No-contest clause in Ratan Tata's will to avoid litigation, say lawyers

The no-contest clause in the will of the late Tata Group chairman, Ratan Tata, was included to prevent litigation among beneficiaries and ensure a peaceful settlement, according to lawyers.

 

“The no-contest clause is usually inserted to avoid any litigation among the beneficiaries and is foolproof. The beneficiaries may, however, seek a clarification or its interpretation from the court,” said a senior lawyer, asking not to be quoted.

 

The no-contest clause in Tata’s will says whosoever contests or challenges the will, would forgo all the rights and benefits of the will. Former chairman of the Tata group and Tata Trusts, Ratan Tata died on October 9th last year.

 

“Assuming that the will has a ‘no contest’ clause as reported in the media, challenging the will would result in the challenger being disinherited. In relation to seeking ‘interpretation’, that situation would also imply that there is ambiguity in the will, which is difficult to comment on, since the contents of the will and the exact wordings are not in the public domain. Going by media reports, if the will does define ‘residual estate’ as excluding certain assets, and assuming that the language is clear, the issue of ‘interpretation’ should logically not arise,” said Ketan Dalal, founder and Managing Director of Katalyst Advisors Pvt. Ltd.

 

Interestingly, former Chief Justice of India, SA Bobde was appointed to arbitrate among the beneficiaries by the executors of the will. Tata’s will was submitted to the Bombay High Court for probate last week. Probate is the legal process of proving a will in a court and confirming its veracity. Once the court confirms the will, it is considered as final.

 

Tata Trusts did not comment on the issue.

 

Mohini Mohan Dutta, a close confidant of the Tatas and a beneficiary of the will, has requested an interpretation to clarify its provisions.

 

According to the will, Dutta is entitled to one-third of RNT’s assets while the rest are willed to Tata’s other relatives and close friends. The executors have valued the assets at ~3,900 crore including Tata Sons shares worth ~1,684 crore at book value.

 

Dutta is seeking clarification on whether his one-third inheritance includes Tata Sons shares.

 

The Tata Sons shares are willed to the two foundations set up by Ratan Tata.

 

Dutta, insiders said, met Tata in 1965 in Jamshedpur and became close friends. Now 74, Dutta later set up a travel business called Stallion travel agency which was later merged with Taj’s travel division. Dutta has also acquired shares in the group’s financial services firm Tata Capital which is expected to be listed soon.

 

The other beneficiaries of Tata’s will include his brother Jimmy Tata and his half sisters Deanna and Shireen Jejeebhoy. Noel Tata, the current Chairman of Tata Trusts and half-brother of Ratan Tata, along with his family members, is excluded from the will.