Ericsson is set to file a second contempt of court petition against Reliance Communications’ (RCom) chairman Anil Ambani for failing to repay dues on time despite Supreme Court’s orders, a move which will add to the telco’s troubles already facing the threat of a revival of insolvency proceedings for failing to pay the Swedish telecom gear maker on time.
“We are going ahead with the revival of the earlier contempt petition as well as filing a new contempt petition against Anil Ambani because he failed to abide by the directions of SC as per its order on October 23,” said senior counsel Anil Kher, who represents Ericsson.
Ambani had given a personal guarantee in the apex court, backing a timely payment to Ericsson, the first deadline for which was September 30. This timeline was missed, prompting the equipment maker to file the first contempt petition against the chairman in October. At that time, the Supreme Court had given RCom more time — till December 15 — to pay Ericsson. A subsequent prayer of RCom for extension of the time was dismissed on December 13.
RCom was hoping to sell spectrum to Reliance Jio, and use the funds to pay Ericsson Rs 550 crore plus interest, besides other creditors. But Tuesday, the Department of Telecommunications (DoT) rejected its spectrum trading pact with Jio, saying it didn’t conform to spectrum trading guidelines, prompting the Swedish company to decide to file fresh petitions.
The DoT decision — triggered by a Jio letter that it shouldn’t be held liable for the Anil Ambani-owned company’s past dues and exclusively reported by ET in its Wednesday edition — spooked the shares of RCom on Wednesday. Its stock plunged nearly 13 per cent in early trade on BSE, before closing 9.6 per cent down at Rs 14.26.
Besides the contempt petitions, RCom, weighed under a Rs 46,000 crore debt, faces the threat of revival of insolvency proceedings, which it had staved off earlier, citing a Rs 18,000 crore plan under which it planned to sell towers, fibre, switching nodes and spectrum to Jio, and some real estate to Canada’s Brookfield.
While spectrum was the key component, fibre and switching nodes have been already sold for Rs 5,000 crore. But that sale could be reversed if RCom is dragged into bankruptcy proceedings due to failure to pay Ericsson, the National Company Law Appellate Tribunal (NCLAT) had said earlier.
The dispute over dues was also heard in the NCLAT on Wednesday where the telco’s representative, senior counsel Kapil Sibal, told the bench that RCom was stuck because of DoT’s delays.
However, Ericsson’s lawyers argued that the agreement to repay dues by RCom was made without any conditions. The case will be heard in NCLAT next on January 22 for orders — but that date is expected to come after SC hears the case next. The apex court will hear the matter in early January when it opens after its winter break.
Source: Economic Times