Tata Sons will seek the approval of the CCI, income tax department to remit $1.18 billion to estranged partner NTT Docomo to settle its long-standing dispute
New Delhi: Tata Sons will seek the approval of the Competition Commission of India and tax authorities to remit $1.18 billion to estranged partner NTT Docomo to settle its long-standing dispute.
“As per the...order of the Delhi high court, Tata Sons will take necessary permissions from the Competition Commission of India and tax authorities to remit the amount in lieu of shares to be transferred to Tata Sons as per the consent terms," Tata Power said in a regulatory filing.
Last week, the Delhi high court rejected the Reserve Bank of India’s objections in the Tata-Docomo case, clearing the decks for the Tatas to pay over $1.1 billion to the Japanese telecom major.
Tata group had been locked in a legal battle with Docomo over the alleged breach of contractual obligations pertaining to the Indian joint venture - Tata Teleservices (TTSL).
“In terms of the...agreement dated 25 March 2009, Tata Power is to acquire 118,222,767 (11.82 crore) equity shares of TTSL. As on the date of the Arbitration Award that is June 22, 2016, $117,128,573 (117.1 million) was payable by Tata Power for the same," Tata Power said on Tuesday in the BSE filing.
The final amount that is payable would be determined on the date of the payment to Docomo and would, therefore, “vary" over the amount indicated, it clarified.
Tata Power has remitted Rs790 crore to Tata Sons on 9 August 2016 and this “will be appropriately adjusted" against the amount governed by the stipulated terms and conditions. It may be recalled that the two sides had gone for arbitration as the Indian company was not able to find a buyer for the Japanese telecom major’s 26.5% stake in their joint venture, 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% of the acquisition price, which came to around Rs58.45 per share. The other option was Tata purchasing the shares at the fair market value, which was Rs23.44. However, this was not acceptable to Docomo and it had opted for arbitration.
The London Court of International Arbitration or LCIA in June 2016 awarded damages of about $1.1 billion in favour of Docomo for Tata’s inability to find a buyer as per the shareholding agreement.
Thereafter, Docomo moved the Delhi high court for enforcement of the award after Tata cited refusal of permission by the RBI to make the payment. The Delhi HC ruling, last week, facilitates the payout by Tatas to Docomo.