Somewhere in Mumbai this weekend, lawyers on both sides of the Tata dispute were reading Article 121 of the Tata Sons Articles of Association with great care.
Almost nobody else in India was.
Yet millions of people who will never see that clause have already formed a view about what is happening inside Bombay House and that view will outlive whatever the Supreme Court eventually decides.
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This is the part of the fight that gets least attention and may matter most.
Brands like Tata are held together by belief rather than by contract.
For a century, the group traded on an idea that Indians absorbed without ever being taught it, that this was a house where ownership served a charitable purpose, where the institution mattered more than the individual and where things were done properly with a capital P. Every rupee of that trust was earned slowly. It can be spent quickly.
The Stories Being Told
The legal dispute is narrow. The Tata Trusts, which own about 66% of Tata Sons, say the board’s September 17 decision to give N. Chandrasekaran another five-year term failed a test written into the company’s own Articles, because the resolution lacked the support of a majority of directors nominated by the Trusts. Noel Tata voted against, Venu Srinivasan voted in favour, and the Trusts argue that a majority of two means both. Tata Sons proceeded anyway, and the Trusts have now called the reappointment void from the outset.
The public dispute is much wider, because two competing stories are being told about what Tata is.
In the first, the Trusts are the guardians. They hold a century of ownership, a charitable purpose written into their founding, and rights deliberately placed in the Articles to protect exactly this moment. Their case is that a board has overridden the owners, and that if this stands, no promoter’s written protections in India are safe. Abhishek Manu Singhvi, now acting for them, has put it in precisely those terms, warning of damage to corporate governance across hundreds of Indian companies.
In the second, Tata Sons is the institution that grew up. A group with assets of around Rs 2 lakh crore cannot be paralysed by disagreements among a handful of trustees. Professional management, transparency and rules that do not depend on personalities are what allowed Tata to become global in the first place. Harish Salve, advising Tata Sons and Chandrasekaran, has made this argument publicly and repeatedly since the vote.
Both stories claim continuity with the Tata tradition. Only one of them, in my reading, is easy to square with how the past five weeks actually unfolded.
The Sequence Matters
On August 12, Chandrasekaran wrote to the board saying he would not seek another term once his current one ends in February 2027. The Trusts accepted that decision and asked for a selection committee to be constituted under the Articles to find a successor, which is the process those Articles lay down. Five weeks later the board reappointed him for another five years, and the owners of two-thirds of the company found themselves outvoted on a question they had every reason to believe was settled.
Tata Sons has an answer. Its Nomination and Remuneration Committee, it says, unanimously asked Chandrasekaran to reconsider, and he agreed. Procedurally that may well hold up. As a story told to the public, it asks people to accept that a chairman’s own decision to leave, accepted by the majority owner, could be reversed without that owner’s agreement.
The board’s strongest point deserves to be stated properly. Under the Companies Act, a nominee director owes his duty to the company as a whole, rather than to whoever nominated him. This dualism itself will be contested. Fiduciary responsibility to the company at where one is nominated as to the nominating entity as well. Srinivasan has pressed the former point himself, after the Sir Dorabji Tata Trust tried to bar him from voting on the listing, a directive he publicly called illegal. Is the case of two nominees voting differently one which shows it to be working or failing ?
It is a real argument and it runs into a real problem. The affirmative-vote protections exist precisely so that certain decisions cannot be carried by an ordinary board majority. If they dissolve whenever a single nominee votes with the board, they protect nothing at all.
My estimation is that the Trusts have the better of this, though the courts will decide what the clauses actually permit.
The irony the Trusts keep pointing to
There is a sharper problem for Tata Sons, and the Trusts have been quick to name it. The very protections now being argued away are the ones Tata Sons itself once defended. The National Company Law Appellate Tribunal called them oppressive during the Cyrus Mistry litigation. Tata Sons argued they were legitimate safeguards attached to the Trusts’ position as majority owner, and it won in the Supreme Court in March 2021.
Salve has since suggested that once Tata Sons becomes a public company, the restrictions in its Articles would fall away. That may be sound law. It also tells the public something about how those safeguards are now regarded by the company that once defended them and it quietly ties the listing fight to the chairman fight.
What the audiences are actually watching
Several constituencies are reading this story at once and each is asking something different.
Employees across the Tata companies are asking whether the group still knows who it is.
Investors in the listed Tata firms are asking whether governance risk has migrated from a single company to the whole structure.
Younger Indians, who have only a faint memory of Ratan Tata, are meeting the group as a corporate dispute rather than as a national institution.
Regulators are watching too, since the Reserve Bank has already refused Tata Sons’ attempt to shed its registration and has filed a caveat in the Bombay High Court to protect its position on a possible listing.
For a house that has spent a century being the answer to the question of how Indian business can be trusted, becoming a case study in shareholder disputes is a costly turn.
The Repair Problem
Institutional trust does not recover the way share prices do. Once the public starts asking which faction speaks for Tata, the question does not stop being asked simply because a court delivers a judgment.
Noel Tata’s position is the harder one to occupy and the easier one to explain. He is defending written protections rather than personal prerogative, and he is asking for a process the Articles themselves lay down. Whether that argument prevails in court remains genuinely uncertain. In the court of public understanding, which is the one that decides what Tata means to the next generation, it is the version that sounds like the Tata people thought they knew.
The lawyers will settle what the Articles permit.
They will decide nothing at all about what Tata stands for.
That question has moved to a court where verdicts arrive slowly, are rarely announced and are almost impossible to appeal.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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