New Delhi: Tata Sons Ltd on Tuesday agreed to furnish $1.17 billion in fixed deposit receipts with the registrar of the Delhi high court (HC) in an arbitration award enforcement proceedings filed by Japan’s NTT Docomo Inc.
In June, an international arbitration panel ordered Tata Sons, the holding company of Tata group companies, to pay NTT Docomo Inc $1.17 billion as damages for breaching a shareholders’ agreement. Thereafter, Docomo filed an enforcement proceeding before the Delhi HC.
On Tuesday, senior lawyer Darius Khambatta, appearing for Tata Sons, agreed to furnish fixed deposits receipts worth the damages in the arbitration award within a week to the high court registrar. Khambatta also presented a letter from the Reserve Bank of India to the court, which denied Tata’s request to remit the money to NTT Docomo.
Justice Manmohan Singh said the case will be heard next on 30 August. He also suggested the two companies attempt settling their issues mutually. “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," a Tata Sons spokesperson said.
“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 2nd, 2016, with the Delhi high court registrar," the spokesperson said.
Clearly, the spokesperson said, 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 outstanding issues between them," spokesperson added.
The development is some relief for NTT Docomo, which had expressed apprehensions over certain matters, including whether Tata Sons will pay the damages awarded.
Last year, in January, NTT Docomo, a unit of Japan’s Nippon Telegraph and Telephone Corp., placed a request for pursuing arbitration proceedings against Tata Sons, claiming the latter failed to fulfil its obligation to find a buyer for Docomo’s stake in Tata Teleservices Ltd. Tata Teleservices is a joint venture between Tata Sons and NTT Docomo.
In April 2014, NTT Docomo had decided to sell its entire 26.5% stake in money-losing Tata Teleservices, and withdraw from mobile telephony in India after a five-year struggle that highlighted the challenges in the domestic market.
Under the terms of the shareholder agreement between Docomo, Tata Teleservices and Tata Sons, Docomo exercised on 7 July 2014 its right (option) to request that a suitable buyer be found to purchase its Tata Teleservices shares for 50% of the acquired price, amounting to ₹ 7,250 crore (or 125.4 billion yen), or a fair market price, whichever is higher. Japan’s largest communications service provider entered India in March 2009 by acquiring the stake in Tata Teleservices for $2.7 billion after the telco was granted a dual-technology licence that allowed CDMA-based operators to offer rival GSM-based services as well.