Tata Sons Case: Tata Trusts’ Protocol on Nominee Directors ‘Contrary to Companies Act 2013’ - Former SC Judge RF Nariman | Republic Business Exclusive

While the Bombay House battle continues to be one of the biggest corporate stories, a new twist has emerged as Republic Business exclusively accessed an April 2025 opinion by former Supreme Court judge Justice Rohinton Fali Nariman in which he states that the Tata Trusts’ protocols guiding the actions of nominee directors on Tata Sons board is ‘contrary to Companies Act 2013.’

In the four page opinion, dated April 13, 2025, Justice Nariman also cites the Supreme Court’s 2021 judgement on TCS-Cyrus Investments and says that the protocol is also in contradiction with the said judgement.

The opinion emerges as important amid the current differences between Tata Trusts and Tata Sons over the holding company’s governance, extension of N Chandrasekaran’s term for five years, and the future of Tata Sons. Tata Trusts, which holds 66% stake in Tata Sons, has challenged the validity of the board decision to reappoint Chandrasekaran.

The Proposed Protocol

The opinion refers to the resolution dated October 17, 2024 by which the trustees of SDTT and SRTT had resolved that directors nominated by the Trusts “should act under the guidance of the Executive Committee and Trustees.”

According to the protocol, the nominee directors, in any matters relating to Articles 118, 121A and 121C of the Articles of Association of Tata Sons are required to vote on any resolution by Tata Son’s Board of Directors, they should consult the Trustees. In case of nominee directors not acting in accordance with the guidance of the Trustees, the Trustees shall immediately review and consider whether the nomination of the directors be withdrawn.

Justice RF Nariman’s Opinion

Justice Nariman examined the protocol on the backdrop of Section 166 of the Companies Act. He says in the document, “section 166 sets out the fiduciary duties of the directors of the company to the company itself.”

While also referring to the Supreme Court’s 2021 Tata Consultancy Services-Cyrus Investments  judgement, he said, “a person nominated by a Charitable Trust, to be a director in a company in which the Trust holds shares, also holds a fiduciary relationship with the Trust and fiduciary duty towards the nameless, faceless beneficiaries of those trusts.”

He further stated that the nominee director is not only allowed to voice the stand of the Trustees but also to apply his own mind to the issue at hand.

In his final conclusion, Justice Nariman said that this “protocol would be contrary to the law, i.e. the Companies Act 2013 and the aforesaid Supreme Court judgement dated 26 March 2021.”

Amid the Tata tussle that has dominated headlines, this April 2025 opinion takes on fresh significance because it again brings the key question into the spotlight: To what extent can Tata Trusts' nominated directors be guided by the Trusts while also exercising their statutory duties to the Tata Sons board? 

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