Mumbai, Sep 17 (PTI) Tata Sons plunged into its most serious boardroom crisis since the ouster of Cyrus Mistry after directors voted to reappoint N Chandrasekaran as executive chairman for a further five-year term, prompting Tata Trusts to declare the resolution void and reopen a broader battle over the conglomerate's future.

The nearly three-hour meeting produced rival claims over the validity of the vote, a legal opinion from former Chief Justice of India DY Chandrachud and a fresh confrontation over whether Tata Sons should remain private or pursue a stock-market listing.

Chandrasekaran, 63, had told the board last month that he would not seek another term when his current tenure ends on February 20, 2027. His decision followed repeated failure by the board to reach unanimity on his renewal.

The board reversed course after the Reserve Bank of India rejected Tata Sons' application to surrender its registration as a core investment company, reviving the prospect of a listing and increasing pressure for leadership continuity.

Tata Sons, in a statement, said Chandrasekaran had "acceded to the Board's request to reconsider his decision" and that the board "thereafter resolved by a majority vote to re-appoint him as Executive Chairman for a further term of five years".

Four directors supported the resolution, while Noel Tata, chairman of Tata Trusts, voted against it.

Tata Trusts, which together with affiliated trusts controls about 66 per cent of Tata Sons, rejected the decision. It described the resolution as a "legal nullity", arguing that the company's Articles of Association require both Trust-nominated directors to support a chairmanship resolution.

Since Noel Tata voted against the appointment, the Trusts said, the resolution "was rendered legally void and without any basis".

The Trusts added that Noel Tata had submitted a legal opinion from former Chief Justice DY Chandrachud supporting its position, which "was not taken note of by the board".

In a statement to the board, Noel Tata argued that the vote sought to overturn Chandrasekaran's own decision to step down, the Trusts' acceptance of that decision and the succession process already set in motion.

"The page has turned," he said, warning that any decision taken amid uncertainty over his own status as a director could face a serious legal challenge.

The leadership dispute is now intertwined with the unresolved question of Tata Sons' regulatory status.

In a separate statement, Tata Trusts said the RBI's September 11 decision was discussed at Thursday's meeting and that all available options - not only a listing - should be examined urgently.

The Trusts said a separate board meeting would be held after that review.

It reiterated that Tata Sons' board had unanimously resolved in March 2024 to remain unlisted, while the Sir Dorabji Tata Trust and Sir Ratan Tata Trust adopted similar positions in July 2025.

Noel Tata said Tata Sons' ownership structure, with charitable trusts as its majority shareholders, allowed the group to support hospitals, universities and research through dividend income.

"A listing will destroy its character and strike at the heart of this principle," he said.

The Reserve Bank classified Tata Sons as an "upper layer" non-banking financial company in 2022, triggering a three-year listing deadline that expired in September 2025. Tata Sons had sought to avoid that requirement after repaying more than Rs 21,000 crore in debt, but the RBI rejected its deregistration request this month.

Thursday's vote appears to have interrupted a succession process already being considered by the Sir Dorabji Tata Trust.

Potential candidates reportedly included Tata Steel chief executive TV Narendran, Tata Sons finance chief Saurabh Agrawal and National Stock Exchange chief executive Ashish Chauhan.

The current standoff also exposes divisions within the Trust structure. The Sir Dorabji Tata Trust sought to bind nominee director Venu Srinivasan to vote against a listing, but Srinivasan declined, citing his independent duties as a director.

The clash revives memories of Tata Sons' last great boardroom war - the 2016 ouster of Cyrus Mistry, orchestrated by Ratan Tata and the Trusts, which triggered years of litigation ending only when the Supreme Court upheld the Trusts' authority in 2021.

That fight also pitted Trust control against a sitting chairman and minority shareholders, chief among them the Shapoorji Pallonji Group - the Mistry family vehicle holding roughly 18 per cent of Tata Sons - which has separately pushed for a listing to unlock value from its stake.

With debt-laden SP Group pushing for listing of Tata Sons, Noel Tata placed before the company's board a proposal from the group to sell enough shares to generate gross proceeds of at least Rs 25,000 crore.

The proposal envisages completing the buyout in two tranches over 18 months. It would also require Tata Sons to initiate a selective capital-reduction process before the National Company Law Tribunal, or NCLT.

No final agreement has been announced.

Noel Tata asked the board to consider ways of raising the funds, including Tata Sons' internal cash flows, the sale of listed investments, bringing investors into newer businesses and potential offers for sale linked to the listing of some operating companies.

He also sought authorisation for Tata Sons' operating team and Tata Trusts to continue discussions with the SP Group and its bankers, and to report back to the board.

Chandrasekaran has led Tata Sons since 2017, when he succeeded Ratan Tata as interim chairman, following the board's ouster of Cyrus Mistry, and was reappointed for a second term in 2022.

His planned departure, announced to the board in August, followed months of friction with Noel Tata over the listing question and capital allocation at newer group ventures, including Air India, Tata Digital and BigBasket, which have posted losses.

The board first deferred a decision on his third term in February, after Noel Tata raised those concerns during a nearly three-hour meeting at Bombay House.

Unlike 2016, the boardroom battle at Tatas this time is over a reappointment rather than a removal, and the divide runs through the Trusts themselves.

Tata Sons treats Chandrasekaran as reappointed. Tata Trusts treats the resolution as void. The appointment is expected to require ratification at the company's annual general meeting, while a second board meeting on the listing question could bring the dispute to a wider confrontation.

Neither side has indicated that legal proceedings have yet been filed. PTI IAS ANZ SAP BAL