Former Top Judges Back Tata Sons on Chairman Reappointment Process

Two former Supreme Court judges have backed Tata Sons on key legal questions surrounding the reappointment of N Chandrasekaran as chairman. The dispute centers on a September 17 board meeting where four directors voted to reappoint Chandrasekaran while Tata Trusts Chairman Noel Tata opposed it. Noel Tata later questioned the validity of the vote and the use of the chairman's casting vote.

Legal Opinions

Tata Sons defended its position by citing legal opinions from former Chief Justice of India Uday U Lalit and former Supreme Court judge B N Srikrishna. Harish Manwani chaired the meeting after Chandrasekaran stepped aside and used a casting vote to favor the reappointment. Justice Lalit stated that since four of the five voting members supported Chandrasekaran, an equality of votes arose among directors appointed under Article 104(B), allowing the officiating chairman to use a casting vote under Article 121. Justice Srikrishna noted that the actions matched the spirit of Article 121 to prevent board deadlocks and keep business moving forward. Srikrishna also stated that a director's statutory fiduciary duty to the company under the Companies Act overrides any contractual duty to a nominating entity, meaning Venu Srinivasan acted correctly.

Differing Stacks

Meanwhile, Tata Trusts and former Chief Justice D Y Chandrachud argued that the rules require affirmative support from Tata Trusts' nominee directors, and a casting vote cannot replace a missing majority. Senior Advocate Sudipto Sarkar also provided a legal opinion supporting the company, stating that Article 121 allows a casting vote in situations of equal votes and that Article 118 concerning a new chairman does not apply since Chandrasekaran is the incumbent. A final decision will come up at the upcoming annual general meeting of Tata Sons.