NCLAT stays DoT show-cause notice to RCom; next hearing on April 8

Appellate tribunal says would like to hear DoT before giving an order

The National Company Law Appellate Tribunal (NCLAT) on Tuesday stayed any action by the Department of Telecommunications (DoT) on the two show cause notices it had issued to Reliance Communications (RCom) until further orders. The DoT had issued the notices on March 14 and 15.

A two-member bench headed by Chairperson Justice S J Mukhopadhaya also stayed the operation of a DoT letter of March 20, in which it asked Axis Bank to encash a bank guarantee of Rs 2,000 crore by the Anil Ambani group firm.

In the first show cause notice, the DoT had sought to know why the bank guarantees submitted by debt-laden telecom service provider should not be invoked by the government. In the second notice, the department sought to know why RCom’s spectrum licence should not be cancelled for failing to pay spectrum fees on time.

RCom had approached the NCLAT, pleading that the notices and the letter to Axis Bank were in violation of the tribunal’s February 4 order, in which it had said that until further orders of the appellate tribunal or the Supreme Court, no one would sell, alienate, or create third-party rights over RCom's assets.

On Tuesday, the NCLAT also impleaded the telecom department as the respondent along with Axis Bank. 

The two-member bench said it would like to hear the DoT on April 8, the next date of hearing, before deciding on the matter. Earlier in the day, RCom moved the top court seeking to vacate the interim stay on the insolvency petition against the company. 

In its pleading, RCom has urged the court that the insolvency petition against it should now be allowed to restart since it had purged the top court's contempt by paying Rs 453 crore to Ericsson India Private Limited. Ericsson India on the other hand opposed this plea and said that the entire insolvency application should now be disposed-off since it had already come to an agreement with RCom and received the said money.

The Ambani led company had on February 1 said it would file for insolvency all its attempts to revive the firm over the past 18 months had come a cropper. The board of the company noted that despite the passage of so much time, the lenders had received zero proceeds from the proposed asset monetisation plans and the overall debt resolution process was yet to make any headway.