The Indian government plans to stop the payment of a $1.17 billion fine that Tata Sons was ordered to pay Japan's NTT DoCoMo by an international arbitration court last month for breaching an India joint venture deal, Bloomberg reported.
The finance ministry won't make an exception to Indian foreign exchange rules as it did not want to set the wrong precedent, said the Bloomberg report citing people familiar with the matter.
Last Month, The London Court of International Arbitration ruled in favour of NTT DoCoMo, Japan's largest mobile firm, ordering Tata Sons to pay the fine for breaching the JV from 2008.
Meanwhile, Japan's DoCoMo has threatened to seize Tata UK steel assets and part of its Jaguar Land Rover seeking compensation for its stake in Tata's wireless business, according to the FT.
According to a statement by Tata, the London court has granted Tata Sons 23 days from July 27 to settle the order. It, however, said the UK assets of Tata Steel and Jaguar Land Rover are subsidiaries of Indian listed companies where Tata Sons only has a minority stake, and therefore cannot be held liable for compensation.
"These companies are not party to the arbitration proceedings, and no award has been issued against them. It follows that the award cannot be enforced against those companies," Tata said in the statement.
Tata Sons has said it plans to deposit $1.2 billion with the Delhi High Court, which has given the companies until August 30 to resolve the issue.
DoCoMo is seeking the price it was entitled to receive upon exiting the Indian joint venture. DoCoMo had bought a 26.5 per cent stake in Tata Teleservices for about Rs 12,740 crore but in April 2014, the company decided to sell its stake after the joint venture struggled to grow subscribers quickly. Tata attempted to buy the stake, but the Reserve Bank of India did not allow the deal because of a rule change.
As per the terms of the JV deal, DoCoMo should have received at least 50 per cent of its acquisition price if it exited the company within five years. However, the JV incurred steep losses and the valuation of the company suffered.
With agency inputs