Tata Sons, Docomo agree to settle Rs 7800 crore payment dispute
- Author: Zachary Reyes Feb 28, 2017,
Feb 28, 2017, 12:11
Tata Sons and Docomo informed the court on Tuesday that they had agred to settle their dispute over a $1.17 billion (nearly Rs 7,783 crore) bill outside the court.
Docomo in 2009 paid 127.4 billion rupees ($2.45 billion at the time) for a 26% stake in Tata Teleservices.
Tata Teleservices, a group company of India's largest business house Tata Sons, and its former telecom joint venture partner NTT DoCoMo have reportedly told the Delhi High Court that both the companies have agreed to settle their dispute, with the former withdrawing its objection to a London-based arbitration court's award of damages in favour of the latter. Docomo then brought Tata to an worldwide arbitration court in London, charging that the Indian company had not upheld its obligation to find a buyer.
Tata Sons and DoCoMo have jointly applied to the Delhi High Court, requesting that it accept their agreed terms of settlement. Tata Sons' failure to pay up was believed to be a factor in shareholders' decision to remove Cyrus Mistry as chairman last October.
The application for settling the dispute would be settled on March 8.
As of 1:29 pm, shares of Tata Teleservices Maharashtra traded 19 per cent higher at Rs 7.95.
However, the deal got stuck as the Reserve Bank of India blocked Tata's offer, saying the rules prevented foreign investors from selling stakes in Indian firms at a pre-determined price. "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 aboard, the board of Tata Sons has chose to withdraw its objections to the enforcement of the award in India". The court agreed, ordering Tata to pay $1.17 billion in damages.
If the settlement sees light of the day, then Tata teleservices would be able to merge with another telco, a trend triggered by emergence of Reliance Jio.