RELIANCE COMMUNICATIONS CHARGED WITH PENALTY
The Supreme Court reserved its verdict on the contempt plea filed by Ericsson India against Reliance Communications Ltd (RCom) Chairman Anil Ambani and two others for non-clearance of dues to the tune of Rs 550 crore on Wednesday. A bench comprising Justices RF Nariman and Vineet Saran said that they were reserving its verdict.
Ericsson India, which had signed a seven-year deal in 2014 to operate and manage RCom's nationwide telecom network, had alleged that it had not been paid the dues of over 1,500 crore and challenged the debt-ridden firm before National Company Law Appellate Tribunal (NCLAT).
The Supreme Court held Reliance Communications (RCom) chairman Anil Ambani in contempt for not paying Ericsson’s dues worth Rs 550 crore despite having the money to do so, threatening to send the businessman to jail for three months if he didn’t cough up what was owed in four weeks. The stock tumbled after the decision.
The Rs 118 crore already deposited by RCom with the top court will be paid to Ericsson in a week, said the bench led by Justice RF Nariman. Since the amount to be paid has been calculated at Rs 571 crore along with interest, the amount due in four weeks is Rs 453 crore. The company said it would abide by the ruling. RCom’s operational creditor Ericsson had filed three contempt pleas to press for its dues.
The court observed that RCom’s undertaking to pay Ericsson was not “conditional”, contrary to the company’s claims and wasn’t linked to the disposal of any specific assets to Mukesh Ambani-led Reliance Jio Infocomm or other entity.
Additionally, RCom, Reliance Infratel and Reliance Telecom were fined Rs 1 crore each. This also has to be deposited within four weeks, failing which their chairmen will have to spend a month in jail, the bench said. This money will be paid to the Supreme Court Legal Services Committee.
The court said the company hadn’t intended to pay.
RCom plunged 9.5% intraday before closing 3.65% lower at Rs 5.80 on the BSE (Bombay Stock Exchange) Wednesday, further eroding the market value of the cash-strapped company.
The company said that it will honour the court order. The payment will have to be cleared by the lenders’ forum, RCom had said in court through counsel Mukul Rohatgi, assisted by advocate Mahesh Agrawal. Sources said that the funds for this will come from an income tax refund of Rs 129 crore and another expected refund of Rs 134 crore, with the rest from RCom units. Swedish gearmaker Ericsson, which was represented by senior advocates Dushyant Dave and Anil Kher, welcomed the verdict.
By Ojus Sindwani
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