'Condition was not met': Tata Trusts challenges Chandrasekaran reappointment resolution

NEW DELHI: Tata Trusts has said the resolution to reappoint N Chandrasekaran as chairman of Tata Sons was not validly passed at the company’s September 17 board meeting, arguing that it did not receive the required support from Tata Trusts’ nominee directors. In a statement, Tata Trusts said the Articles of Association (AoA) of Tata Sons do not allow board decisions to be determined simply by a majority of directors. It said a resolution requires the affirmative support of at least a majority of directors nominated by Tata Trusts, which holds approximately 66% of Tata Sons. Tata Trusts said there are two of its nominee directors on the Tata Sons board and that both were required to support the resolution. “Majority amongst two is two and not one,” the Trusts said, adding that one of its nominee directors voted against the resolution on September 17. As a result, the required affirmative support was not secured, it said. The Trusts also rejected the argument that the disagreement between its nominee directors amounted to a deadlock that could be resolved through the chairman’s casting vote. "The Chairman’s casting vote is available only where there is equality of votes at the overall board level. It does not apply amongst Tata Trusts’ Nominee Directors. Whether the result of the vote was 4:1, or any other figure, is irrelevant. A condition is either met, or it is not. In this case the condition was not met," reads the statement. Tata Trusts said there was neither a deadlock nor any paralysis at the board, arguing that its nominee director’s decision not to support the resolution was an exercise of the protective rights granted under Tata Sons’ Articles of Association (AoA). “The Board put a question, and the AoA answered it in the negative,” the Trusts said. The Trusts maintained that the resolution to reappoint Chandrasekaran as chairman of Tata Sons “was not validly passed and has no legal effect”, describing it as “void ab initio”, or invalid from the outset.