SC reserves judgement on Tata-Birla row on Idea
Tata Industries had filed petition in the court seeking arbitration to resolve a dispute related to termination of their joint venture Idea Cellular with Birlas.india Updated: Apr 08, 2008 23:36 IST
The Supreme Court on Tuesday reserved its judgement on a petition filed by Tata Industries seeking arbitration to resolve a dispute related to termination of their joint venture Idea Cellular with Birlas.
Justice V S Sirpurkar on Tuesday reserved the order and directed the parties to submit their written submissions.
Tata, which served two termination notices to its partner before selling its over 48 per cent stake in Idea Cellular, which was floated in October 2001, to the A V Birla group firm Grasim, has sought arbitration on the ground that Birlas violated the shareholder agreement (SHA). However, the A V Birla Group has rejected the call for arbitration.
If the arbitration is settled in Tata group's favour, it will have the right to buy out Birlas' stake in Idea. Tata Group, which held 48.14 per cent stake in Idea through Tata Industries (TIL) and its subsidiary Apex Investments (Mauritius) Holding, had sold it to Grasim for Rs 4,406 crore last year even while the termination notices were pending.
Alleging breach of SHA by Birlas, Tatas moved the apex court seeking to appoint a nominee arbitrator on behalf of Grasim as the latter had refused to appoint one.
"The resolution of the existing disputes between the parties and the acceptance of the offer notice by the respondent (Grasim) are two distinct proceedings and cannot affect the continuance of the other," TIL stated.
It added that a vested right to seek reparation against Birlas was created the moment the latter breached the provisions of the SHA by applying for a mobile licence for Mumbai circle.
On the other hand, A V Birla group while seeking dismissal of "frivolous" petition filed by Tatas told the apex court that Tatas had agreed to a joint venture, competed with it and later walked
Birlas said Tata's plea for arbitration to resolve a dispute related to termination of their joint venture Idea Cellular was "frivolous and vexatious."
"(Tata) have already exited Idea Cellular by selling their shareholding to the Birla Group on the terms and conditions determined by themselves," Birla group submitted.
Terming this approach as mischievous, the Birla group said that the proceedings initiated by Tatas were aimed at promoting the business interests of that group's mobile telecom companies.
It also argued that TIL had no right to seek arbitration as the JV was between Tata Group and Birla Group and not with individual companies.