Tata Sons wants quick resolution of DoCoMo issue

The Tatas were unhappy that DoCoMo sued Tata Sons in the US and the UK courts, apart from litigation in the Delhi HC

The escalating legal fight between Tata Sons, under former chairman Cyrus Mistry, and Japan’s NTT DoCoMo over the buyback of Tata Teleservices was denting the image of the Tatas abroad. This was one of the triggers to oust Mistry as Tata Sons chairman, said an insider.

According to sources, the Tatas were unhappy that DoCoMo sued Tata Sons in the US and the UK courts, apart from litigation in the Delhi High Court, for not honouring a contract signed by Ratan Tata with DoCoMo in 2009. Under the contract, the Tatas were to buy back DoCoMo’s shares in Tata Teleservices at (at least) half the acquisition prices in five years. When DoCoMo decided to exit India in 2014, it asked Tata Sons to buy back the shares but it refused saying it can’t pay the pre-determined price as the Reserve Bank of India norms do not allow the same. DoCoMo sued the Tatas in the London Court of Arbitration in January last year. 

But, even after a scathing order by the London Court of Arbitration in June this year, Tata Sons did not pay $1.2 billion to DoCoMo. Within a month, DoCoMo sued Tata Sons in the United Kingdom Commercial Court and in the United States early this month to enforce the award. Tata Sons had deposited $1.2 billion with the Delhi High Court in July and was losing Rs 2 crore a day as interest.

The old guard was of the opinion that by escalating the matter to various courts in the world, Tata Sons was being exposed to the risk of getting its assets attached across the world. Besides, the Tata group is well known across the world for keeping its word instead of litigating around it. By not honouring the contract, the brand image of Tata was at risk, a source said. 

When DoCoMo moved the London court to enforce the award, the Tatas had argued said DoCoMo could not attach Tata Motors or Tata Steel’s properties in the UK, as Tata Sons is a minority shareholder in Tata Steel and Tata Motors-JLR. Early this month, DoCoMo moved a New York court against the Tatas. Tatas’ argument that it’s a minority stakeholder in Tata Motors and Tata Steel was not making much sense in the legal circles abroad as it owns 74 per cent stake in the group’s profit churner, Tata Consultancy Services, which earns 55 per cent of its revenues or Rs 58,000 crore from the North American markets. 

The group company, Indian Hotels, also owns marquee hotel properties in the US and Tata Motors-owned Jaguar Land Rover earns 16 per cent of its revenues from North America.

Besides, all Tata Sons directors were at the risk of getting sued in the US. 

Mistry started negotiations with DoCoMo last weekend in Singapore to arrive at a settlement, but the talks failed to make any headway. Besides, Mistry was also unable to sell or find a partner for Tata Teleservices, which is making huge losses.