The inside story of how the schism at Tata Trusts came about

Tata Trusts is run by seven trustees, who have made decisions in the past by consensus—until fissures emerged recently after nearly 11 months of tensions.

CNBC-TV18 reported on Tuesday that Tata Trusts chairman Noel Tata and N Chandrasekaran, chairman of Tata Sons, “are likely to meet senior government officials later (in the day) to discuss the governance crisis." An unnamed source told the network that “the government cannot be a silent spectator to the coup attempt by four trustees of Tata Trusts".

This came after The Economic Times wrote on Monday about the government’s concern at the differences at the controlling level of the country’s #1 valued conglomerate.

To understand the schism at Tata Trusts and its dynamics read our deep dive story complete with the people involved and the twists and turns below. It was first published on 24 September.

After eleven months of simmering tensions, differences flared at the Tata Trusts boardroom this month, forcing the exit of a Tata Trusts nominee from the Tata Sons board.

Vijay Singh was removed as a director of Tata Sons at a tense Tata Trusts board meeting on 11 September, said two executives directly aware of the matter, citing the minutes of the meeting. Four out of seven trustees opposed his continuation at the Tata Group investment vehicle, which sits at the head of over 100 companies, forming India's largest conglomerate.

The voting and ouster of Singh marks a unique development at Tata Trusts, India's largest group of philanthropic entities where decisions are typically made by consensus. Singh, a former defence secretary, continues as a trustee at Tata Trusts.

The four trustees expressed frustration that the Trusts' three nominees on the Tata Sons board—Noel Tata, Vijay Singh and Venu Srinivasan—had failed to apprise them about several important developments involving Tata Sons, in which the philanthropic entities own a 65.9% stake.

Fissures

The three-hour Tata Trusts meeting ended with no rapprochement in sight. The seven trustees are now split into two opposing camps—Noel Tata, chair of the Tata Trusts, is in one group, backed by Singh, and TVS Motor Corp. chair emeritus Venu Srinivasan. In the other camp are former Citibank India CEO Pramit Jhaveri, Mumbai-based lawyer Darius Khambata, businessman Mehli Mistry, and Pune-based philanthropist and businessman Jehangir HC Jehangir.

Worryingly, Srinivasan’s continuation as the Tata Trusts nominee on the Tata Sons board will be decided next month, the executives cited above said on the condition of anonymity.

The differences at Tata Trusts surface at a critical time for Tata Sons. Under the chairmanship of Natarajan Chandrasekaran, Tata Sons is negotiating with the Reserve Bank of India to stay private. It is also preparing to negotiate an exit from Tata Sons for the Shapoorji Pallonji Group, its largest individual shareholder with an 18.38% stake.

The dissent also comes at a time when the Tata Sons board, currently comprising just six members, has three positions to fill and requires the support of the trustees to do so. A fully staffed board is essential to address the challenges of growing its long-term businesses, which include privately held entities in the airline sector (Air India), e-commerce (Tata Digital), and chip manufacturing (Tata Electronics).

The 11 September tumult

Tata, Srinivasan, Jhaveri, Khambata, Mistry and Jehangir attended the board meeting, while Singh decided to skip it. While Jehangir represents only the Sir Ratan Tata Trust, the others also represent the Sir Dorabji Tata Trust. Sir Ratan Tata Trust and Sir Dorabji Tata Trust own 27.98% and 23.56% of Tata Sons, respectively. The smaller Trusts hold the remaining 14.38%.

The dispute, which began after Ratan Tata's death last October, centres on what the four trustees of the Tata Trusts call a lack of transparency.

The vote to remove Singh from Tata Sons followed a discussion on the sixth and last resolution tabled at the meeting: “To discuss matters related to Trusts’ representation on the Tata Sons’ Board."

Earlier, Tata Trusts did not have a mandatory retirement age for its nominees on the Tata Sons board. That changed last year—at a board meeting of the Tata Trusts on 17 October last year, the trustees agreed to review the performance of representatives who are over 75 years old. Therefore, Singh’s performance, as a 77-year-old nominee, was slated for discussion.

Four trustees, including Khambata, Jhaveri, Mistry and Jehangir, believe there are now two types of Tata Trustees. Some are privy to the decisions made by Tata Sons; others are not.

Divisions have existed since October 2024, according to Jhaveri, who said that information from Tata Sons has been redacted and details about things like Article 121A have not been shared.

Article 121A of the Articles of Association of Tata Sons stipulates that the operating entity (Tata Sons) must obtain prior approval from all the trustees of the Tata Trusts for all major acquisitions, investments, and divestments made by the group companies with a value exceeding ₹100 crore.

Two classes

There is a feeling that two classes of trustees exist, said Khambata—nominee directors who are privy to the information, and the remaining trustees who don’t.

Nominee directors need to introspect why there is a sense of alienation (among the remaining trustees), said Jhaveri.

Mistry questioned why the three nominee directors consented to the reappointment of Tata Sons' independent director, Anita Marangoly George, for a three-year term in July, without consulting the four other trustees.

Noel, 68, and Srinivasan, 72, listened quietly.

When Khambata said Singh should have attended the meeting, Mistry responded that Singh had told him that did not want to be present for his review.

Noel and Srinivasan tried to intervene.

Singh's long association with Ratan Tata matters, Noel said, arguing removing him would be unprecedented.

Srinivasan said Singh was a respected public servant who had Ratan Tata’s confidence, adding he had been appointed vice-chairman of the Tata Trusts. He suggested the trustees spend more time on the matter. Removing Singh would set a bad precedent and suggest a division (inside Tata Trust), he added.

Khambata rebutted that while all trustees had great respect for Singh, the issue is about having a stronger voice on the Tata Sons board, especially given important topics like listing Tata Sons and talks with the Mistry family.

In the last week of July, Tata Trusts directed Tata Sons chair Chandrasekaran to explore all possible options to ensure that the holding company of the Tata Group remains private and also continue discussions with the Shapoorji Pallonji Group, to provide an exit to the largest minority shareholder.

Following this, the trustees voted to remove Singh from the Tata Sons board.

Shocker

Khambata then asked if the trustees would support Mehli Mistry representing Tata Trusts on the Tata Sons board.

He said most trustees believed that a representative from Tata Trusts was the need of the hour, especially as Tata Sons faces an existential period with matters like the RBI insisting on the operating entity (Tata Sons) going public before 30 September, and Tata Sons looking to initiate discussions to facilitate an exit for the SP Group.

Then came the shocker, which underscored the fissures among the Tata Trust’s Trustees.

“No," Noel replied, without elaboration.

Mistry was surprised by Noel’s protest, especially since just 11 months earlier, he had proposed Noel as chair of Tata Trusts on 11 October.

Eleven months since, a deep rift now separates the two, who are also related: Mehli Mistry is the son of Minal Mistry, and Noel’s wife, Aloo Mistry, is Minal’s niece, making Mehli and Aloo first cousins.

To be sure, Mistry’s candidature was not put to a vote. Neither was Tata Trusts looking to nominate Mistry immediately. This is because Tata Trusts can nominate up to one-third of the Tata Sons board. Currently, the Tata Sons board comprises six directors, following the retirement of independent director Ajay Piramal at 70 in August and Ralf Speth's term ended on 9 September. Besides Chandrasekaran, Noel and Srinivasan, the three other members of the Tata Sons board are group CFO Saurabh Agrawal and independent directors Harish Manwani and Anita Marangoly George.

Detailed questions sent to all seven trustees seeking comment went unanswered.