Cyrus Mistry on Tuesday fired another salvo at the Tatas stating that “insinuations that the Docomo issue was handled under the watch of Mistry in a manner inconsistent with Tata culture and values are baseless” and that “at all times Ratan Tata and NA Soonawala, Trustee, concurred and approved the course of action adopted by the Tatas”.
“The suggestion that Ratan Tata and the trustees would not have approved of the manner in which the litigation was conducted is contrary to what transpired,” Mistry’s office said amid speculation that the ongoing legal battle between Japanese firm, NTT DoCoMo and the Tatas may be one of the reasons that led to the exit of Mistry from Tata Sons. “All decisions were taken with the unanimous approval of the Tata Sons Board. In fact, all decisions were collective decisions and the actions were consistent with every such collective decision,” Mistry said.
The London Court of Arbitration has given a $1.17 billion award in favour of NTT Docomo for Tata’s alleged breach of an agreement over their telecom joint venture — Tata Teleservices Ltd (TTSL). In November 2009, Docomo had acquired 26.5 per cent stake in TTSL for about Rs 12,740 crore. The two had also agreed that in case Docomo exits the venture within five years, it would be paid a minimum 50 per cent of the acquisition price. Under the shareholding agreement between the two, Tata was obliged to find a buyer for Docomo’s shares in TTSL if the Japanese company exited- a condition the Indian company is alleged to have breached. While Cyrus Mistry had made the Docomo issue into a legal battle, sources said it was not taken to kindly by Ratan Tata.
According to Mistry, a number of discussions on the Docomo situation had been held in the Tata Sons board. “Mistry had always mentioned that the Tatas should honour all commitments within the law. This stance is based on Tata Sons’ board view and was always consistent with the series of board meetings in which the Docomo issue was discussed,” Mistry said.
Hinting that it was a legacy issue, Mistry said, “to begin with, the agreement with Docomo had been executed before Mistry became executive chairman of the Tata Group.”
“The Tatas under Mistry requested Docomo to join the Tatas in seeking the approval of the Reserve Bank of India. Docomo did not agree. Nevertheless, Tatas applied to the RBI for the approval. Since the RBI approval was not forthcoming, Docomo initiated arbitration. The Award was passed in favour of Docomo and against the Tatas. The Tatas under Mistry did not challenge the Award in the UK. On the contrary, the RBI was approached once again by the Tatas for permission to pay the amount awarded. The RBI again refused permission,” Mistry said.
“Docomo sought enforcement of the Award in the Delhi High Court. In order to show their bonafides, the Tatas deposited a sum in excess of Rs 8,000 crore in the court. Throughout the above process, Ratan Tata and NA Soonawala, Trustee, were kept informed and they participated in separate meetings held with Mistry. They also participated in the meeting with the legal counsel (who also happened to be a trustee of the Dorabji Tata trust) and who represented Tatas in the litigation. At all times Ratan Tata and Soonawala concurred and approved the course of action adopted by Tatas and as advised by legal counsel,” Mistry said.
“In light of the above facts, to suggest that Mistry acted on his own, or contrary to “Tata values”, or without the knowledge and/or concurrence of Ratan Tata and Soonawala is as false as it is mischievous,” Mistry’s office said.
According to Tata Sons, when it asked for RBI’s approval for payment of the damages, the central bank of the country had said the option was not valid and any payment would have to be made at fair market value. Docomo had then moved Delhi High Court for enforcement of the award.