ABSTRACT
On September 11, 2026, the Reserve Bank of India (RBI) rejected the application of Tata Sons Private Limited to surrender its Core Investment Company (CIC) registration which closed the route by which the Tata group’s holding company had sought to stay unlisted. Six days later, its board resolved to initiate steps to comply with the RBI’s norms and reappointed N. Chandrasekaran as executive chairman by a 4-1 vote. Noel Tata, chairman of Tata Trusts, which holds about 66% of the company, objected to the decision. The Trusts say the resolution is void under Article 121 of the Articles of Association because their two nominee directors voted on opposite sides. This article examines how the Articles divide power between shareholder, nominee and board, whether a casting vote can supply the affirmative vote Article 121 demands, and what listing would do to the Trusts’ special rights. It argues that the Supreme Court’s 2021 ruling upheld those rights but did not answer the question now before the parties. Therefore, the real weakness lies in how the rights are exercised and not in whether they exist.
INTRODUCTION
On September 11, 2026, the RBI told Tata Sons that its application to surrender its CIC registration could not be accepted.1 The company had been classified as an upper-layer non-banking financial company (NBFC) in September 2022, which carries an obligation to list within three years and that period lapsed on September 30, 2025. On September 17, the Tata Sons board resolved to initiate steps towards compliance with the RBI’s guidelines and by a majority, reappointed Chandrasekaran for five years. Noel Tata opposed both decisions. The Trusts’ other nominee, Venu Srinivasan, voted with the majority and the Trusts have since called the reappointment a “legal nullity”.2 This article reflects developments up to October 17, 2026.
The dispute is usually described as a contest between a chairman and a majority shareholder. In law it is a question of who controls the controller: Tata Sons is controlled by the Trusts, the Trusts are run by trustees who do not agree with one another, and Tata Sons is itself regulated by the RBI. This article asks three questions:
- Can the Trusts’ special rights under the Articles be exercised when their own nominee directors are divided, and can a casting vote cure the division?
- Did the RBI’s letter mandate listing, and can a restructuring lawfully avoid it?
- What happens to the Trusts’ special rights if Tata Sons lists?
OWNERSHIP IS NOT CONTROL: THE ARTICLES OF TATA SONS
Tata Trusts hold about 66% of Tata Sons largely through the Sir Dorabji Tata Trust (SDTT) and the Sir Ratan Tata Trust (SRTT), which together hold about 51.54%. Tata Sons converted from a deemed public company into a private company, which shareholders approved in September 2017 and the National Company Law Tribunal (NCLT) approved in July 2018. Under Section 10 of the Companies Act, 2013, its Articles bind the company and every member as if each had signed them. Three provisions matter. Article 104B lets the two Trusts jointly nominate one-third of the board as long as their combined holding is at least 40%. Article 118 provides for a selection committee to choose the chairman. Article 121 requires that any decision needing a board majority should also receive the affirmative vote of a majority of the Trust-nominated directors present at the meeting.3 Of the six directors, two are Trust nominees: Noel Tata and Srinivasan.
The Supreme Court examined these rights in the Tata-Mistry litigation and rejected the attempt to delete or restrict the affirmative-voting provision.4 Both sides now rely on that decision. However, when Cyrus Mistry was removed in 2016 the Trust nominees voted together, so the Court never had to decide what Article 121 means when they split 1:1.5 Two features of the structure then stand out. First, the veto belongs to nominee directors and not to the Trusts as shareholders. A director must act in accordance with the Articles and in good faith for the benefit of the members as a whole under Section 166 of the Companies Act, 2013, so a nominee is not a representative who is bound to vote as instructed. That explains why a 66% stake did not produce a Trust-favourable vote. Second, the machinery for exercising the Trusts’ rights is itself stalled. The SRTT has reportedly been unable to convene its trustees amid proceedings before the Maharashtra Charity Commissioner, and the Articles require the two Trusts to select a representative jointly for general meetings, which has left the annual general meeting in doubt.6
THE CASTING VOTE AND ARTICLE 121
The Trusts argue that Article 121 sets two separate tests, a board majority and an affirmative majority of Trust nominees, and that one of two nominees is not a majority. They also invoke Article 118 and say a fresh five-year term is a new appointment that must go through the selection committee. Chandrasekaran answers that Article 121 itself provides a casting vote on an equality of votes, and that the Articles were deliberately changed from requiring all Trust nominees to requiring a majority. Hence, he argues that a 1:1 split is exactly the equality the clause requires. The Trusts placed an opinion of former Chief Justice of India D.Y. Chandrachud before the board, that a casting vote can break a deadlock but cannot replace a required affirmative vote.
A casting vote generally exists only where the Articles confer it. On text, a majority of two nominees present means both, and the change from “all” to “a majority” makes sense for a larger nominee group but does not obviously address a pair. On purpose, if a vote cast by a non-nominee could substitute the nominees’ required majority, Article 121 might become ineffective precisely when the nominees disagree. A court may still prefer the Chandrasekaran’s interpretation because the casting-vote language sits within Article 121. The point is open, and the 2021 ruling does not settle it. A dispute purely about what Article 121 means may be better suited to a civil court. Noel Tata and his son Neville Tata filed caveats on October 7, 2026, in the Bombay High Court and the Mumbai City Civil Court.7 Nevertheless, a caveat only asks to be heard before any order is passed, and it decides nothing.
THE LISTING QUESTION: THE RBI, THE CIC AND THE PUBLIC COMPANY
The listing obligation comes from the RBI’s powers over NBFCs under Chapter III-B of the Reserve Bank of India Act, 1934 and from its scale-based regulation framework, under which an upper-layer NBFC must list within three years of being identified. The RBI’s recent FAQs restate that a CIC must hold at least 90% of its net assets in the equity, preference shares, debt or loans of group companies, and that “public funds” include funds that reach the CIC indirectly through group entities. The parties dispute what the September 11 letter requires. Noel Tata and three SDTT trustees say the RBI rejected the application and asked Tata Sons to find a lawful way to comply, but did not mandate listing. Whereas, the board and Chandrasekaran treat it as a direction to list. The letter has not been published, so both readings rest on reported excerpts. Notably, the board resolved only to initiate steps and to seek guidance from the RBI, the Trusts and other stakeholders hence, it has not approved an initial public offering. The Trusts’ alternative is a restructuring in which Tata Electronics Systems Solutions and Tata Consulting Engineers merge into Tata Sons so that it leaves the CIC structure, with a request to the RBI for time until September 2029, and a proposal from the Shapoorji Pallonji Group to monetise part of its stake for ₹25,000 crore. A merger of this kind would need a scheme under Sections 230 to 232 of the Companies Act, 2013 and RBI approval. Whether it can take a holding company outside the CIC definition is for the RBI to decide, and reports say the proposal still needs both the board’s consideration and the RBI’s approval.
WHAT LISTING DOES TO SPECIAL RIGHTS
A listing requires conversion to a public company by altering the Articles under Section 14, followed by an offer under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and compliance with the minimum public shareholding rules. Section 14 needs a special resolution. Special resolution cannot pass without the Trusts as they hold a substantial majority, while the SP Group’s share at about 18.4%, cannot block one alone by itself. But the Trusts’ ability to vote is complicated by how SDTT and the SRTT jointly authorise a representative to exercise their voting rights.
Listing also affects the special rights. Regulation 31B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires any special right granted to a shareholder of a listed entity, such as nomination or veto rights, to be approved by special resolution in general meeting once every five years. Regulation 17(1D) requires continuation of directors to be approved at least once every five years. Public shareholders would therefore vote periodically on whether the Trusts retain special rights i.e. Articles 104B and 121. This is the Trusts’ real concern. It is also why Chandrasekaran says the reappointment and listing questions cannot be separated.
WAY FORWARD
A boardroom vote is not the place to settle questions of this kind. Three steps might be helpful:
- The Article 121 question should be put before a competent court for an early declaration. The new term would begin only on February 20, 2027, so there is time to do this instead of fighting it out at the annual general meeting.
- The RBI should publish or clarify its September 11 letter, stating whether any lawful alternative to listing exists and by when compliance is expected, so that the board and the Trusts argue from the same text.
- Tata Sons and the Trusts should settle the Trust-level questions first, including a workable protocol for the joint nomination of Article 104B directors. Any post-listing special rights of the Trusts should be a defined, time-bound right that can pass the Regulation 31B test.
CONCLUSION
The Tata Sons dispute shows that special rights written into the Articles are only as strong as the process by which they are exercised. The Supreme Court upheld Articles 104B and 121 in 2021, but it did not say what happens when the Trusts’ own nominees disagree, and that answer will now come from the courts or the regulator, not from the boardroom. For the Trusts, the lesson is that control is best protected by clear rules settled before a dispute and not by votes counted after it.
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WRITTEN BY: T.R AISIRI RAO.
- PTI, RBI Rejects Tata Sons’ Bid to Surrender NBFC Licence, Setting Stage for Mandatory Listing, ThePrint (Sept. 12, 2026), https://theprint.in/economy/rbi-rejects-tata-sons-bid-to-surrender-nbfc-licence-setting-stage-for-mandatory-listing/3041346/
- Anjali Pal, Tata Sons vs Noel Tata: Voting Maths Behind Boardroom Battle Explained, Outlook Business (Sept. 18, 2026), https://www.outlookbusiness.com/corporate/tata-sons-vs-noel-tata-voting-math-behind-boardroom-battle-explained
- Barkha Mathur, Chandra’s Third Term: Why Tata Trusts and Tata Sons Read the Rules Differently, Business Standard (Sept. 22, 2026), https://www.business-standard.com/companies/news/chandra-s-third-term-why-tata-trusts-and-tata-sons-read-the-rules-differently-126092200155_1.html
- Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd., (2021) 9 SCC 449 (India) (decided Mar. 26, 2021).
- Barkha Mathur, supra note 3.
- Anjali Pal, supra note 2.
- Noel Tata, Son File Caveats In Mumbai Courts In Tata Trusts Battle, ETV Bharat (Oct. 14, 2026), https://www.etvbharat.com/en/business/noel-tata-son-file-caveats-in-mumbai-courts-in-tata-trusts-battele-enn26101402899
