Tata Chemicals, Tata Investment Shares Fall As Tata Sons Dispute Moves Towards Legal Action

Tata Group stocks came under pressure on Monday as the dispute between Tata Trusts and Tata Sons over N Chandrasekaran's reappointment as chairman showed signs of moving towards legal proceedings.

Tata Chemicals shares fell more than 3% to ₹670 on the National Stock Exchange (NSE) during early trade, while Tata Investment Corporation declined nearly 2%. Other Tata Group stocks, including Tata Steel, Tata Motors Passenger Vehicles and TCS, also traded lower before some recovered part of their losses.

As of 11:03 AM, Tata Chemicals’ share price stood at ₹693, down 0.04% from the previous day’s closing. Tata Investment Corp.'s share price stood at ₹687.90, down 2.06%.

The latest fall follows a volatile few sessions for Tata stocks after Tata Sons approved a fresh five-year term for Chandrasekaran and moved ahead with preparations for a potential listing of the group holding company. Tata Trusts subsequently challenged the validity of the reappointment.

Tata Trusts Challenges Chandrasekaran Reappointment

Tata Trusts chairman Noel Tata opposed the 17 September board decision to reappoint Chandrasekaran for another five years.

The Trusts have argued that the required support from their nominee directors was not secured at the meeting. Tata Trusts has two nominee directors on the Tata Sons board, and Noel Tata voted against the reappointment.

Tata Trusts said the resolution was therefore not validly passed and has no legal effect. It has also argued that the chairman's casting vote cannot be used to override the requirement under Tata Sons' Articles of Association.

Tata Sons, meanwhile, approved the reappointment by a majority vote, with four directors voting in favour and Noel Tata voting against it. The company has maintained that Chandrasekaran will serve another five-year term.

Legal Action Could Follow

The dispute could now move beyond the Tata Sons boardroom.

Senior advocate Abhishek Manu Singhvi has been appointed to represent Tata Trusts in the matter. He said on Sunday that he was entering the issue with regret that the differences could not be resolved amicably.

The Trusts' challenge is not limited to Chandrasekaran's appointment. The dispute also comes against the backdrop of Tata Sons' proposed listing.

Tata Trusts, which controls around 66% of Tata Sons, has opposed the holding company's listing. Tata Sons, on the other hand, has moved ahead with preparations after the Reserve Bank of India rejected its request to surrender its registration as a core investment company.

Tata Stocks Remain In Focus

The developments have led to sharp moves in Tata Group companies that hold stakes in Tata Sons.

Tata Chemicals, which holds around 2.5% in Tata Sons, fell more than 11% on Friday. Tata Investment Corporation, another company with exposure to Tata Sons, declined over 2% that day. Tata Motors Passenger Vehicles and Tata Steel also ended lower.

The same stocks had rallied earlier after Tata Sons backed Chandrasekaran's reappointment and advanced preparations for a possible listing.

For investors in Tata Group companies, the focus is now on how the dispute over Chandrasekaran's tenure unfolds and how the future of Tata Sons develops, particularly if the matter proceeds to court.

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