Tata Trusts Conflict Explained: What's The Dispute Over Tata Sons Board Seats?

Tata Trusts Conflict: The house of Tatas, which includes Tata Sons and the Tata Trusts, are in serious disagreement over the governance and future control of the company. On Tuesday, October 7, Tata Trusts chairman Noel Tata and Tata Sons chairman N Chandrasekaran met Union Home Minister Amit Shah and Finance Minister Nirmala Sitharaman in Delhi to discuss the crisis.

Tata Trusts trustee Venu Srinivasan and Tata Sons trustee Darius Khambata were also present in the meeting with the senior ministers, who were briefed about the power control struggle in the business giant, which is worth more than USD 180 billion.

Soon after the death of former chairman Ratan Tata, the Tata Trusts was said to have split vertically. While one section is aligned with Noel Tata, the other includes a group of four trustees -- Mehli Mistry, Jehangir HC Jehangir, Pramit Zaveri, and Darius Khambata. Mehli Mistry, a cousin of ousted Tata Sons chairman Cyrus Mistry, is close to the Shapoorji Pallonji family which owns 18.37 per cent of Tata Sons.

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The Tata Sons board, which is the holding company that owns the various operational businesses of the Tata Group, raised concerns that some trustees were trying to exert too much control over the group's board, which hinders the independent decision-making of the group.

The meeting was held in complete privacy with only the board members and ministers present. The goal of the meeting was to come to a conciliatory conclusion amid concerns that these divisions could harm the internal operations of one of the largest and most influential business groups in India.

Tata Sons vs Tata Trusts: What is the conflict all about?

The current crisis was triggered due to disagreement over re-appointment of former Defence Secretary Vijay Singh as a nominee-director to the Tata Sons board. 77-year-old Singh had stepped down from the post on September 11. While Noel Tata and Venu Srinivasan backed Singh's reappointment, the Mehli Mistry camp of trustees opposed the move.

After the death of Ratan Tata in October 2024, Tata Trusts had introduced a policy of annual reappointment of Tata Sons nominee-directors once they turn 75 years old.

Both sides are on fire and accusing each other of management failures. Mehli-led group claims that they were not informed about Vijay Singh's dismissal, they were also not informed about the process of his reappointment. On the other side, the Noel Tata-led group alleges that the Trust members were trying to dominate the board through their influence.

The main disagreement is about two key issues: One, who will have the power to appoint the directors to the Tata Sons board, and how much information can be shared among all the trustees of the group.

The flashpoint in this case has been the sudden dismissal of Vijay Singh, who was a former defense secretary. Moreover, the misconduct of one of the trustees, who had recently threatened to have Venu Srinivasan removed, was also discussed.

Tata Sons chairman N Chandrasekaran remained neutral in the dispute and gave the ministers an overview of the situation without leaning on any of the sides.

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Future of the group

The government has advised the senior-most Tata leadership to resolve their differences internally, as the Tata Group, being one of the most influential business groups in India, should maintain stability and prevent conflict so as not to make it a "regulatory issue". Further, the Tata Trusts should be the first mover in this conflict resolution, as it owns a 66 per cent stake in Tata Sons, giving them significant power over key decisions and appointments.

All eyes are now on the Tata Trust meeting, which has been scheduled for October 10.