New Delhi, Apr 28 (PTI) Tata Sons today said the Delhi High Court upholding the USD 1.18 billion award to Japan’s DoCoMo will facilitate the payout and allow it to acquire the latter’s 26 per cent stake in joint venture Tata Teleservices.
The high court today rejected the Reserve Bank of India’s objections in the Tata-DoCoMo case, clearing the decks for the Tatas to pay over USD 1.1 billion to the Japanese firm.
“Today’s order entails Tata Sons and its nominees remitting the USD 1.18 billion, already deposited with the Registrar of the Delhi High Court, to DoCoMO, and DoCoMO transferring all its shares in Tata Teleservices,” Tata Sons said in a statement.
Earlier, NTT DoCoMo expressed hope that the RBI will not create any more hurdle in Tata Group making the said payment.
Tata Sons further said it “welcomes” the order allowing the two companies to implement the London Court of International Arbitration (LCIA) Award dated June 2016.
“The court allowed both the enforcement of the award and implementation of the consent terms between the two entities.
Tata Sons and NTT DoCoMo are taking further steps in terms of the order,” the Tatas’ statement said.
DoCoMo said the company considers today’s verdict to be of “huge” significance for foreign investments in India, as it showed “that the Indian Courts will recognise their international obligations and enforce an award within a matter of months”.
“We hope and expect that the RBI will not seek to delay final resolution by, for example, lodging an appeal against this very clear decision,” DoCoMo sources told PTI.
An acceptance of the judgment will make this a “landmark” case, boosting investor confidence in India’s legal system, the sources added.
Tata Sons noted that the court had held that the Indian company honouring its commitment will have a bearing on its goodwill and reputation in the international arena.
The court noted that the shareholders’ agreement and the arbitration award were not opposed to any provision of Indian law or public policy, Tata Sons said quoting the order.
The two sides had gone for arbitration as the Indian company was not able to find a buyer for the Japanese telecom major’s over 26 per cent stake in their joint venture, Tata Teleservices Ltd (TTSL), when it exited from it.
As per the shareholding agreement, on DoCoMo’s exit from the venture within five years, Tata was to find a buyer who would purchase the Japanese company’s stake at minimum 50 per cent of the acquisition price, which came to around Rs 58.45 per share.
The other option was Tata purchasing the shares at the fair market value, which was Rs 23.44. However, this was not acceptable to DoCoMo and it had opted for arbitration.
Thereafter, the London Court of International Arbitration or LCIA awarded damages of over USD 1.1 billion in favour of DoCoMo for Tata’s inability to find a buyer as per the shareholding agreement.
DoCoMo moved the High Court for enforcement of the award after Tata cited refusal of permission by the RBI to make the payment.
The RBI contended that the shareholding agreement was illegal and objected to the award of damages.
It had said that DoCoMo’s shares in TTSL be purchased only at the fair market value. The RBI had later also opposed the settlement arrived at between Tata and Docomo.
Under the settlement agreement between the two companies, Tata and DoCoMo had decided to settle the dispute, with the Indian company withdrawing its objections to the enforcement of the award.
The Japanese company in turn had said it will “suspend its related enforcement proceedings in the United Kingdom and the United States” for a period of six months.
This is published unedited from the PTI feed.