What next for Tata Trusts after removal of Mehli Mistry as trustee?

October 24, 2016 would have been like any other normal day, till that evening when Tata Sons issued a two-paragraph statement that its board had replaced Cyrus Mistry as chairman. That sent shockwaves in the business world. A long legal battle followed, which ultimately was settled in the Tatas' favour by the Supreme Court in 2021.

October 2025 could possibly be a kick-start of another Tata versus Mistry battle. On Tuesday, Mehli Mistry, a trustee and cousin of the late Cyrus Mistry, was voted off the Tata Trusts board.

Divisions between the various trustees of the Tata Trusts had become very much evident in recent months, more so after a section of the trustees had blocked the reappointment of Vijay Singh (a trustee and former defence secretary) as a nominee director on the Tata Sons board.

The differences were not just on board appointments, but also reportedly around the sharing of information by the nominee directors with trustees.

Incidentally,  Mehli Mistry had been a close confidant of late Ratan Tata and even had sided with him when the entire battle between Tata and Cyrus Mistry had played out.

After Ratan Tata passed away last year, his half-brother Noel Tata was appointed as the chairman of the Tata Trusts. In recent months, clear divisions emerged with one group of trustees behind Noel Tata and the other backing Mistry.

What's next for Tata?

What's next for Tata Trusts and, in turn, Tata Sons? Mistry could very well go to court. Noted lawyer HP Ranina has pointed to an October 2024 resolution that said all trustees would be appointed for life.

Tuesday's resolution was counter to that resolution that had been passed unanimously, and therefore, Mistry might go to court if he wanted to do so to get justice, he pointed out on a TV channel.

So far, there has been no indication from Mistry whether he will take legal recourse in the matter.  Should that happen, it is sure to be a long, drawn-out affair, with both sides putting forth arguments and counterarguments.

The Tata Trusts, too, have remained tight-lipped on the matter and haven't issued any statement on Mistry being voted out and the differences between the trustees.

Why this matter is important is because the Tata Trusts hold a 66 per cent stake in Tata Sons, the holding company of the salt to semiconductor conglomerate, and thus enjoy a lot of power over the group.

Corporate governance experts had said over the past few weeks that the workings of Tata Sons or the many listed and unlisted companies of the group were unlikely to be affected as long as the matter remained within the trustees.

However, with a clear divide in the trustees, should the differences remain unresolved or if a court case is initiated by Mistry, then it could lead to a stalemate in decision-making at the trusts and perhaps even the Tata Sons, as the trustees may not be able to reach a consensus on key matters, they say.

The differences had even reached New Delhi, with key Tata executives meeting Home Minister Amit Shah and Finance Minister Nirmala Sitharaman recently. The ministers reportedly told them to ensure the differences were resolved amicably.  With interest from fast-moving consumer goods to automobiles, steel, software and now even semiconductors, the Tata Group is very important to India's economic prospects.

The divisions within the Tata Trusts come at a time when there has been uncertainty about the potential listing of Tata Sons.

Tatas are understood to be not keen on a listing as it will then open the doors for external investors to enter Tata Sons and, in turn, reduce the control of Tata Trusts.

Tata Sons was one of several entities classified as upper-tier non-banking finance companies, and these entities were mandated to list. That deadline has passed, and Tata Sons has, over the past year, taken various steps and made representations to the RBI in a bid to remain private. The Reserve Bank is yet to take any firm stand on Tata Sons' listing.

The Shapporji Pallonji Group, though, has made it clear that it wants Tata Sons to list. The SP Group has over 18.37 per cent stake in Tata Sons. The SP Group, which has interests from renewable energy to real estate and construction, and has an estimated debt of Rs 60,000 crore, is in need of funds. Should Tata Sons list, it could sell off some or, if not all, its stake,  giving it much-needed money.

The removal of Mehli Mistry could mean Noel Tata will be able to more clearly drive decisions at Tata Trusts, which carries out many philanthropic activities. But getting all the trustees on the same page for the greater good of the trusts and the Tata Group itself will be a key issue ahead.

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