Tata Trusts chairman Noel Tata and his son Neville have filed a string of caveats with the Maharashtra charity commissioner, seeking to ensure they are heard before the regulator acts on complaints by vice-chairman Venu Srinivasan over the management of the charitable trusts, according to two executives in the know of the development.
Noel has filed 21 caveats, while Neville—a trustee of five shareholding Trusts, who has also been named in Srinivasan’s complaint—has filed 15, the executives said. The move seeks to protect the Trusts from any adverse order at a time when their ability to exercise their 65.9% voting power in Tata Sons could prove crucial.
Significance of Noel Tata’s move
Tata Trusts chairman Noel Tata has filed 21 caveats with the Maharashtra charity commissioner, seeking to ensure he is heard before the regulator acts on complaints by vice-chairman Venu Srinivasan over the management of the charitable trusts.
The 21 separate caveats relate to the seven shareholding Trusts of the Tata Trusts after Srinivasan filed a complaint on 29 September about how Sir Dorabji Tata Trusts (SDTT), the largest shareholder of Tata Sons, is being managed. Significantly, Neville has also filed 15 separate caveats as he is a trustee of five shareholding Trusts. Neville filed these preemptive caveats after Srinivasan named him, along with his father, in the complaint to the charity commissioner.
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Tata Trusts is an umbrella entity comprising 14 philanthropic entities, seven of which own shares in Tata Sons. SDTT and Sir Ratan Tata Trust (SRTT) are the largest, owning 27.98% and 23.56%, respectively. JRD Tata Trust (4.01%), Tata Social Welfare Trust (3.73%), RD Tata Trust (2.19%), Tata Education and Development Trust (3.73%), and Sarvajanik Seva Trust (0.1%) are the five remaining trusts that own shares in Tata Sons.
The decision to go to the charity commissioner is significant , especially since Trusts need to use their 65.9% voting power at Tata Sons’ next annual general meeting (AGM). Tata Sons chairman N. Chandrasekaran’s reappointment as a director is set to come before shareholders at the AGM.
Differences over Tata Sons’ listing
At a 17 September board meeting that had also exposed differences over a potential Tata Sons listing, Chandrasekaran was reappointed chairman for another five years despite Noel Tata’s opposition. Tata Sons now has until 18 November to hold its shareholder meeting after the meet slated for 18 August could not proceed on lack of quorum, prompting the corporate affairs ministry to give it three months.
Another reason, according to a second executive, is that Tata Trusts does not want its largest shareholder to be “paralysed”, like SRTT was. A 15 May order from the charity commissioner barred the second principal trust, SRTT, from holding meetings or making decisions. The move came after Srinivasan claimed that the three permanent SRTT trustees exceeded the state rule cap on the number of permanent trustees at one-fourth of the total count. SRTT currently has five trustees.
Srinivasan’s complaint, the second after he raised concerns about SRTT in April, is increasing tensions between Tata Trusts and Tata Sons, with some lawyers calling it an “all-out war” for control of the Tata Group. “Well, he (Noel) has no choice and has to defend himself. So, he has filed these caveats,” said senior Supreme Court lawyer H.P. Ranina, who called the events at the House of Tatas “extremely unfortunate” and “sad”.
“I think it is a coup by them (Srinivasan and Chandrasekaran) and Tata Trusts face an existential problem. Either way, this situation looks like it will end up as a legal fight. One side is fighting for survival while the other, in its ambition, wants to take control,” said Ranina.
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In a complaint filed with the charity commissioner, Srinivasan, TVS Motor chairman emeritus, asked the public charitable trusts regulator to keep a status quo on the current board member count for SDTT.
“Direct Noel Tata, Chair of Tata Trusts, to recuse himself from participating in, deliberating upon or voting on matters concerning the appointment, nomination or authorisation of representatives of SDTT at Tata Sons meetings,” Srinivasan wrote, as per a report by The Economic Times.
An email sent to Srinivasan and Tata Trusts seeking comment on the matter went unanswered.