‘Tata-DoCoMo deal signals sanctity of contract for Indian firms’
Mumbai, March 1 (IANS) The deal between Tata Sons and Japanese mobile operator DoCoMo for the transfer of latter’s shares testifies the sanctity of contract for Indian entities, said an executive of Legasis Services.
Tata Sons on Tuesday said it has agreed to pay $1.18 billion (Rs 7,876 crore) to Japanese mobile operator NTT DoCoMo for transfer of its shares to Tata Teleservices Ltd.
“The Tata-DoCoMo deal sends a strong signal to the international community that the sanctity of contract is important for Indian businesses,” Suhas Tuljapurkar, Founder and Director Legasis Services told BTVI in an interview here.
In a statement, Tata Sons said its Board had agreed to pay $1.18 billion to DoCoMo as enforced by the London Court of International Arbitration on June 22, 2016 and withdraw objections to its award in India.
“If any provision of the contract is legally unenforceable or not binding under the RBI regulations, the settlement showed that both the parties have acted in good faith on the best possible option to give effect to what they agreed upon,” reiterated Tuljapurkar.
As both the parties have jointly applied to the Delhi High Court for settling their dispute, the settlement terms will be subject to its further orders.
Tata Sons has already deposited the amount with the Delhi High Court.
As part of the joint application, DoCoMo has also agreed to suspend its enforcement proceedings in Britain and the US for a period of time.
As per the award, if the price option had to be protected, the settlement also demonstrated that the parties could work together without violating the law or regulations and agreed to the terms.
“I think it is a good news that the put option price was exercised to send a strong signal to the international community that sanctity of contacts was important to Indian entities,” asserted Tuljapurkar.
Agreeing to settle the dispute under the Companies Act of 2013, Tuljapurkar also indicated that the put option as a mechanism of protecting the price was legally enforceable.
“Nothing prevents parties from working out what is the next best possible option and alternatives available to give effect to the contract,” affirmed the legal executive.
In this context, Tuljapurkar cited various provisions and investors’ rights in the shareholder’s act that are unenforceable.
He also observed that the courts have wide powers to even direct the regulator to settle the dispute between the parties in the company law matters.
“The powers vested in the courts are much wider, as they can enforce a consensual settlement arrived at between the parties, and everybody will have to follow what the court says,” added the legal expert.