The Reserve Bank of India has opposed the enforcement of $1.17 billion arbitral award in favour of Japanese telecom major NTT Docomo in its case with Tata Sons. The RBI submitted this in front of the Delhi High Court, in a setback to the companies' efforts to settle the long pending case.
However, the court on Wednesday asked the RBI whether its permission was required if there was no other objection to the enforcement of the arbitral award.
"Is the RBI's special permission required for paying damages for failing to fulfill contractual obligations? Say yes or no. If yes, then quote the circular, regulation or rule under which permission is required. If not, then say no," Justice S Muralidhar said and added, "make your stand clear".
The query from the court after the RBI opposed the consent terms arrived at between Tata Sons and Docomo with regard to the enforceability of the award granted in favour of the Japanese telecom major by the London Court of International Arbitration (LCIA) in June 2016.
The RBI said it will submit its stand before the court on the next date of hearing on March 14.
Tata has already deposited the amount of $1.17 billion with the Delhi High Court.
Tata and Docomo have decided to settle their two-year old dispute regarding their telecom joint venture, Tata Teleservices Ltd (TTSL), with the Indian company withdrawing its objections to the enforcement of the award.
The Japanese company in turn has said it will "suspend its related enforcement proceedings in the United Kingdom and the United States" for a period of six months.
The Reserve Bank of India (RBI) has objected to the consent terms saying if Docomo fails to succeed in enforcement of its award in India, it cannot say it will try and enforce it in some other jurisdiction after six months.
According to media reports, the central bank was also concerned that the enforcement of the award will result in "transfer of shares and was hence illegal".
The court, however, disagreed with the contention and termed it "absurd". It said that if Docomo does not succeed here, it can take the award for enforcement of the award to the US or the UK and "RBI has no jurisdiction outside India".
"How can you object to enforceability anywhere else in the world? If they (Tata) have assets anywhere else, they (Docomo) can move a court there for the enforcement of the award. There is no law prohibiting it," the judge said.
The judge said "all I will say is that objections to enforceability of the award stand withdrawn. ... So it won't be a precedent as I have not adjudicated on the correctness of the tribunals ruling."
Published Date: Mar 09, 2017 08:41 am | Updated Date: Mar 09, 2017 12:52 pm