Tata Sons and NTT Docomo filed a joint petition in the Delhi High Court today saying they have agreed to settle the dispute.
After hearing both parties on the joint application, Justice S Muralidhar has adjourned the matter to March 8. Law firm Khaitan & Co is advising NTT Docomo in the case, while the Tata Group is being advised by AZB & Partners.
The Japanese telecom major has been fighting with Tata Sons over the right to sell its stake in their Indian wireless venture Tata Teleservices for at least 50 percent of the original investment since 2014, when it decided to exit the JV.
In 2009, DoCoMo had bought a 26% stake in Tata Teleservices for Rs 13,300 crore. Both parties had agreed that the Japanese company could sell its shares if the Indian partner failed to achieve the performance targets by March 2014. 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.
However, the RBI, which regulates the trade of put options, rejected the deal, saying the payment would have to be at a fair market value, as per an amendment in the rules in 2013. The then equity value of the JV was significantly below the originally agreed upon price. Since RBI approval was not forthcoming, DoCoMo initiated arbitration.
Docomo had dragged Tata to an international arbitration court in London, which upheld Docomo’s arguments and directed the Tatas to pay $1.17 billion in damages. 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.
The warring joint venture partners started litigations and other legal manoeuvring after the June 2016 order of the London Court of International Arbitration, which had asked the Tata Group to pay $1.17 billion to NTT Docomo as per the original agreement.
If the two partners part amicably, this will not only be good news for the salt-to-software Tata group but it could also pave the way for further consolidation in India’s telecom industry.
