Hope RBI Won’t Delay Final Resolution With Tatas: Docomo
After Delhi High Court win Docomo hopes RBI will not take further action.
Japanese telecom firm NTT DoCoMo hopes that the Reserve Bank of India will not create any more obstacles in the enforcement of the $1.17-billion award to be paid by the Tata Group, as approved by the Delhi High Court to settle a 3-year old dispute between the estranged partners.
The Delhi High Court on Friday, rejected the RBI's objections in the Tata-Docomo case, clearing the decks for the Tatas to pay $1.17 billion to the Japanese telecom major.
"We hope and expect that the RBI will not seek to delay final resolution by, for example, lodging an appeal against this very clear decision," DoCoMo sources told news wire agency PTI.
The company considers today's verdict to be of "huge significance" for foreign investments in India.
Docomo has been locked in a legal battle with the Tata Group over alleged breach of contractual obligations pertaining to the Indian joint venture.
"The court's decision is very welcome. It is of huge significance for foreign investment in India, because it shows that the Indian Courts will recognise their international obligations and enforce an award within a matter of months," the sources added.
An acceptance of the judgement will make this a "landmark" case, boosting investor confidence in India's legal system, they pointed out.
The two sides had gone for arbitration as the Indian company was not able to find a buyer for the Japanese telecom major's 26.5 percent stake in their joint venture, Tata Teleservices Ltd (TTSL), when it exited from it.
As per the shareholding agreement, on Docomo's exit from the venture within five years, Tata was to find a buyer who would purchase the Japanese company's stake at minimum 50 percent of the acquisition price, which came to around Rs 58.45 per share.
The other option was Tata purchasing the shares at the fair market value, which was Rs 23.44. However, this was not acceptable to Docomo and it had opted for arbitration.
Thereafter, the London Court of International Arbitration or LCIA in June 2016 awarded damages of $1.17 billion in favour of Docomo for Tata's inability to find a buyer as per the shareholding agreement.
Docomo had moved the Delhi HC for enforcement of the award after Tata cited refusal of permission by the RBI to make the payment.
The RBI had contended that the shareholding agreement was illegal and objected to the award of damages.
It had said that Docomo's shares in TTSL be purchased only at the fair market value. The RBI had later also opposed the settlement arrived at between Tata and Docomo.
Under the settlement agreement between the two companies, Tata and Docomo had decided to settle the dispute, with the Indian company withdrawing its objections to the enforcement of the award.
Tata had already deposited $1.17 billion with the high court.
The Japanese company in turn had said it will "suspend its related enforcement proceedings in the U.K. and the U.S." for a period of six months.