NTT DoCoMo has served a fresh notice to Tata Sons in London to enforce the $1.17 billion in damages awarded by an international arbitration court. The notice was served on Wednesday after the Japanese firm received approval from an England court to initiate the proceedings.
The Japanese telecom company has decided to take legal recourse for enforcement of the arbitration award in countries where Tata Sons has a major presence. According to sources close to NTT DoCoMo, the decision was taken as it was unhappy at the manner in which the dispute has been handled by Tata Sons.
“The Tata Group seems to be taking cover behind technicalities instead of paying the damages awarded through the arbitration process. Perhaps, there was no need to seek the approval of the Reserve Bank of India again because the situation has changed since 2014. Then, it was a case of an equity transaction, whereas now, it is an arbitration award,” said the source, adding that the Tatas should have consulted their joint venture partner before approaching the RBI.
On Tuesday, Tata Sons had announced its intention to deposit $1.17 billion (₹7,950 crore) with the Delhi High Court. An international arbitration panel had earlier ordered Tata Sons to pay damages to Japan’s NTT DoCoMo Inc for breaching an agreement related to their telecom joint venture, Tata Teleservices.
The money, however, cannot be released to NTT DoCoMo because the RBI has refused permission. While NTT DoCoMo reckons Tata Sons did not play its cards right for an RBI nod, a spokesperson for the Indian firm said the transaction “requires conformance to Indian regulations and law, and Tata Sons is committed to full compliance with all such requirements”.
The RBI ruled that when the put option is exercised, it should be based on the prevailing return on equity at the time the option is exercised and not on a pre-determined valuation. But, under the agreement, NTT DoCoMo is entitled to at least ₹7,250 crore (at ₹58 per share) for its stake in Tata Teleservices.