Delhi HC allows RBI to intervene in Tata-NTT DoCoMo case

Award is the result of two-year tussle between the two firms over their failed JV, Tata Teleservices, in which DoCoMo holds 26%

The Delhi High Court on Wednesday allowed the Reserve Bank of India (RBI) to file an intervention application in the enforcement proceedings initiated by NTT DoCoMo to realise a $1.17-billion international arbitration award in favour of the Japanese telecom giant against Tata Sons.

The arbitral award in question is the result of a two-year tussle between the two corporate behemoths regarding their failed joint venture Tata Teleservices, in which DoCoMo holds a 26 per cent stake.

According to the initial agreement, DoCoMo was given the choice of exiting the venture after a period of three years at a pre-determined share price, which was to be bought by Tata or an external buyer which the Indian company was to arrange.

In 2014, after the collaboration failed to generate the desired returns, DoCoMo decided to exercise the exit option at a time when the share price of Tata Teleservices had plummeted far below the earlier decided exit amount.

Unable to find a buyer, Tatas made an application to RBI to purchase the shares themselves as previously agreed. But, the regulator refused the stake-sale stating that such a transfer could not be made on a subsequent date at pre-determined share prices. This created an impasse which led to international arbitral proceedings, resulting in the June 22 London Court of International Arbitration (LCIA) award against Tatas.

In Wednesday’s hearing, RBI pressed to intervene in the ongoing enforcement proceedings and requested the court to allow the regulator to state its position regarding the legality of the award.

Disregarding the opposition put forth by the counsel for DoCoMo, judge Muralidhar permitted RBI to file a formal intervention application explaining its stance in the matter.

Even after the LCIA determination, RBI had reiterated its earlier stand in a letter to Tatas asking them not to comply with the terms of the award.

The case has been listed again for further consideration on December 1.