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Tata Sons Agrees To Pay DOCOMO $1.17 Billion 

Tata Sons Agrees to Submit Bank Deposit Receipts By August 2

Bombay House, Tata headquarters in Mumbai (Photographer: Harsunit Pal/BloombergQuint) 
Bombay House, Tata headquarters in Mumbai (Photographer: Harsunit Pal/BloombergQuint) 

Tata Sons Ltd. agreed to pay $1.17 billion to Japan’s NTT DOCOMO Inc., and said it will submit fixed deposit receipts for the amount to the Delhi High Court’s registrar by next Tuesday.

Japan’s DOCOMO had filed a plea in the high court seeking enforcement of the London Court of International Arbitration’s order. On June 24, the arbitration court had ruled in favour of DOCOMO and directed Tata Sons to pay $1.17 billion, approximately Rs 8,000 crore, for breach of contract.

DOCOMO filed the arbitration in London last year, claiming that Tata Sons failed to get a buyer for DOCOMO’s stake in their joint venture - Tata Teleservices Ltd. DOCOMO further claimed that Tata Sons did not buy back the Japanese company’s 26 percent stake in Tata Teleservices, despite repeated attempts for negotiations.

Tata Sons’ counsel Darius Khambatta submitted the Reserve Bank of India’s letter, in which the regulator rejected Tata’s proposal to pay DOCOMO $1.17 billion. RBI regulations do not permit an Indian promoter to buyback, from foreign investors, shares in an unlisted Indian company at pre-determined prices. Any such buyback was only permitted at fair market value.

DOCOMO has already lost half of the investments made in the telecom joint venture with Tata Sons, said senior counsel Kapil Sibal, who is representing DOCOMO. The company’s international reputation is getting hurt because of this case, Sibal added.

The Delhi High Court has suggested that DOCOMO and Tata Sons should consider resolving the issue together. The court also indicated that in light of the RBI’s opposition to Tata Sons’ payment proposal, it may look into whether the regulator can reject such payments directed under arbitral awards.

The high court will hear the case next on August 30.

“Tata Sons has from the outset underlined its commitment to honouring its contractual obligations to DOCOMO, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with Indian law,” a Tata Sons spokesperson said.