War of two vetoes: Noel Tata-Venu Srinivasan showdown expected at Tata Sons board meeting today

When the Tata Sons board is about to start its meeting this morning, all eyes are on how the sharply divided board will take up critical matters such as the RBI’s call to list Tata Sons and Chairman N. Chandrasekaran’s voluntary decision to step down from the top post. According to sources, the board members are likely to corner Tata Trusts Chairman Noel Tata, who is alone in the fight so far on both issues.

Tata Trusts vice chairman Venu Srinivasan is likely to lead the chorus, arguing for Chandrasekaran’s continuation as chairman, with the RBI having rejected Tata Sons’ request to surrender its core investment company (CIC) registration. The rejection means Tata Sons remains within the upper-layer NBFC framework, which could strengthen the case for continuity of Chandrasekaran at the top of the group, sources said. The board agenda includes an update from the nomination and remuneration committee (NRC) and an update on the RBI letter.

The NRC comprises Srinivasan, Harish Manwani, and Anita Marangoly George. Srinivasan has publicly supported the listing of Tata Sons, while Manwani and George were among the board members who backed Chandrasekaran’s continuation when the issue was discussed in February. The board, however, deferred the decision after Noel Tata raised concerns over the performance and capital allocation of businesses, including Air India and the new-age ventures.

Noel Tata is likely to stick to the point of how to counter the RBI’s decision. The Trusts has already roped in legal firm Cyril Amarchand Mangaldas (CAM) in the RBI matter, according to sources. The Noel Tata camp believes there is still room for renegotiation with the RBI before taking any legal action.

The board meeting comes amid another point of contention between the two camps. According to sources, Chandrasekaran’s office began preparations for an initial public offering of Tata Sons in May under Saurabh Agrawal. Sources close to Noel Tata’s camp contend that this was contrary to the mandate given to Chandrasekaran.

“When Tata Trusts backed his extension for a third term, it was on the understanding that Chandrasekaran would negotiate with the RBI to keep Tata Sons private,” said an executive. The subsequent preparation for an IPO has raised questions over whether the agreed approach has changed. The listing question had already emerged as a key point of disagreement during the February board deliberations.

The RBI’s recent move has added another layer to the dispute. On Tuesday, the central bank filed a caveat in the Bombay High Court in the Tata Sons listing matter, shortly after rejecting the company’s request to surrender its CIC registration. The caveat is intended to ensure that the RBI gets an opportunity to present its arguments before the court considers any ex parte relief to Tata Sons.

Since Noel Tata and Venu Srinivasan hold veto power in Tata Sons, the clash is likely to reach an intense level as the timing is critical for all the matters being discussed by the board. Noel Tata holds veto power on behalf of Tata Trusts over decisions of the holding company, while the NRC is expected to put forward arguments supporting Chandrasekaran’s continuity, according to sources.