Tata Sons and Japan’s NTT DoCoMo on Tuesday agreed to settle their long-standing dispute over the former paying the latter $1.17 billion in lieu of its 26% stake in Tata Teleservices (TTSL). Both parties told the Delhi High Court, where the matter is being heard, that they have reached a settlement agreement on enforcement of an arbitration award by the London Court of International Arbitration (LCIA) in June 2016. However, the final resolution of the dispute and eventual payment by Tatas to DoCoMo hinges on what stand the government, Reserve Bank of India, and the high court takes on the matter.

The RBI’s counsel on Tuesday said that he will seek instructions on the issue and the next date of hearing has been fixed for March 8. Basically, the settlement between the two sides is that the Tatas have withdrawn their objection over paying and DoCoMo in turn has agreed to suspend its related enforcement proceedings in the UK and the US for a period of time.

So far the payment of the amount has been stuck, though the Tatas have deposited the amount with the Delhi High Court’s registrar, because the RBI’s regulation does not permit any share sale at a predetermined price but on fair market valuation. Though the RBI twice sought the advice of the government on the matter as an exception to DoCoMo’s case, the government responded in the negative, stating that providing an exception to one firm would open up several other similar cases.

NTT DoCoMo had entered into a joint venture with TTSL in 2009 for $2.7 billion (R12,740 crore at R117 per share) for a 26.5% stake. In April 2014, DoCoMo decided to sell its entire 26.5% stake in TTSL because the agreed upon parameters could not be met. Under the terms of the agreement between the two parties, either the Tatas found a suitable buyer for DoCoMo’s stake or TTSL would have to buy its stake for 50% of the acquired price,
which worked out to R7,250 crore (R58 per share) or a fair market price, whichever is higher.
The agreement could not be enforced as according to the RBI’s guideline any such sale could not take place at a predetermined rate but should reflect fair market valuation.

Based on advice from the Prime Minister’s Office (PMO), the RBI said the Tatas could only offer DoCoMo a price based on an independent valuation that worked out to R2,915 crore (R23.34 per share). DoCoMo then moved the LCIA in January 2015, which passed an order in its favour in June 2016.

“The settlement terms clear the way for the $1.17 billion already deposited by Tata Sons with the court to be paid to DoCoMo, and would allow DoCoMo to transfer its shares in Tata Teleservices, Inc,” the Japanese firm said in a statement.

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Telecom secy says plan to make spectrum auction an annual exercise. “Today’s agreement is a significant step towards resolution of this dispute, and DoCoMo is hopeful that the two parties will continue to work together constructively to achieve a resolution.” DoCoMo said the settlement will enable it to “consider reinvestment of an amount in India, under a new cooperative relationship with Tata Sons”. “DoCoMo believes that such a relationship could become a paradigm for India-Japan economic ties,” the statement added.

“Tata Sons is pleased to announce that in the interests of putting an end to a dispute that had arisen with NTT DoCoMo, Japan, and in the larger national interest of preserving a fair investment environment in India, it has reached an agreement with NTT DoCoMo on a joint approach to enable enforcement of the June 22, 2016, LCIA award. As a gesture of good faith and in accordance with the Tata group’s long-standing record of adherence to contractual commitments that it has always enjoyed both in India and abroad, the Board of Tata Sons has decided to withdraw its objections to the enforcement of the Award in India,” Tata Sons said in a statement.