Tata Trusts, which controls Tata Sons, the holding company of the Tata group, with a 66.6% stake, is preparing to mount two legal challenges — one against the Reserve Bank of India’s September 11 directive asking Tata Sons to go public immediately, and another seeking a direction to the charity commissioner to lift the stay on the Sir Ratan Tata Trust (SRTT), the second-largest trust with a 23.57% stake in Tata Sons, from holding its board meetings.
The RBI action came after it sat on Tata Sons’ application to surrender its NBFC-CIC (core investment company) licence for 30 months. The application was filed in March 2024. The directive has put Tata Sons chairman Noel Tata in a difficult position. ,
Unless unless the stay on SRTT’s board meetings is lifted, the board’s cannot take key decisions, including on the succession of Tata Sons chairman N Chandrasekaran and the proposed IPO. Under Tata Sons’ bylaws, decisions of the board have to be unanimous. There is also urgency to mount a legal challenge as the Tata Sons board is scheduled to meet on September 17, with three critical issues converging at the same time — the IPO, uncertainty over who will succeed Chandra and the continuing governance impasse at SRTT.
“Given the urgency of the situation, both the trusts and Tata Sons are of the view that only a legal challenge can give them time and freedom to run their affairs. They are likely to move the Bombay High Court later this week with a joint writ petition to set aside the RBI directive on listing and another petition by the trusts to direct the charity commissioner to vacate the stay, as its amended rules are being applied retrospectively,” two people aware of the thinking at the trusts told TNIE on Monday.
The stay on SRTT’s board meetings was imposed by the charity commissioner in early May after an advocate petitioned that, under the September 2025 amended rules governing public charitable trusts, only a fourth of the trustees can be lifetime members. In the case of SRTT, half of its six trustees are lifetime members. Noel Tata, Jimmy Tata and Jehangir HC Jehangir are the lifetime trustees of SRTT and were appointed years before the rules were amended.
The sources said the trusts may argue that Tata Sons has complied with all previous RBI norms, including having no debt on its books since March 2024 and stopping the issuance of corporate guarantees for debt raised by group companies. They may also argue that the new RBI norms governing upper-layer NBFCs are not being applied uniformly to private and government-owned NBFCs, with the latter not being asked to list.
The sources said the writ petition is likely to be filed under Article 226 of the Constitution.
If challenged, it would be the second time in recent years that an RBI directive has faced a legal challenge. The first involved Uday Kotak-led Kotak Mahindra Bank, which approached the Bombay High Court after the RBI rejected his proposal to reduce his stake through the issuance of subordinate debt rather than equity dilution in December 2018. The matter was eventually settled out of court, with Kotak agreeing to cap his voting rights at 15%, while the RBI allowed him to continue to hold a 26% stake in the bank.