Mumbai: The protracted dispute between Tata Sons Ltd and NTT Docomo Inc. has traversed a long distance over the last seven months, from Ratan Tata considering legal action against the Japanese firm for defamation to the chairman emeritus leading settlement talks.
However, what is clear from documents filed by the Tatas and Cyrus Mistry in their ongoing case at the National Company Law Tribunal is that Ratan Tata and Tata Trusts were involved in the matter as early as from July, if not earlier.
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Tata’s displeasure over the continued public dispute is reportedly one reason that led to Mistry’s October sacking as chairman of Tata Sons.
A 26 July email to Mistry from Bharat Vasani, Tata group’s general counsel, shows the Trusts were quite involved and eager to resolve the long pending issue with Docomo. If anything, Ratan Tata’s involvement deepened after an arbitration award by a London court.
In his email, Vasani wrote he had carefully thought through the company’s legal strategy as soon as the award was pronounced against Tata Sons on 22 June. Then, the London Court of International Arbitration had awarded Docomo $1.17 billion in damages for breach of contract. “Unfortunately, with the Trustees directly taking charge of the matter and giving direct instructions to Darius Khambata (Tata’s legal counsel) and showing extreme anxiety to unconditionally deposit the money, my view became irrelevant,” wrote Vasani.
The Tatas had always maintained they were open to paying the money to Docomo as long as it does not breach the laws of the land.
In his email, Vasani also makes a mention of a conversation over dinner with Khambata during which Khambata said he “was completely fed up with the multiple instructions coming to him in this matter and will like to have a joint meeting with all of us, plus Ratan Tata and N.A. Soonawala (a trustee) for the next steps after today’s hearing”.
On 30 July, almost a month after the $1.17 billion award to Docomo, for breach of the shareholders agreement, Ratan Tata was considering the possibility of suing the Japanese telco.
“Mr Tata felt that since Docomo was clearly looking to tarnish the reputation of the group, we should explore the possibility of suing Docomo for defamation,” said a discussion note drafted by AZB and Partners, which is part of an affidavit filed by Mistry at NCLT.
Obviously, the Tatas didn’t follow this up, and sometime in August, Tata met the Japanese ambassador and NTT Docomo head in a bid to resolve the crisis amicably, a few months before the 24 October boardroom coup which led to Mistry’s ouster, said a person close to the Tata group on condition of anonymity.
While the Delhi high court hearings—Docomo was trying to enforce its London award—went on, back-channel discussions were on from November after Ratan Tata took charge as interim chairman.
The board’s consent for a settlement was taken at a 21 February board meeting, the same one which saw N. Chandrasekaran take over as chairman of Tata Sons, said the person close to the Tata group cited earlier.
“The whole issue could have been handled in a more mature, in a non-public manner at least after the arbitration was awarded,” said Shriram Subramanian, managing director and founder at InGovern Research.
The broader contours of the agreement are not yet known, and it’s not clear how both the parties will sidestep Reserve Bank of India (RBI) regulations.
RBI has objected to Tata’s application to buy back Docomo’s stake in Tata Teleservices Ltd at Rs58.5 a share (or 50% of its acquisition price). That fell foul of RBI norms announced in 2014.
“Repatriating money from India will be difficult without RBI’s permission. If they have some option, it would have to be further analysed,” said Sandeep Parekh, founder of Finsec Law Advisors, a Mumbai-based financial sector law firm.