter was also part of the agenda, and the board decided to adhere to the regulator's call and start preparing for an IPO. Here too, Noel Tata cast his vote against deciding on IPO preparation. But Srinivasan and others decided to go ahead with the listing and asked Chandrasekaran to prepare for it.

Following the board meeting, Tata Trusts said the decision of Chandrasekaran not to offer himself for reappointment upon the conclusion of his current tenure on February 20, 2027, had been duly accepted and had attained finality. On August 12, Chandrasekaran communicated to the Tata Sons board his own decision not to offer himself for reappointment, said Trusts. “The Tata Trusts formally placed on record their acceptance of the decision the following day and advised Tata Sons to initiate the process for setting up a Selection Committee for appointing a successor, in accordance with the Articles of Association of Tata Sons,” the Trusts' statement said. The Trusts’ position remains unchanged, it added.

The series of incidents ended with the reappointment of Chandrasekaran and the beginning of the IPO preparations, hinting that the dispute in Tata is heading towards a full-blown legal battle.