NEW DELHI: The Delhi High Court ruled out RBI’s appeal and on the contrary allowed the The Tata group and NTT to settle down their dispute.
With the High court ruling, Tata group have been allowed to pay roughly $1.25 billion to Japanese telecom giant NTT DoCoMo with the Delhi High Court today upholding the enforceability of an international arbitration award issued last June.
The court verdict signals the end to a three-year scrappy battle between the two partners over the terms of disengagement from their telecom venture in India.
In 2014, NTT Docomo had demanded the payment of 50 per cent of its original investment of $2.5 billion made in 2009 for a 26.5 per cent stake in Tata Teleservices under the terms of a shareholders’ agreement between the two partners.
Delivering a landmark judgment, Justice S. Muralidhar of the Delhi high court said the Reserve Bank of India had no locus standi to intervene in the dispute between the two parties since the central bank wasn’t a party to the arbitration proceedings.
There is no such statutory requirement that where the enforcement of an arbitral award might result in remitting money to a non-Indian entity outside India, or to an account of a party outside India, RBI has to necessarily be heard on the validity of the award,” the judge said.
It was not immediately clear whether the RBI would challenge the high court verdict.
In November 2009, the Japanese firm had picked up a stake in Tata Teleservices (TTSL) for about Rs 12,740 crore (at Rs 117 per share). Under the terms of the shareholders’ agreement, if TTSL failed to meet certain performance indicators, the Tatas would be obligated to find a buyer for DoCoMo’s shares in TTSL at a sale price which would have to be higher of the fair value of those shares as on March 31, 2014 or 50 per cent of the price at which DoCoMo purchased the shares.
In April 2014, DoCoMo decided to exit the joint venture and sought a price of Rs 58 per share, or Rs 7,200 crore, from the Tatas. As the dispute between the two parties snowballed, the Japanese firm commenced arbitration proceedings against Tata Sons where it won a $1.17 billion award in London. Last year, DoCoMo had filed a plea in the Delhi High Court seeking enforcement of the arbitration ruling.
In February this year, both DoCoMo and Tata Sons reached an agreement on the enforcement of an arbitration award. The parties jointly applied to the Delhi high court, requesting that it accept their agreed terms of settlement, subject to such further orders as the court sees fit.
The terms include the withdrawal of Tata Sons’ objections to enforcement in India and disposition of the arbitration amount even as it sought the court’s declaration that the award is enforceable in India. The Japanese firm agreed to suspend its related enforcement proceedings in the UK and the US.