R Venkataramanan, the managing trustee of the Tata Trusts, a string of non-profits that own 66 percent of the diversified Tata Sons, has resigned. There were speculations last week that he had offered to quit following reports about some trustees not being happy with the high compensation of Rs 2.66 crore paid to him.
In another significant development, Ratan Tata's half- brother Noel Tata has been appointed the trustee of Sir Ratan Tata Trust, the second largest among the dozen-odd charities that make up the Tata Trusts.
Venkataramanan's Rs 2.66-crore annual compensation has been under the income tax scanner and led it to withdraw tax exemption to the Sir Dorabji Tata Trust-the largest of all the trusts--in December 2018.
Speculation is rife that Venkat, as Venkataramanan is popularly known, may shift to London in some new role within the Tata group.
Considered very close to Ratan Tata, the group patriarch and the chairman of the trusts, Venkat is also under the scanner in a money laundering case involving AirAsia India which is being probed by the Central Bureau of Investigation.
The low-cost AirAsia India is a 51:49 joint venture between the Tatas and the Malaysian airline group AirAsia. Venkataramanan is a shareholder and director of AirAsia India, a joint venture between Tata Sons and Malaysian budget carrier AirAsia.
"Venkataramanan had informed the chairman and the trustees of the Tata Trusts that he had been considering other options, given that he was completing five years as the executive trustee/ managing trustee, and sought to be relieved," the Tata Trusts said in an official statement on Wednesday, adding the managing trustees "regretfully accepted" the request.
He will relinquish from the trusts on 31 March, the statement said.
A statement from the Tata Trusts pic.twitter.com/o3OU21YeEM
— Tata Trusts (@tatatrusts) February 13, 2019
A committee of trustees, comprising Ratan Tata, and vice-chairmen Vijay Singh and Venu Srinivasan, has been set up to oversee the operations and select a new chief executive for the trusts, it said.
The trustees also placed on record Venkat's contribution in "steering and executing the objectives" of the trusts' portfolios over the last five years.
In addition to the interventions through grants, the Tata Trusts also pursues large-scale programmes through direct implementation and partnerships with many states and foundations, it said.
Noel Tata is the chairman of the group's retail arm Trent and also the managing director of Tata International, that group arm that scouts for new business opportunities outside the country.
He has been appointed as the trustee of Sir Ratan Tata Trust along with Jehangir HC, who is currently spearheading the healthcare mission at the Jehangir Hospital, Pune, the statement said.
Allegations against Venkataramanan
Some of the trustees were also very critical of the allegations relating to the income tax order that withdrew tax exemptions to the trusts, which is the largest and the oldest public charity in the country, sources said.
The rejig comes following the Income Tax Department's withdrawal of the tax exemption granted to Sir Dorabji Tata Trust after the authorities found a violation of certain conditions by the trust, The Economic Times reported.
The newspaper, citing an order, said that the I-T Department had ruled that "the annual salary of Rs 2.66 crore drawn by Venkataramanan was not in accordance with the trust’s deed."
In October last year, six Tata Trusts had withdrawn their petitions filed in the Bombay High Court challenging the show cause notices issued against them by the Income Tax Department as to why their registrations should not be cancelled.
The Income Tax Commissioner (Exemptions) had issued notices to these six trusts on 8 March, 2018 for alleged non-compliance of rules governing the trust funds.
The notices sought to know why their registrations under Section 12A of the Income Tax Act should not be cancelled for non-compliance.
Following this, the trusts, including the Navajbai Ratan Tata Trust, Jamsetji Tata Trust and the Tata Education Trust, had petitioned the high court challenging the notices.
When the petitions came up for hearing on before a division bench of Justices SC Dharmadhikari and BP Colabawalla, the trusts' lawyers sought to withdraw the pleas without assigning any reason.
However, some officials defended the compensation given to Venkataramanan, saying a managing trustee is also an employee of the trust, and questioned how else will professionals get compensated.
"Decisions on compensation levels are prerogative of the boards, given the size and span of activity," the official added.
However, there is another section as well which argues that a trustee is technically not an employee.
The Dorabji Tata Trust has appealed against the I-T order, though the contents of the order are not known yet.
--With PTI inputs
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Updated Date: Feb 14, 2019 08:54:41 IST