Tata Sons row: Why the 2021 Cyrus Mistry verdict is back in focus

The Tata Sons board has approved N Chandrasekaran’s reappointment as chairman for another five years, but the decision has opened a fresh legal dispute with the Tata Trusts over whether the board followed the company’s own voting rules.

The immediate issue is simple: while one Tata Trust-nominated director voted for Chandrasekaran’s reappointment, the other voted against it. The board then used a casting vote to break the deadlock and the resolution ultimately passed 4-1.

The Tata Trusts, which collectively hold around 66% of Tata Sons, are questioning whether that was enough. Their argument is that the Trust-nominated directors have a separate voting right under Tata Sons’ Articles of Association, and that this requirement cannot be bypassed simply because the overall board voted in favour.

This is why a 2021 Supreme Court judgment involving former Tata Sons chairman Cyrus Mistry has come back into focus. The judgment had examined the same special voting rights given to Tata Trust-nominated directors and upheld their validity.

The current dispute is therefore about how those rights should apply to Chandrasekaran’s reappointment.

There is also a second issue running alongside the leadership dispute. The Reserve Bank of India’s recent decision rejecting Tata Sons’ request to surrender its NBFC registration has brought the question of a possible listing of Tata Sons back into focus. The Tata Trusts have opposed a listing.

Chandrasekaran had told the Tata Sons board in August that he would not seek another term when his existing tenure ends on February 20, 2027.

That decision had set off a succession process, with the Tata Trusts beginning steps to identify a possible successor.

However, at the September 17 board meeting, the situation changed.

The board considered Chandrasekaran’s reappointment for another five years.

The Tata Sons board has six members: Chandrasekaran, Noel Tata, Venu Srinivasan, Saurabh Agrawal, Harish Manwani and Anita Marangoly George. Chandrasekaran did not vote on his own reappointment.

Noel Tata, who is chairman of Tata Trusts and one of its two nominee directors on the Tata Sons board, voted against the reappointment.

The other Trust nominee, Venu Srinivasan, voted in favour.

The disagreement between the two Trust nominees led to a tie in the board vote. Independent director Harish Manwani, who was chairing the meeting, then exercised his casting vote in favour of Chandrasekaran, reported Times of India (TOI).

The resolution was subsequently passed 4-1, with Noel Tata the sole vote against it. Saurabh Agrawal and Anita Marangoly George also voted in favour.

On the face of it, therefore, Chandrasekaran has been reappointed.

But the Tata Trusts say the 4-1 board vote does not settle the matter.WHY IS THERE A DISPUTE IF THE VOTE WAS 4-1?

The answer lies in Tata Sons’ Articles of Association. These are essentially the rulebook governing how the company is run.

The Articles give the Tata Trusts certain special rights because of their position as the company's majority shareholders.

One of the important provisions is Article 121. It says that for certain decisions requiring a board majority, there must also be an affirmative vote from a majority of the directors nominated by the Tata Trusts under Article 104B.

This creates an additional layer of approval.

In simple terms, the argument is that there are two questions to be answered.

First, did the resolution get enough support from the Tata Sons board?

Second, did it also get the required support from the Tata Trust-nominated directors?

The Tata Trusts say the answer to the second question is no. There are two Trust-nominated directors — Noel Tata and Venu Srinivasan.

Venu supported Chandrasekaran. Noel did not. The Trusts therefore argue that there was no majority among their two nominees.

This is the basis of the Trusts’ argument that the overall 4-1 board vote cannot, by itself, make the reappointment valid.advertisementSO, WHAT DOES THE 2021 CYRUS MISTRY CASE HAVE TO DO WITH THIS?This is where the issue goes back to the long-running dispute between Cyrus Mistry and the Tata Group.

Mistry was removed as executive chairman of Tata Sons in October 2016.

The Mistry family and the Shapoorji Pallonji Group challenged his removal. The National Company Law Appellate Tribunal later ordered his reinstatement.

The matter eventually reached the Supreme Court.

In March 2021, the Supreme Court overturned the NCLAT decision and upheld Mistry’s removal.

But the judgment was not limited to the question of whether Mistry should return as chairman.

The court also examined the special rights given to the Tata Trusts under Tata Sons’ Articles of Association.

The Mistry side had challenged these special provisions, including the affirmative voting rights available to directors nominated by the Trusts.

The Supreme Court upheld the validity of those provisions.

That part of the judgment is now important because the current dispute is also about those same provisions.

In other words, the Tata Trusts are not pointing to the 2021 judgment because the Supreme Court had ruled on Chandrasekaran or his reappointment. It had not.

They are relying on it because the Supreme Court had already examined the Tata Sons Articles and upheld the special voting rights of Trust-nominated directors.advertisementWHAT DOES ‘AFFIRMATIVE VOTE’ MEAN IN SIMPLE TERMS?It basically means that for certain decisions, it is not enough for most directors on the board to say yes.

The required Trust-nominated directors must also provide the necessary support.

For example, imagine a board has a separate rule saying that a particular decision needs both the approval of the full board and the approval of a specific group of directors.

Even if the full board votes in favour, the second condition would still have to be satisfied.

That is broadly the argument being made by Tata Trusts.

Their position is that the 4-1 vote shows that the wider board supported Chandrasekaran, but it does not answer the separate question of whether the Trust-nominated directors gave the required affirmative support.

Since Noel Tata voted against and Venu Srinivasan voted in favour, the Trusts say the separate condition was not met.THEN WHAT WAS THE CASTING VOTE FOR?

This is another important part of the dispute.

The board vote was tied before Harish Manwani exercised his casting vote.

A casting vote is generally used by the chair of a meeting to break an equality of votes.

That is what happened at the September 17 meeting, according to the TOI report. Manwani's casting vote was in favour of Chandrasekaran and the resolution then went through.

But the Tata Trusts' argument is that the casting vote can settle the general board vote, but cannot replace the separate affirmative support required from the Trust-nominated directors.

This is where the legal disagreement becomes more specific.

The question is not simply whether Manwani could use a casting vote to break a board-level tie. It is whether doing so can also satisfy a separate requirement relating to the Trust-nominated directors.WHAT DOES THE 2021 JUDGMENT ACTUALLY SAY?

The 2021 Supreme Court judgment did not give Tata Trusts unlimited power over Tata Sons.

It upheld specific provisions already contained in the company's Articles of Association.

That distinction is important. The judgment did not say that Tata Trusts can veto every decision of Tata Sons.

It also did not deal with the present situation in which two Trust-nominated directors disagree over a chairman's reappointment.

So the 2021 ruling does not directly decide whether Chandrasekaran's reappointment is valid.

What it does provide is the Supreme Court's earlier interpretation of the special rights given to Tata Trust-nominated directors under the Tata Sons Articles.

The current dispute is about applying those provisions to a different set of circumstances.WHAT IS THE LEGAL OPINION BY FORMER CJI DY CHANDRACHUD?

The Tata Trusts have also obtained a legal opinion from former Chief Justice of India D Y Chandrachud.

According to the TOI report, the opinion takes the view that a majority of the two Tata Trust-nominated directors — Noel Tata and Venu Srinivasan — would be required to support Chandrasekaran's reappointment.

It also takes the view that Manwani's casting vote cannot replace that separate requirement.

Importantly, this is a legal opinion and not a Supreme Court judgment or court order. It therefore does not by itself invalidate Chandrasekaran's reappointment.

The question of whether the Articles were correctly applied would ultimately depend on the legal process and interpretation of the company's governing documents.WHERE DOES THE RBI AND LISTING ISSUE COME IN?

The leadership dispute is unfolding alongside a separate disagreement over what happens to Tata Sons' corporate structure.

Tata Sons had applied to the RBI in March 2024 to voluntarily surrender its NBFC registration. The application was made after the company had decided that it should remain unlisted.

The RBI rejected that request on September 11 and advised Tata Sons to comply with the rules applicable to an upper-layer NBFC.

That has brought the possibility of a Tata Sons listing back into focus.

The Tata Trusts have opposed listing and have maintained that Tata Sons should remain unlisted.

In his September 17 statement to the Tata Sons board, Noel Tata said the Trusts had already taken a formal position on keeping Tata Sons unlisted. He argued that if that position was to be reconsidered, the Trusts should first deliberate on it and their nominee directors should then act on the position taken by the trustees.

The Trusts have also said that all available alternatives to listing should be examined following the RBI's decision.

The listing question matters to the current leadership dispute because it has been one of the areas of disagreement between Noel Tata and the Tata Sons board.

Noel's September 17 statement records that he had previously asked Chandrasekaran about his commitment to keeping Tata Sons private and whether all necessary steps had been taken to avoid a listing. He said the Trusts should be involved before any major structural decision is taken.SO WHY IS THE 2021 CASE IN FOCUS NOW?

The connection can be summed up simply.

In 2021, the Supreme Court upheld special voting rights given to Tata Trust-nominated directors under Tata Sons' Articles of Association.

In 2026, one of those Trust-nominated directors has supported Chandrasekaran's reappointment while the other has opposed it.

The wider board then approved the reappointment after a casting vote.

The Tata Trusts are now arguing that the separate requirement for support from their nominated directors was not fulfilled.

That is why the Cyrus Mistry judgment has become relevant again.

It does not decide Chandrasekaran's case. It provides the legal background to the very provisions that are now being disputed.

At the same time, the RBI's decision has brought the separate question of Tata Sons' future structure and a possible listing back into the picture.

So the current Tata Sons dispute has two closely connected layers: the legal validity of Chandrasekaran's reappointment and the broader disagreement over the company's future structure, including the role of Tata Trusts and the possibility of listing.

For now, the board has approved Chandrasekaran's five-year reappointment. The unresolved question is whether that board approval is enough under Tata Sons' Articles of Association.- EndsPublished By: Sonu VivekPublished On: Sep 22, 2026 17:31 IST