Tata Sons Share Transfer at Centre of Irregularities Allegations

Tata Trusts Face Legal Challenge Over 1989 Share Transfer

A legal notice has been served on the trustees of the Sir Ratan Tata Trust (SRTT), including Noel Tata and Tata Sons chairperson N. Chandrasekaran, challenging the legality of a 1989 transfer of shares of Tata Sons from the Navajbai Ratan Tata Trust (NR Tata Trust) to the late Naval H. Tata. According to a copy of the notice reviewed by Moneycontrol, the transfer of 833 equity shares was made without fair consideration, trustee approval, or proper transfer documentation.

The notice, issued by advocate Katyayani Agrawal on behalf of Sunil Tulsiram Patilkhede, alleged that the shares were transferred to Naval H. Tata in his personal capacity without demonstrating any benefit to the trust or its beneficiaries. The NR Tata Trust was established in December 1974 by Ratan Tata as a public charitable trust focused on education, public utility, and relief activities. In 1979, the trust received 208 bonus shares, taking its total holding to 833 equity shares.

On January 11, 1989, Naval H. Tata resigned as trustee of the NR Tata Trust, and a week later, on January 18, 1989, the 833 shares were transferred to him personally. The Tata Sons share register recorded the consideration for the transfer as "Nil". The notice claimed that there was no trustee resolution authorising the transfer and no transfer deed or statutory Form 7B executed under Section 108 of the Companies Act, 1956.

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The transfer has been characterised as a related-party transaction because Ratan Tata was the son of Naval H. Tata. Naval Tata is the father of the late Ratan Tata and of Jimmy and Noel Tata. The legal notice contended that the transfer violated the Companies Act, Tata Sons' Articles of Association, and the charitable objectives of the NR Tata Trust, and therefore constituted a "void transaction and a nullity".

The notice has demanded that the recipients "make good the loss" allegedly caused to the trust within 15 days, failing which civil and criminal proceedings would be initiated. The recipients of the notice include multiple trustees and office-bearers associated with the Sir Ratan Tata Trust, including Noel Tata, Venu Srinivasan, Vijay Singh, Jimmy Tata, Jehangir Jehangir, Darius Khambata, Siddharth Sharma, Neville Tata, and Bhaskar Bhat.

Comparison of Share Transfers

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The May 8 meetings of the Sir Ratan Tata Trust and Sir Dorabji Tata Trust, which hold a controlling 52 percent stake in Tata Sons, have been rescheduled for May 16. Patilkhede is the same person who approached the Bombay High Court to stop the meetings. However, the Bombay High Court declined to issue an injunction staying the meetings, and the two trusts had filed caveats in the High Court anticipating legal challenges.

Emails sent to Tata Trusts, trustees of Sir Ratan Tata Trust, and N Chandrasekaran did not elicit a response till the time of publication.