Arbitration on the shareholder agreement between Tata Sons and NTT Docomo has been adjourned until February 2, with the Indian company saying it needs more time to respond to a notice from the Reserve Bank of India (RBI).
NTT is seeking the enforcement of a shareholder agreement which would see Tata Sons, holding company of the Tata Group, pay $1.7 billion as compensation for its stake in Tata Teleservices.
The matter has been bogged down in legal argument before the High Court in Delhi after the RBI and the finance ministry said the payment violated Indian foreign investment rules.
On Wednesday, Tata’s lawyers told the High Court that the company was prepared to pay out its Japanese partner, but was prohibited by Indian regulations.
According to the Economic Times, Tata says it initially received approval from the RBI to pay the full amount to Docomo, but this was overturned by intervention from the finance ministry.
“We’re committed to perform out obligation, and we even solicited Docomo’s co-operation before we made the application to the RBI,” Tata’s layer Darius Khambata told the court.
Docomo acquired a 26.5% stake in Tata Teleservices in 2009, and under the shareholder agreement it would be paid a minimum 50% of the acquisition price if it wanted to exit the venture within five years.
The value of Tata Teleservices has fallen significantly below the agreed original valuation, and the RBI now claims that under new rules the compensation amount should be set at current market value.