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28
February 2017
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Tata Docomo (The Total Investment & Insurance
Solutions)
The Tata
Group has agreed to pay $1.18 billion to Japanese company NTT DoCoMo to settle
the dispute between them. Tata had already deposited the amount with the Delhi
High Court. As part of the settlement, both the parties would withdraw cases
against each other, and the Japanese company would transfer its shares in Tata
Teleservices Ltd. The Total
Investment & Insurance Solutions
"The
parties have 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 settlement terms, if approved by the Delhi High Court, clears the
way for the $1.18 billion (about Rs7,741 crore), already deposited by Tata Sons
with the Delhi High Court, to be paid to DoCoMo, and would allow DoCoMo to
transfer its shares in Tata Teleservices," Tata Sons, the group's holding
company said in a release.
As part of
this joint application, and in anticipation of the matter being finally
resolved in India, DoCoMo has agreed to suspend its related enforcement
proceedings in UK and US for a period, the statement says.
The Delhi HC
heard the matter on Tuesday. The Court adjourned the matter to the case's
original date of 8 March 2017. The
Total Investment & Insurance Solutions
In 2009,
DoCoMo bought 26.5% stake in Tata Teleservices for about Rs12,740 crore. Both
Tata and DoCoMo had agreed at that time that upon failure to meet certain
criteria, the Japanese company would have right to exit the venture after five
years and would get back a minimum 50% of its investment.
However, in
2014, when DoCoMo decided to exit from the Indian market, the Tatas refused to
buy back the shares at pre-determined price. The Tatas cited a change in
regulation, which led the Reserve Bank of India (RBI) and the Finance Ministry
to object to the transaction committed to a pre-fixed price. Tata filed an
application before the RBI seeking its permission to acquire the stake for
itself, but the central bank rejected the application. The Total Investment & Insurance Solutions
DoCoMo then
sued Tata Sons in courts in the US and UK, besides the Delhi HC. The Japanese
company also filed a suit against the Tatas in the London Court of Arbitration
in January 2015. In June 2016, a three-member international arbitration panel
ordered Tata Sons to pay $1.17 billion (around Rs7,956 crore at that time) to
DoCoMo for breach of contract. The
Total Investment & Insurance Solutions
In the
statement issued on Tuesday, Tata Sons said, "...in the interests of
putting an end to a dispute that had arisen with NTT DoCoMo and in the larger
national interest of preserving a fair investment environment in India, it has
reached an agreement with NTT DoCoMo on a joint approach to enable enforcement
of the 22 June 2016, London Court of International Arbitration (LCIA) award. As
a gesture of good faith and in accordance with the Tata group's long-standing
record of adherence to contractual commitments that it has always enjoyed both
in India and abroad, the Board of Tata Sons has decided to withdraw its
objections to the enforcement of the Award in India."The Total Investment & Insurance
Solutions
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