Senior Advocate Darius Khambata has decided not to seek reappointment as a trustee of Tata Trusts, expressing concern that the proposed public listing of Tata Sons and the conduct of its board could threaten the governance model established by the Tata Group's founders.
The Harvard alumnus’ term as a trustee of the Sir Dorabji Tata Trust ends on November 9, while his term at the Sir Ratan Tata Trust ends later this month. Khambata wrote to chairman Noel Tata and the trusts' chief executive, Siddharth Sharma, on Monday, expressing his decision not to seek reappointment.
In the letter, seen by TNIE, he said he had accepted the two positions at the invitation of the late Ratan Tata in November 2018. Khambata said the Tata model represented a unique relationship between business and philanthropy that could not be dismantled without undermining the institution itself.
"The Tata model is a living manifestation of Mahatma Gandhiji's trusteeship doctrine: India's most iconic industrial and philanthropic combine, a national treasure in which neither limb is meaningful without the other," he said.
He criticised the developments of September 17, when the Tata Sons board voted 4-1, including the chairman's casting vote, to retain N Chandrasekaran as chairman and proceed with the listing.
"The sad events of September 17, a day that will live in infamy, have sullied Tata Sons' reputation and have imperilled the image of corporate India. No spin doctoring can mask what happened," he wrote.
Expressing disappointment over Tata Sons' lack of meaningful engagement with the Reserve Bank of India (RBI) on its application to surrender its registration as a core investment company (CIC), Khambata said discussions had failed to establish how the company could adopt the transparency and reporting standards of a listed entity while remaining outside the CIC framework.
“Unfortunately, I don’t believe that the engagement with the RBI has been meaningful, much less successful, in showing how Tata Sons could fully adopt a listed company's transparency and reporting mechanisms even if it’s deregistered as a CIC or could restructure to avoid listing,” he wrote.
Arguing that “the Tata model succeeded because it was not driven by short-term returns or commercial considerations alone”, he said a privately held Tata Sons had been able to take long-term decisions, including funding losses at subsidiaries and investing in businesses such as Air India and semiconductors. A listed Tata Sons, judged on the basis of shorter-term returns, would probably not be able to make such allocations, he added.
"Talk of the greater ability to raise capital and higher growth misses the simple truth: the model succeeded precisely because it was not driven by avarice or short-term gain," he said.
He also said he remained supportive of proposals that would provide liquidity to the Shapoorji Pallonji Group.