Court accepts Tata-Docomo agreement, rejects RBI objection

The Delhi High Court has accepted the consent terms of Tata Sons and NTT Docomo, ending a long standing battle between India’s oldest business house and Japanese telecom firm. The court dismissed Reserve Bank of India’s (RBI’s) objection to a pact aimed to resolve the dispute over the Japanese company’s exit from their Indian telecom joint venture with the Tata Group.

The court allowed for the enforcement of $1.17 billion arbitral award by the Tata group, that was decided last year by an international court.

Tata Sons under their interim chairman Ratan Tata had withdrawn its objections to the enforcement of the arbitral award few months ago.

The RBI had last month contested the payment to Docomo, which would have followed the enforcement of the award, arguing that it amounted to a transfer of shares and was illegal.

Docomo had acquired a 26.5% stake in Tata Teleservices for about Rs 12,740 crore in November 2009 and the partners agreed that the Japanese company would be paid at least 50% of the acquisition price if it exited the venture within five years. When Docomo decided to get out in 2014, Tata Sons was unable to find a buyer for the Japanese company’s stake and offered to buy it for half the investment of $2.2 billion.

India’s central bank blocked the Tata Sons’ offer, saying foreign investors could not sell stakes in Indian companies at pre-determined prices. Docomo approached a London tribunal in January 2015, which asked the Tata Group last June to pay $1.17 billion for not abiding by the agreement. Docomo then moved the Delhi High Court to enforce the award.