News
Delhi court to hold next hearing in Tata DoCoMo case at end of August.
Tata Sons has committed to depositing the US$1.17 billion it has been ordered to pay NTT DoCoMo in damages related to their Indian joint venture with the Delhi High Court next week, according to local press reports.
The firm has agreed to pay the sum and will submit fixed deposit receipts for the total amount to the court’s registrar by Tuesday, India’s BloombergQuint reported.
While the move is a positive step for DoCoMo, which is seeking to exit India, the report indicates that there are still hurdles to be overcome in the case, including the possibility of regulatory intervention. The next hearing in the Delhi High Court will be on 30 August.
A month ago NTT DoCoMo revealed that the London Court of International Arbitration had ruled in its favour with regard to its bid to sell out of Tata Teleservices, a joint venture between itself and Tata that offers mobile services in India under the Tata DoCoMo brand. The U.K. court ordered Tata Sons to pay DoCoMo $1.172 billion in damages for breach of the pair’s shareholder agreement.
DoCoMo sought arbitration in January after Tata failed to find a buyer for its stake in Tata Teleservices.
Essentially, the original shareholder agreement made provision for DoCoMo to exit the venture in return for either fair market value or for at least half of the money it invested in March 2009 for a 26.5% stake, a sum that comes to 72.5 billion rupees, or around $1.17 billion based on a December 2014 exchange rate.
DoCoMo exercised its option to exit the JV in July 2014, putting the onus on Tata to find a buyer for the shares.
Tata Sons had attempted to buy back the shares itself, for $1.17 billion, but was blocked from doing so under Reserve Bank of India regulations, BloombergQuint explained.
The Delhi High Court may examine the legality of such regulatory blocks, the news service added.
It has also called upon Tata Sons and NTT DoCoMo to work together to resolve the issue.
