Tata Sons agrees to pay $1.17 bn to DoCoMo, withdraws case in HC

Tata Sons has agreed to pay USD 1.17 billion in damages to Japan's NTT DoCoMo  in their long-standing dispute over the latter's exit from a joint venture in India. The deal could be announced as early as Tuesday. The parties have opted for an out-of-court settlement. Following this, Tata Sons has withdrawn its application against DoCoMo in the Delhi High Court. Following news that Tata Sons and NTT DoCoMo have opted for an out-of-court settlement, Tata Sons has withdrawn its application against DoCoMo in the Delhi High Court, reports CNBC-TV18.The biggest hurdle to a settlement now remains the Reserve Bank of India, which remains opposed to the payout under the existing structure. RBI said the existing clause in the joint venture agreement was illegal, something which Tata Sons denies. RBI said a fixed rate of return for exit from the joint venture makes it unacceptable.HP Ranina, a senior lawyer, said this settlement is against the RBI's norms and the parties may not be able to take this forward. They will have to look for other alternatives.Tata and DoCoMo will have their fingers crossed when the RBI reviews the case on March 8.It is understood that the new regime at Tata Sons under N Chandrasekaran has sought to quickly resolve the matter, which cropped up under the reign of Cyrus Mistry.Mistry's handling of the dispute was among the many grievances that irked the Tata Sons board and led to his unceremonious ouster last October.In 2009, the Japanese telecom giant invested around USD 2.6 billion in order to buy a 26.5 percent stake in Tata Teleservices (TTSL). Under the terms of that deal, in the event of an exit, DoCoMo was guaranteed the higher of either half its original investment, or its fair value. DoCoMo later deemed the venture as its “worst” overseas investment, and sought USD 1.17 billion in compensation for its 2014 exit from India. In June last year, an arbitration court in London ruled against the Tata Group. Docomo had alleged a breach of contract on the grounds that Tata Sons had neither found a buyer nor bought back the Japanese partner's 26 percent stake in their telecom joint venture Tata Teleservices. The Reserve Bank of India was opposed to the payout under the existing structure. It said the existing clause in the joint venture agreement was illegal, something which Tata Sons denies.Both Tata Sons and NTT Docomo refused to comment on the matter.