The Reserve Bank of India (RBI)’s intervention plea was rejected by the Delhi High Court in the Tata-Docomo case, today.
The petition was rejected wile taking on record the terms of consent of the settlement between Japanese telecom major NTT Docomo and Tata Sons over the payment of USD 1.17 billion damages to the former. The verdict was given by Justice S Muralidhar, opposing the settlement as well as the damages awarded to Docomo by the London Court of International Arbitration (LCIA). The court stated that, it has given detailed directions in its judgment and disposed of the plea by Docomo seeking enforcement of the LCIA award. However, the court reserved its judgement on March 15. Both the firms, Docomo and Tata had gone for a negotiation as the Indian company, was not able to find a buyer for the Japanese telecom major’s 26.5% stake in their joint venture, Tata Teleservices Ltd (TTSL), when Docomo exited from the venture within five years.
Under the shareholding agreement between them, Tata was to find a buyer who would purchase the Japanese company’s stake at minimum 50% 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. Therefore, the LCIA in June 2016, awarded damages of USD 1.17 billion in favor of Docomo for Tata’s inability to find a buyer as per the shareholding agreement. Docomo had moved the Delhi High Court for enforcement of the award after Tata cited refusal of permission by the RBI to make the payment.
During the proceedings, the RBI had contended that once it had denied permission for transferring the money overseas, the issue had attained finality. Its decision has not been challenged till now, said RBI. The RBI, in its intervention application, had contended that the shareholding agreement was illegal and objected to the award of damages. The Docomo’s shares in TTSL can be purchased only at the fair market value. The Indian central bank had later also opposed the settlement arrived at between Tata and Docomo. Tata and Docomo, under the settlement agreement between the two companies, had decided to settle their two-year-old dispute regarding TTSL with the Indian company withdrawing its objections to the enforcement of the award. Tata had already deposited USD 1.17 billion with the high court. 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.