An unprecedented battle for control and future direction has erupted at the 158-year-old Tata Group, one of the most prestigious in the Indian corporate world. The controversy that erupted during an important board meeting of Tata Sons has exposed the deep rift between the boards of Tata Sons and Tata Trust. The incident, which took place within just 24 hours, has turned into a major public controversy in the country's biggest business house, which is now on the verge of a court battle and government intervention. The dramatic 24-hour event began with the Tata Sons board meeting. In the first half hour of the meeting, there was a peaceful discussion on general business topics like quarterly operations and accounting. However, as soon as the issue of the Reserve Bank of India's listing instructions came up, the atmosphere suddenly became tense. Tata Sons chairman N Chandrasekaran, who has been leading the company for the past decade and who had hinted at listing the company on the stock market, decided to resign earlier this year after failing to reach a consensus. But in a sudden twist at the board meeting, board members decided by a 4-1 majority to extend Chandrasekaran's tenure by another five years and move towards an IPO. Tata Trust chief Noel Tata strongly opposed the IPO and presented his rational side in complete silence without raising a voice. He argued that the IPO of the company is not mandatory and alternatives should be explored. Noel Tata proposed that Tata Sons should approach the RBI and take all legal avenues to remain unlisted. If this effort fails, additional time of at least three years should be sought for financial and corporate preparations. To avoid an IPO, he offered to buy 18.4 percent stake in Shapoorji Pallonji Group through Tata Sons. Under this scheme, at least 250 billion rupees i.e. 2.6 billion dollars in cash can be given to SP Group in two installments in 18 months. The buyback was suggested to be financed through internal liquidity, sale of shares in listed Tata companies and external investment in new assets. In this meeting, when Chairman of Nomination and Remuneration Committee Manvani proposed to extend Chandrasekaran's tenure by five years, Chandrasekaran walked out of the room keeping himself away from the discussion. Noel Tata opposed the proposal saying that Chandrasekaran's resignation announcement on August 12 has been accepted and the page has now been turned. Noel Tata invoked Article 121 of the Tata Sons Rules, which requires the approval of a majority of the directors nominated by the Tata Trust for the appointment of the chairman. However, there was a difference of opinion between the two nominated directors of the trust - Noel Tata opposed the extension while Srinivasan supported it, leading to a 1-1 tie for the trust vote. However, the board did not extend Chandrasekaran's tenure by a 4-1 vote, ignoring Noyal Tata's protest.
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