Objection of Noel Tata overruled, n. Chandrasekaran will be the boss of Tata Sons

A lot of upheaval is going on these days within the Tata Group, one of the largest business houses of the country. Tata Sons has completely rejected Tata Trust chairman Noel Tata’s objections in which he asked N. Questions were raised on the re-appointment of Chandrasekaran as chairman. The board of the company has made it clear that their decision taken by majority is absolutely correct. Along with this, Noel Tata’s arguments are said to be against company rules.

Basis of Noel Tata’s objections

Noel Tata said that rules were not followed in reappointment of Chandrasekaran. He referred to section 118 of the company. Under this rule, if a Tata trust owns 40 per cent stake in a company, a special process has to be followed for the selection of the chairman. In this, a selection committee consisting of representatives of Sir Dorabji Tata Trust and Sir Ratan Tata Trust selects the chairman. Noel argued that reappointment should also go through the same process.

Correct answer from Tata Sons

Tata Sons wrote a letter to Noel Tata on September 24. In this the company clarified that section 118 applies only on the first appointment of the new chairman. This rule does not apply to the re-enthronement of an existing Chairman. The board has decided to reassign responsibility to Chandrasekhar by a majority vote. The letter, written by company secretary Suprakash Mukhopadhyay, said the move was completely legal.

Legal experts also agreed

To strengthen its decision, Tata Sons also sought the opinion of leading legal experts of the country. Initially, the opinion of senior advocate Sudipto Sarkar was taken. When Noel Tata raised questions, the company also approached former Supreme Court judge BN Srikrishna along with former Chief Justice of India UU Lalit. All these veterans agreed that the board’s proposal was absolutely right. A copy of these legal opinions has also been sent to all directors along with the letter.

Real reason for adjournment of AGM

The letter also mentions the Annual General Meeting (AGM) convened on August 18. The meeting had to be adjourned due to lack of quorum. Tata Sons clarified that the meeting was adjourned as the Tata Trust cannot nominate any of its joint representatives under Article 86. The company rubbished any attempt to link the September 17 board resolution with the adjournment of the AGM. Now, to continue Chandrasekaran as a director, a fresh meeting will be called under Section 152 of the Companies Act, in which the shareholders will put a final stamp on his fate.