Ericsson-RComm dispute: NCLT reserves order on insolvency proceedings

Ericsson India has filed petitions against RComm, Reliance Infratel and Reliance Telecom with the total claims against the three firms at Rs 9.8 billion

The National Company Law Tribunal (NCLT) here has reserved its order on the insolvency proceedings initiated by Ericsson India against three telecommunications companies led by Anil Ambani. 

Ericsson India has filed petitions against Reliance Communications (RComm), Reliance Infratel and Reliance Telecom, respectively, with the total claims against the three firms at Rs 9.8 billion. 

Senior counsel U K Choudhary on behalf of RComm told the Bench of judges B S V Prakash Kumar and Duraiswamy pointed out that Ericsson's legal representatives had made a major discrepancy in declaring of dues. 

“The petitioners cannot combine the dues of the three corporate debtors, in one form or letter,” Choudhary said, further stating the document signed by Ericsson's legal counsel should be nullified on grounds of lack of authority.

In response, senior counsel Anil Kher, for Ericsson, told the Bench the company had been defrauded, as Reliance Infratel and RComm had made repeated promises since January 2016 to pay Ericsson its fees for the services it provided, but never adhered to this. Therefore, Ericsson had authority under Insolvency and Bankruptcy Code (IBC) to approach the NCLT. The Bench will pronounce its order on Friday. 

RComm owed lenders around Rs 450 billion as of March 2017 and in December of last year had come up with a debt restructuring plan, which involved selling assets, such as spectrum, mobile towers and optical fibre network, to Reliance Jio. 

The three firms have not yet been admitted for insolvency proceedings under the IBC.

Ericsson had earlier approached an arbitration tribunal, which ordered RComm, Reliance Infratel and Reliance Telecom, to not transfer or sell any assets without its permission, which is a setback to Anil Ambani's plans to repay lenders and avoid proceedings under the IBC. 

Choudhary told the NCLT that if Ericsson's claim was admitted and the company was admitted under the IBC it would lead to a loss of Rs 181 billion for the company.