Tata Sons is likely to challenge the Reserve Bank of India’s (RBI) decision rejecting its bid to surrender its Certificate of Registration, though legal experts suggest courts may be reluctant to intervene in a regulatory matter.
“Nothing is stopping them from approaching the courts to contest this requirement, but I doubt the courts will intervene. When it comes to regulatory matters, courts usually do not interfere, making it a futile exercise to move them,” said HP Ranina, Supreme Court advocate.
A legal challenge is, however, only one of the options likely to be on the table as the Tata Group holding company weighs its next move. It could also engage with the RBI to work out a compliance roadmap, including the timetable for a stock market listing, or undertake a substantive restructuring that changes its regulatory status.
The RBI’s rejection has put Tata Sons firmly back on the road toward a listing, even as its majority shareholder, Tata Trusts, maintains the company should remain private.
Tata Sons was classified as a non-banking financial company in the Upper Layer (NBFC-UL) in September 2022, triggering a three-year deadline for listing. That deadline expired in September 2025, and the rejection of its deregistration application does not automatically reset the clock or give the company another three years.
“Under the regulatory framework, Tata Sons has no option but to list now,” Ranina said.
High Judicial Bar
Legal experts said Tata Sons could challenge the RBI’s decision before a High Court under Article 226, with the dispute potentially reaching the Supreme Court.
Possible grounds could include arbitrariness, inadequate reasoning, procedural infirmity, violation of principles of natural justice or an incorrect interpretation of the regulatory framework.
Rahul Hingmire, managing partner at Vis Legis Law Practice, said Tata Sons could consider challenging the RBI decision, particularly on grounds such as arbitrariness, incorrect interpretation of the Core Investment Company framework, failure to consider relevant material or inadequate reasoning.
However, he cautioned that “courts generally give RBI substantial latitude in financial regulation and systemic-risk matters”.
While judicial review remains legally available, “using litigation primarily to avoid mandatory listing may be difficult unless Tata Sons establishes a clear legal or procedural error,” Hingmire said.
Other opinions exist. One issue that could potentially form part of a legal challenge is whether the existing statutory framework gives a regulator the power to compel a privately held company to go public.
A lawyer said there was a question over whether the Companies Act grants the Securities and Exchange Board of India or the RBI the legislative power to force a company to go public.
Alongside litigation, Tata Sons is likely to engage with the RBI regarding compliance with the Upper Layer framework.
“Tata Sons would therefore be expected to engage with the RBI forthwith on compliance, including the manner and timetable for giving effect to the listing requirement,” said Tushar Kumar, advocate, Supreme Court of India.
The company could seek more time or regulatory clarity while drawing up a formal roadmap covering the listing, disclosures, governance and other obligations applicable to an upper-layer NBFC. It would also have to navigate requirements under the Companies Act and securities laws before going public, lawyers said.
Shareholder Standoff
Complicating this option is the position taken by Tata Trusts, which owns 65.9% of Tata Sons.
“The entire Tata Trusts board has taken a stand to keep it private. So unless Tata Trusts reverses its stance, they are bound by it,” an executive said when asked whether Tata Sons could revisit its decision not to go public at its board meeting on September 17.
In a resolution in July last year, Tata Trusts directed the Tata Sons board to do everything possible to keep the holding company private while looking at ways to provide an exit to its largest minority shareholder, the Shapoorji Pallonji Group.
A third possibility is a restructuring significant enough to alter Tata Sons’ regulatory position.
“A genuine reorganisation, merger, demerger or alteration of the asset and investment structure may, depending upon its substance, produce a different regulatory consequence,” Kumar said.
But the regulatory hurdle would be considerably higher if the restructuring left Tata Sons’ underlying economic and systemic character largely unchanged and appeared primarily designed to sidestep its Upper Layer obligations, he added.
Alay Razvi, managing partner at Accord Juris, said Tata Sons could “explore a genuine restructuring of its activities and investments”.
However, “a restructuring undertaken merely to avoid listing could attract regulatory scrutiny and may fail if the company continues to satisfy the criteria for upper-layer classification,” he said.
The RBI’s decision could have implications beyond Tata Sons. It suggests that becoming debt-free or reducing reliance on public funds may not, by itself, be sufficient for a large and systemically significant holding company to exit the enhanced regulatory framework.
For Tata Sons, the choices have narrowed to three difficult paths: challenge the regulator in court despite the relatively high threshold for judicial intervention, reconcile Tata Trusts’ insistence on remaining private with the RBI’s listing requirement, or pursue a restructuring substantial enough to change its regulatory character.
Unless one of those routes succeeds, the question may increasingly be not whether Tata Sons will have to list, but how and when it does so.