It is in line with the London Court of International Arbitration’s June 24 order that directed Tata Sons to pay the amount in damages for breach of contract
In response to Japanese telecom operator NTT Docomo’s move to seek enforcement by the Delhi High Court of the London Court of International Arbitration’s (LCIA) award, Tata Sons on Tuesday said it will deposit the
$1.17 billion (around R8,000 crore) with the registrar of the high court.
This is in line with the LCIA’s June 24 order that directed Tata Sons to pay $1.17 billion in damages for breach of contract on the grounds that the Indian group neither found a buyer, nor bought back the Japanese partner’s 26% stake in their telecom joint venture Tata Teleservices.
“Tata Sons has from the outset underlined its commitment to honouring its contractual obligations to DOCOMO, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with Indian law. The regulatory approval for performance of the arbitral award of the London Court of International Arbitration has been denied by the Reserve Bank of India. However, in the Delhi High Court today, Tata Sons, as a gesture of good faith and without prejudice to its rights, has in line with its earlier offer to DOCOMO, committed to deposit the entire amount of the arbitral award by Tuesday, August 2, 2016, with the Delhi High Court Registrar.
“Clearly, fulfilment by both the parties of the arbitral award requires conformance to Indian regulations and law, and Tata Sons is committed to full compliance with all such requirements. The Honourable High Court has given time till August 30, 2016, for both parties to try and resolve the outstanding issues between them,” Tata Sons said in a statement.
Senior advocate Darius Khambatta, appearing for Tata Sons, submitted before a bench of Justice Manmohan Singh the RBI’s letter, in which the regulator had reiterated its earlier position against the stake sale.
Senior advocate Kapil Sibal, appearing for DOCOMO, said the Japanese major is not concerned with the the RBI letter and Tata has an international reputation to maintain. He further told the court that DOCOMO has already lost half of the investments made in the joint venture (JV).
In April 2014, NTT DOCOMO had decided to sell its entire 26.5% stake in Tata Teleservices (TTSL). Under the terms of the agreement between the two parties, either Tata finds suitable buyer for DOCOMO’s stake or TTSL buys it stake for 50% of the acquired price, which worked out to Rs 7,250 crore or a fair market price, whichever is higher.
NTT DOCOMO had entered into the JV with TTSL in 2009 for $2.7 billion for the 26% stake. The agreement could not be enforced as according to the RBI’s guideline any such sale could not take place at a pre-determined rate, but should reflect fair market valuation.
Based on advice from the prime minister’s office (PMO), the RBI said Tatas could only offer Docomo a price based on an independent valuation which worked out to Rs 2,915 crore. Docomo then moved the LCIA International Court for Arbitration in London in January 2015, which passed the order in its favour.