MUMBAI: In a victory for NTT DoCoMo , the Delhi high court has approved the $1.18-billion settlement pact, which would allow the Japanese major to sell its 26.5% stake in the telecom joint venture back to Tata Sons.

The shareholders’ agreement between Tata Sons and DoCoMo in 2009 as well as the settlement terms struck by them were opposed by the Reserve Bank of India (RBI) on the grounds that those contravened the country’s laws. However, the Delhi high court on Friday rejected the central bank’s objection, stating that “there is no provision in law which permits the RBI to intervene in a petition seeking enforcement of an (international) arbitral award to which the RBI is not a party”. The court also said that the RBI has failed to prove that it has the power to overrule a foreign court’s arbitral award.

Welcoming the judgment, Tata Sons said, “The court allowed both the enforcement of the award and implementation of the consent terms between the two entities. Tata Sons and NTT DoCoMo are taking further steps in terms of the order.”

This 41-page order by Justice S Murlidhar can have confidence-building implications for foreign players investing in India, demonstrating the country’s business-friendly environment. It also signals that India would recognise verdicts given in international arbitrations. Tejas Karia, partner at Shardul Amarchand Mangaldas, said, “The decision sends a strong message that Indian courts do recognise ability of International Arbitral Tribunal to pass award on contractual terms and the same will be enforced in India.”

In 2016, DoCoMo had won the $1.18-billion arbitral award from a London court and sought its implementation in India. The Japanese telco had moved the international court after it was denied an exit price of $1.18 billion from the Indian telecom joint venture (JV). According to the shareholder agreement with Tata Sons, DoCoMo would get a minimum 50% of its $2.36 billion investment it had made in the JV on its exit. But the RBI had blocked the payout, citing rules that prevent a guaranteed payment to a foreign investor with regard to selling its shares in an Indian company.

Initially, Tata Sons too had opposed the arbitral award. But recently the company supported it. Last month, both the joint venture partners filed a petition in the Delhi high court seeking a settlement to the matter. Friday’s order said that the arbitral award “is enforceable in India” and “it shall operate as a deemed decree of this court”. The Delhi HC also said that the arbitral award related to ‘damages’ won by DoCoMo and the latter is returning the shares held in the Indian JV as they are of no use now.

