Ex-CJI D Y Chandrachud Suggests Majority Support Needed for N Chandrasekaran

Former chief justice of India D Y Chandrachud has opined that Tata Sons cannot validly reappoint N Chandrasekaran as executive chairman without the majority support of Tata Trusts' nominee directors. The legal opinion, obtained by Trusts, centres on the interpretation of Tata Sons' Articles of Association and the interaction between the special voting rights enjoyed by the Trusts' nominee directors and the chairman's casting vote.

Trusts chairman Noel Tata voted against reappointing Chandrasekaran while vice-chairman Venu Srinivasan backed it. The deadlock among nominee directors was broken when independent director Harish Manwani. Who chaired the meeting for the resolution, exercised a casting vote.

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Chandrachud said, "The affirmative vote of the nominee directors is an independent and standalone requirement and operates on a wholly different plane from the chairperson's casting vote which is designed to resolve a tied vote among all directors of the board taken cumulatively."

Chandrachud found the resolution invalid because only one of the two nominee directors backed it. "Given that one of the two nominee directors has not voted in favour of the resolution, the requirement that a majority of nominee directors support the resolution has not been satisfied."

This provision was introduced to prevent any one individual from dominating the board.

The Tata Trusts' nominee directors have been a contentious issue in recent years. With some critics arguing that they are too focused on short-term gains rather than long-term sustainability.

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Tata Sons has declined to comment on Chandrachud's opinion, citing ongoing legal proceedings. The Trusts have also remained silent on the matter.

The outcome of this dispute will likely have significant implications for Tata Sons' governance structure and its ability to make strategic decisions.