Japan-based NTT DoCoMo Inc has rejected Tata Sons’ offer to deposit $1.17 billion — a penalty awarded by an arbitration panel — with the Delhi High Court registrar pointing towards further escalation
Japan-based NTT DoCoMo Inc has rejected Tata Sons’ offer to deposit $1.17 billion — a penalty awarded by an arbitration panel — with the Delhi High Court registrar pointing towards further escalation of battle between the two giants over the exit of the Japanese company from its telecom joint venture with the Tata Group.
According to sources, DoCoMo feels that until the full sum, which the Tata owed is to it, is paid it “will (have to) take all available steps to recover what is due to it, (from) wherever the Tata Group does business.”
Tata Sons — the holding company of the salt-to-airframes conglomerate — on Tuesday had agreed to furnish fixed deposit receipts of $1.17 billion with the registrar of the Delhi High Court on or by August 2, 2016. This follows an award in favour of DoCoMo by a tribunal of the London court of international Arbitration rendered on 22 June 2016.
The dispute relates to DoCoMo’s exercise of its right to exit from Tata Teleservices — its joint venture with the Tata Group — at share price half of what it had paid over five years ago.
DoCoMo had decided to exit Tata Teleservices in 2014 as its JV’s performance was not upto mark and had given Tata 90 days to find a buyer.
With Tata failing to find a buyer for DoCoMo’s stake in the JV, the Japan-ese telecom company had exercised its right to seek a buyback of its for 50 per cent “of the acquired price, amounting to Rs 7,250 crore (or 125.4 billion yen), or a fair market price, whichever is higher.”
The Tata Group, however, could not repay the amount as the Reserve Bank India felt it would violate the current Foreign Exchange Manag-ement Act (Fema) norms.
According to RBI, Tata Group cannot buyback shares at a price higher than the market value as Tata Teleservices’ stock price is lower than the price agreed under the deal between Tata and DoCoMo.
Following this, the Japanese firm initiated arbitration proceedings which ruled in favour of DoCoMo and fined the Tata Group $1.17 billion.
DoCoMo believes, the sources said, that Tata’s offer to deposit into court is intended “to give the appearance of payment but it is patently not the same as payment.”
This is particularly so, DoCoMo felt where the RBI has allegedly “bloc-ked payment out following an application by the Tata Group.”
The Japanese telecom gaint thinks that deposit into court is not payment out to DoCoMo.
“Until such point as the full sum owed is paid, DoCoMo will take all available steps to recover what is due to it, wherever Tata does business. DoCoMo will vigorously pursue its rights,” said sources.