Tata Sons and Japanese telecom major NTT Docomo today filed a joint application in the Delhi High Court saying they have decided to settle their two-year old dispute over their Indian telecom joint venture.
In their application moved before Justice S Muralidhar, Tata said it has decided to "withdraw its objections to the enforcement of the award" of USD 1.17 billion granted by the London Court of International Arbitration (LCIA) in favour of Docomo in June 2016.
The Japanese company in turn said it will "suspend its related enforcement proceedings in the United Kingdom and the United States" for a period of six months.
The court took on record the application and listed it for hearing on March 8 when it will also take up the Reserve Bank of India's (RBI) plea seeking to intervene in the matter.
RBI has sought to intervene in the matter contending that that the shareholding agreement between the two companies permitting transfer of funds abroad was illegal as it violated Foreign Exchange Management Act (FEMA) Regulations.
Tata, in the past, has been consistently maintaining that while it has every intention to pay the arbitral award to Docomo, it has been unable to do so due to lack of permission from RBI.
The issue pertains to the exit of Docomo from the two companies' joint venture, Tata Teleservices Ltd (TTSL), for alleged breach of agreement by Tata and the subsequent enforcement of the damages awarded by LCIA in favour of the Japanese company for the same.
The matter had gone to arbitration as Tata was unable to find a buyer for Docomo's 26.5 per cent stake in TTSL for 50 per cent of the acquisition price, which came to around Rs 58.45 per share, and the Japanese company was not willing to accept the "fair market value" of Rs 23.44, that the Indian company was willing to pay as per the shareholding agreement.
Under the agreement between the two companies, either
Tata had to find a buyer for Docomo's shares at 50 per cent of acquisition price or buy its shares at fair market value, both leading to transfer of funds outside India, which RBI has termed as illegal.
In November 2009, Docomo had acquired 26.5 per cent stake in TTSL for about Rs 12,740 crore. The two had also agreed that in case Docomo exits the venture within five years, it will be paid a minimum 50 per cent of the acquisition price through the purchase of its shares by a buyer who would be found by Tata.
The other option was Tata purchasing the shares at fair market value.
LCIA had awarded damages of USD 1.17 billion in favour of Docomo for Tata's alleged breach of the agreement regarding buying of the Japanese company's stake on its exit.
Docomo moved the Delhi High Court for enforcement of the award after Tata cited refusal of permission by RBI to make the payment.
Docomo in an affidavit had said that RBI's permission was not required for paying the damages.
