Tata Sons told the Mumbai HC on Wednesday that it has got initial approval from the RBI to pay the $1.17 billion in damages to Japan’s NTT DoCoMo but the payment was apparently turned down by the Finance Ministry due to foreign exchange regulations, reports Economic Times. Tata’s lawyer added that the company had invited NTT Docomo to hold joint discussion with the government, however NTT refused to take part, according to the report. The hearing is now adjourned until February 2nd 2017.
Japan’s NTT Docomo holds a 26% stake in the joint venture Tata Docomo in India along with Tata Teleservices (TTL). After the venture started posting continuous losses, TTL was ordered to pay $1.17 billion in damages to NTT by a London court in June. The terms of agreement between both companies provides an option for the acquirer (NTT Docomo) to request a suitable buyer for at least 50% of the acquired price in case venture turns non-profitable.
NTT told in statements to the press that Tata is not ‘honoring’ the payment of $1.17 billion in damages; Tata had earlier denied these allegations in August. Tata added that RBI’s foreign exchange regulations prevented it from paying the entire amount in a single transaction. The company claimed to have deposited the entire amount with the Delhi Court registrar after it received the London court’s arbitrary order. NTT however went on to move a United States district court last month to force Tata to pay the $1.17 billion arbitrary sum.
During a hearing on 2nd December, RBI had stepped in and filed itself as a party in the case, but the court is yet to decide about RBI’s inclusion. On Wednesday’s hearing, the judge hearing the case had reportedly suggested that in case Tata Docomo venture deal had an indemnity option for NTT, then Tata should abide by it.
Tata assets in London at stake
In August, while procuring the London court order, NTT was examining whether it could seize Tata’s UK assets, including Jaguar Land Rover, a unit of Tata Motors, for recovering the $1.17 billion payout. However the Tata spokesperson told MediaNama that NTT cannot use this route to secure the payment, as the UK assets were not under direct ownership of Tata Sons.