New Delhi: Tata Sons and NTT DoCoMo told the Delhi high court on Tuesday that they have reached a settlement agreement concerning enforcement of an arbitration award on the Tata Docomo issue.
“Tata Sons withdraws objections to enforcement of the arbitration award in favour of NTT DoCoMo,” Darius Khambatta, senior advocate representing Tata told the court. He also said that NTT, as per the agreement, would not enforce the award within the next six months in any jurisdiction.
Both Tata Sons and NTT Docomo have objected to the Reserve Bank of India’s (RBI) statement before the court terming the exit agreement as illegal.
However, the high court will have to adjudicate the RBI’s objections to Tata’s application to buy back Docomo’s stake at Rs58.5 a share.
The central bank, according to its 2014 norms that specified that foreign companies can only exit investments at a valuation based on the return on equity, rejected DoCoMo’s exit proposal.
In January 2015, NTT initiated 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.
In April 2014, NTT DoCoMo had decided to sell its entire 26.5% stake in Tata Teleservices and withdraw from mobile telephony in India.
Under the agreement between Tata and NTT, the latter had the right to request a buyer for its stake at a fair market price or 50% of its acquired price, amounting to Rs7,250 crore, whichever was higher. That would have meant a higher price than what is allowed under current rules which state that foreign companies can only exit investments at a valuation based on the return on equity.
A London tribunal had ordered the promoter of major Tata operating companies to pay $1.17 billion as compensation to NTT DoCoMo in June for breaching an agreement. Thereafter, DoCoMo filed an enforcement proceeding before the Delhi high court. It also approached London’s Commercial Court seeking enforcement action assets such as Jaguar LandRover and Tata Steel, which it argued, are controlled by Tata Sons.