Tata Trust member seeks probe into 1989 share transfer deal

Tata Trusts Vice Chairman Vijay Singh has written to the Maharashtra Charity Commissioner seeking an independent investigation into a share transfer deal where 833 shares of Tata Sons were transferred from the Navajbai Ratan Tata Trust to the late industrialist Naval Tata on January 18, 1989.

Present Tata Trusts Chairman Noel Tata happens to be one of the heirs of the late industrialist Naval Tata, as well as a Director on the board of Tata Sons.

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Tata Trusts control approximately 66% of the equity share capital in Tata Sons, which is the principal holding company of the Tata Group. The two largest and most prominent trusts in this group are the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust. Together with other smaller allied Tata family charitable trusts like the Tata Education and Development Trust (TEDT), Tata Trusts control approximately 66% ownership of Tata Sons.

Significantly, it may be recalled that a former Tata Sons trustee Mehli Mistry had voted against the reappointment of trustees Venu Srinivasan and Vijay Singh to the Tata Education and Development Trust (TEDT), even before their tenures ended on May 10.

Mehli Mistry had also opposed the listing of Tata Sons, while Vijay Singh had pushed for Tata Sons to be listed on the stock exchanges through an initial public offering (IPO). Similarly, Tata Trusts Chairman Noel Tata, who is one of the heirs of the late industrialist Naval Tata, has also opposed the listing of Tata Sons on the stock exchanges.

Vijay Singh’s latest move came after he received a legal notice alleging that the 1989 transaction amounted to an unlawful diversion of charitable assets into private hands and he sought an investigation into the 1989 share transfer, urging the Maharashtra Charity Commissioner to safeguard the interests of public charitable trusts.

Earlier, a petitioner Suresh Tulsiram Patilkhede had approached the Maharashtra Charity Commissioner regarding alleged irregularities in the Sir Ratan Tata Trust, prompting official action. On June 4, Patilhhede filed a complaint alleging that the share transfer took place on January 18, 1989, just a week after Naval Tata resigned as a trustee of the Navajbai Ratan Tata Trust. Patilkhede also alleged that the 1989 share transfer transaction lacked any legal necessity, was unsupported by any valid instrument of share transfer and was carried out without consideration, making it unlawful under principles which govern public trusts.

According to the letter written by Tata Trusts Vice Chairman Vijay Singh to the Maharashtra Charity Commissioner, the legal notice has raised several questions, including whether there was any legal necessity for the transfer, whether any proper documentation of the share transfer existed, and whether the Navajbai Ratan Tata Trust received adequate consideration based on an independent valuation of the shares it transferred to the late industrialist Naval Tata in 1989.

Vijay Singh’s letter highlighted a potential conflict of interest involving present Tata Trusts Chairman Noel Tata, since Tata Trust Chairman Noel Tata is one of the heirs of the late Naval Tata who was the beneficiary of the 1989 share transfer. Singh stated in his letter that Tata Trust Chairman Noel Tata should not participate in any deliberations regarding the 1989 share transfer, since that would be a conflict of interest.

“As a trustee of the Sir Ratan Tata Trust as well as the Navajbai Ratan Tata Trust, I feel it is my duty to request an independent enquiry into both the legality and propriety of the transfer of these shares, so that the factual position is conclusively established,” Vijay Singh wrote to the Maharashtra Charity Commissioner.

Singh stated that while the Tata Trusts had publicly rejected allegations regarding the 1989 share transaction, their response did not provide detailed explanations regarding the circumstances of the share transfer. Singh also referred to Tatat Trusts relying on the approval of eminent jurist Nani Palkhivala, saying it remained unclear whether a formal legal opinion existed on record or whether Palkhivala’s consent had been provided in his capacity as a trustee.

Singh’s letter to the Maharashtra Charity Commissioner stated that the allegations involve a transaction which ultimately benefited members of Naval Tata’s family, some of whom continue to hold influential positions within the Tata Trusts, which own an approximately 66 percent in Tata Sons, which is the main Tata Group holding company.

Singh stated in his letter that he has not cast aspersions on any individual but maintained that any denial issued by Tata Trusts under such circumstances could create a perception of conflict of interest.

“Since Noel Tata, who is a direct beneficiary of the share transfer, is presently Chairman of Tata Trusts, it could be inferred that a denial authorised by him does create a conflict of interest situation, without casting any aspersions on anyone,” Vijay Singh stated in his letter to the Maharashtra Charity Commissioner.