Tata Sons IPO: RBI moves Bombay HC, braces for possible legal challenge

The Reserve Bank of India (RBI) has filed a caveat petition in the Bombay High Court in connection with the mandated listing of Tata Sons, reported The Economic Times reported.The caveat has been filed to ensure that the central bank gets an opportunity to present its case before the court passes any order if Tata Sons or a related party approaches it seeking relief against the regulator, according to the report.The RBI has also informed Tata Sons about the filing, as per the report.The development comes days after the RBI rejected Tata Sons' application to voluntarily surrender its Certificate of Registration (CoR). The central bank's September 11 decision means Tata Sons will continue to be subject to the regulatory framework applicable to NBFC-Upper Layer entities, bringing the mandated listing of the Tata group holding company back into focus.WHY DID RBI FILE A CAVEAT?A caveat is essentially a precautionary legal step. It ensures that a court does not pass an interim order without first hearing the party that has filed the caveat. Ashish K Singh, managing partner at law firm Capstone Legal, told ET that under Section 148A of the Civil Procedure Code, if Tata Sons or a related party approaches the court seeking relief against the regulator, it would have to give advance notice to the RBI.The purpose is to ensure that the regulator is heard before any order is passed, Singh said.Independent counsel Vyapak Desai said the caveat would prevent any ex parte order or relief against the RBI without giving it an opportunity to be heard.RBI REJECTED TATA SONS' DEREGISTRATION REQUESTThe caveat comes after the RBI rejected Tata Sons' request to surrender its CoR.Tata Sons had applied in March 2024 to surrender its registration and be classified as an unregistered Core Investment Company. The RBI, after considering the application and subsequent correspondence, declined the request on September 11.Following the rejection, the RBI advised Tata Sons to take necessary steps to ensure full compliance with the rules applicable to NBFC-Upper Layer entities. The company will therefore continue to remain under the NBFC-UL regulatory framework.WHY IS TATA SONS FACING A LISTING REQUIREMENT?The regulatory issue is linked to Tata Sons' classification as an upper-layer NBFC.The RBI revised its scale-based regulatory framework in June 2026 and set an asset threshold of Rs 1 lakh crore for classification as an upper-layer NBFC. Tata Sons had total assets of Rs 2.01 lakh crore as of March 31, 2026, more than twice the threshold.Tata Sons had repaid all its debt in an effort to secure deregistration and avoid the listing requirement. However, the RBI's eligibility conditions say only entities that do not hold public funds, have no customer interface and have assets below Rs 1,000 crore can qualify for deregistration by December 31.TATA TRUSTS, SP GROUP HAVE DIFFERENT VIEWSThe listing issue is also significant because Tata Sons' major shareholders have differing views on taking the holding company public.Tata Trusts, which controls 66% of Tata Sons through the Sir Ratan Tata Trust and Sir Dorabji Tata Trust, has favoured keeping the company privately held. It passed a resolution in July 2025 seeking to retain Tata Sons as a private company.The Shapoorji Pallonji Group, Tata Sons' largest minority shareholder with an 18.37% stake, on the other hand, views a listing as the most practical way to unlock value from its investment.For now, the RBI's caveat does not mean that a court case has already been filed by Tata Sons against the regulator. Rather, it ensures that the RBI will get an opportunity to be heard if such a legal challenge is brought before the Bombay High Court.The development adds another legal layer to the ongoing Tata Sons listing issue, following the RBI's rejection of the company's deregistration request.- EndsPublished On: Sep 15, 2026 12:51 IST