The National Company Law Appellate Tribunal (NCLAT) has stayed a show-cause notice from the Department of Telecommunications (DoT) to Reliance CommunicationsNSE -4.21 % (RCom) asking the telco to explain why its licence and spectrum for the Mumbai circle should not be withdrawn despite defaulting on Rs 21-crore spectrum payment.
The appellate tribunal on Tuesday also stayed a March 20 notice from the DoT to Axis BankNSE 0.95 % for encashing a bank guarantee worth Rs 2,000 crore that was given by the operator as one-time spectrum charge (OTSC). These dues are towards payment of market-linked prices for excess spectrum held by a telco.
A case pertaining to both the notices will be heard on April 8. The NCLAT said that both were against a February 4 order, which said that no assets were to be sold without the court’s permission. “Prima facie, the show-cause notices of March 14 and 15 and the letter dated March 20, 2019 by DoT are against the direction passed by this tribunal,” said the two member bench led by Justice SJ Mukhopadhaya. The counsel for RCom highlighted the earlier NCLAT order, which prohibited transfer of any assets of RCom or invocation of any guarantee given by the company without prior permission of the appellate tribunal or the Supreme Court.
The Axis Bank counsel said they had written to DoT explaining the guarantees could not be invoked under the interim order. RCom shares closed at Rs 4.81, down 4.9% on the BSE on Tuesday. The NCLAT decision, which came in the middle of a legal tussle between the telco and DoT, could be a breather for RCom, gasping under a Rs 46,000-crore debt load. The operator had missed a March 13 spectrum payment deadline which included a 10-day grace period over spectrum dues worth Rs 21 crore.
ET had reported that the telco had responded to DoT, saying that it was under a payment moratorium from an earlier appellate order and therefore its licence could not be revoked. RCom has two other installments of Rs 281 crore and Rs 492 crore that will need to be paid in April.
As far as the notice on bank guarantees is concerned, RCom had provided the bank guarantees in 2016 after DoT demanded them in late 2015. The case was previously heard by the Telecom Disputes Settlements and Appellate Tribunal (TDSAT), which had ordered DoT to return the bank guarantees.
Source: Economic Times