The long-running dispute over Tata Sons' regulatory status has taken a legal turn, with the Reserve Bank of India (RBI) filing a caveat in the Bombay High Court amid the possibility of a challenge by the Tata Group holding company.

Citing sources close to the development, The Financial Express reported that the central bank filed the caveat online on Tuesday. The application is expected to be registered on Wednesday.

The move comes after the RBI rejected Tata Sons' request to surrender its registration as a core investment company (CIC), a step the company had pursued instead of proceeding with the mandated public listing.

A caveat requires the court to hear the party that has filed it before passing an order on a petition that may subsequently be filed by the other side.

Why Tata Sons' Listing Is Back In Focus

Tata Sons was classified among the 16 NBFCs placed in the Upper Layer by the RBI in September 2022. Under the regulatory framework, such entities were given three years to comply with the listing requirement.

That deadline expired in September 2025, but Tata Sons did not proceed with a public listing.

Instead, the company repaid Rs 21,813 crore of debt in FY24 and later sought cancellation of its CIC registration. The deregistration route was significant because it was aimed at changing the company's regulatory status and, consequently, avoiding the requirement to list.

The RBI has now rejected that route.

RBI Turns Down Deregistration Request

Tata Sons had filed its application for deregistration on March 28, 2024.

In its September 11 communication, the RBI said the company's request for voluntary surrender of its certificate of registration (CoR), which would have enabled it to be treated as an unregistered CIC, "cannot be acceded to".

The central bank also directed Tata Sons to take the necessary steps to ensure full compliance with the guidelines and instructions applicable to NBFCs in the Upper Layer.

The Tata Sons board is scheduled to meet on September 17, when the RBI's communication is expected to be discussed.

What Could Happen If Tata Sons Goes To Court?

The filing of the caveat indicates that the RBI is preparing for the possibility of Tata Sons challenging the decision before the Bombay High Court.

Citing a lawyer familiar with the development, the report said that the company could challenge the RBI's order under Article 226 of the Constitution. The matter could eventually reach the Supreme Court.

Potential grounds for such a challenge could include arbitrariness, inadequate reasoning, procedural infirmity, violation of the principles of natural justice or an incorrect interpretation of the regulatory framework, the lawyer said.

Tata Sons could also question whether the RBI can prevent it from surrendering its CIC registration.

One possible argument, according to the lawyer, could be that while Tata Sons' systemic importance may justify continued regulatory oversight, the company should be allowed to reorganise its affairs in a manner that removes the requirement to list rather than being compelled to go public.

RBI Caveat Valid For 90 Days

The caveat filed by the RBI will remain valid for 90 days.

The lawyer said Tata Sons could approach the court after this period, although it may then have to explain the delay. The RBI could also file a fresh caveat after the current one expires.

The caveat does not itself settle the dispute over Tata Sons' listing. It ensures that the central bank gets an opportunity to present its position before the court considers any relief sought by the company.

Tata Sons' Asset Size Adds To Regulatory Questions

The company's current asset size is also relevant to its regulatory classification.

The RBI revised its scale-based regulatory framework in 2026 and prescribed an asset threshold of Rs 1 lakh crore for classification in the Upper Layer.

Tata Sons reported total assets of Rs 2.01 lakh crore as of March 31, 2026, according to its FY26 annual report. That is more than twice the revised threshold.

The RBI's rules state that an NBFC seeking exemption from registration must meet certain conditions. These include not accessing public funds, having no customer interface and holding assets below Rs 1,000 crore.

Existing NBFCs that neither access public funds nor have a customer interface, including entities holding a CoR as Type-I NBFCs, can apply for deregistration by December 31, 2026, provided they satisfy the exemption criteria.

However, the regulatory framework also contains a separate provision for entities classified in the Upper Layer. Such an NBFC remains subject to the enhanced regulatory framework for at least five years, even if it subsequently stops meeting the criteria for Upper Layer classification.

What The RBI's New Move Means For The Dispute

The RBI's latest filing comes as Tata Sons weighs its response to the rejection of its deregistration request.

With the original three-year listing deadline already having expired, the company's regulatory status, its deregistration application and the RBI's refusal to accept it are now closely linked.

For now, the RBI has moved to ensure that if the dispute reaches the Bombay High Court, its position is heard before any order is passed on a petition from Tata Sons.