Amid escalating war of words between Cyrus Mistry and Tatas, the recently sacked chairman today refuted the charge that the controversial telecom deal with Japanese firm DoCoMo were handled by him 'in a manner inconsistent with Tata culture' and dubbed it as 'false and mischievous'.
A statement issued by his office said the suggestion that Ratan Tata and trustees would not have approved of the manner in which the litigation against Docomo was conducted was contrary to what transpired.
All decisions on Tata-Docomo deal were taken with approval of Tata Sons Board and actions were consistent with every such collective decision, it added.
“Insinuations that the Docomo issue was handled under the watch of Mistry in a manner inconsistent with Tata culture and values are baseless. 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,” the statement said.
Stating that a number of discussions on the Docomo situation had been held in the Tata Sons board, the statement added: “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.”
Reiterating that the agreement with Docomo had been executed before Mistry became executive chairman of the Tata Group, the statement said: “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.”
Tata Group is entangled in a legal tussle with Japanese firm, NTT DoCoMo. DoCoMo had in November 2009 acquired 26.5 per cent stake in Tata Teleservices for about Rs 12,740 crore (at Rs 117 per share) with an understanding that in case it exits the venture within five years, it will be paid a minimum 50 per cent of the acquisition price.
DoCoMo, in April 2014, decided to exit the joint venture that struggled to grow subscribers quickly and sought Rs 58 per share or Rs 7,200 crore from the Tatas.
But the Indian group offered Rs 23.34 a share in line with RBI guidelines that states that an international firm can only exit its investment at a valuation “not exceeding that arrived at on the basis of return on equity”.
The Japanese firm then dragged the Tatas to international arbitration where it won a USD 1.17 billion award.
Tata Sons has said they will resist enforcement of the arbitration award in India as also other jurisdictions as it has been barred by Indian law and public policy.
The statement by Mistry’s office further said the Tatas under his leadership requested Docomo to join them in seeking approval of the Reserve Bank of India (RBI), which the estranged Japanese partner didn’t agree.
“Nevertheless, the Tatas applied to RBI for approval. Since RBI approval was not forthcoming, Docomo initiated arbitration. The award was passed in favour of Docomo and against the Tatas,” it added.
Tatas did not challenge the award in the UK. On the contrary, RBI was approached once again by the Tatas for permission to pay the amount awarded. RBI again refused permission, the statement said.
“When Docomo sought enforcement of the award in the Delhi High Court, in order to show their bonafides, Tatas deposited a sum in excess of Rs 8,000 crore in court,” it added.
Insisting that Tata and NA Soonawala, Trustee, were kept informed throughout the process, the statement said they even 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 the
Tatas and as advised by legal counsel,” it said.
“In light of the above facts, to suggest that Mr 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,” the statement by his office added.