Docomo case: Tata Sons to deposit $1.17 bn in Delhi HC

Pursuant to the judicial proceedings initiated by Japanese telecom giant NTT Docomo, Tata Sons Ltd on Tuesday agreed to deposit the full sum of $1.17 billion, in line with a June 23 London Court of International Arbitration award against them with the registrar of the Delhi High Court by August 2.

According to a Tata Sons spokesperson, the fulfillment of any arbitral award requires conformance to Indian law and regulations and the company is committed to full compliance with all such requirements. “The company has consistently underlined its commitment to honouring its contractual obligations with NTT Docomo, and has taken every possible step to keep the interests of all stakeholders in mind,” added the Tata Sons spokesperson.

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The recent arbitral award, currently being enforced by NTT Docomo, is the result of a two-year tussle between the two corporate behemoths in relation to their failed joint venture (JV) Tata Teleservices, in which NTT Docomo holds a 26 per cent stake.
 

According to their initial agreement, NTT Docomo had been allowed the option of exiting the venture after a period of three years at a predetermined share price, which was to be bought by Tata Sons or an external buyer, which the Indian company was to arrange.

In 2014, after the collaboration failed in generating the desired returns, NTT Docomo decided to exercise the exit option, at a time when the share price of Tata Teleservices had plummeted far below the earlier decided exit agreement.

Unable to find a buyer, Tata Sons made an application to the Reserve Bank of India (RBI) to purchase the shares themselves, as previously agreed. The regulator, though, refused the application at the time, on the ground that such a transfer could not be made on a subsequent date at a predetermined share price, according to existent foreign exchange and securities regulations.

The deadlock resulted in the international arbitration proceedings that followed, culminating with the $1.17 billion award now sought to be enforced against Tata Sons.

Also Read: Tata Sons To Pump Rs 3k Cr Into Tata Teleservices

In Tuesday's hearing, senior advocate Darius Khambata, appearing for Tata Sons, began the proceedings by informing the court of a recent letter issued by RBI, reiterating its earlier position against the stake sale.
 

Senior advocate Kapil Sibal, appearing for NTT Docomo, was quick to respond by saying, "We are not concerned with this (the RBI letter). Tata has an international reputation to maintain and Docomo has lost a considerable sum of money in this process."
 

The counsel for Tata Sons then reassured the court of the company's commitment to NTT Docomo and the arbitral award, by making an offer to deposit the entire amount as awarded with the Delhi High Court without prejudice to the merits of the case until the final determination of the matter.

Also Read: UK Court To Tata Sons: Pay $1.17 Billion In Damages To Docomo
 

Khambata also made a passing reference, seeking the deposit of Docomo's shares in the JV in return, while also asking the court for four weeks time to consider Tata's position with regard to the proceedings. Sibal, in turn, accepted the Tata Sons offer but refused to make any such deposits as requested.
 

This lead the Bench, presided by Justice Manmohan Singh, to parentally remark, "I will still tell both of you (Tata and Docomo) to sit together and try to solve this amicably," in an attempt to find common ground between the two sides.
 

The Bench then directed Tata Sons to deposit the $1.17 billion, in the name of the registrar of the Delhi High Court within one week from Tuesday and allowed the amount to be invested in a fixed deposit in any scheduled Indian bank for a period of six months, which is to be renewed as and when necessary. The matter has been fixed for further hearing again on August 26.