In a fresh setback for Anil Ambani and Reliance Communications (RCom), the National Company Law Appellate Tribunal (NCLAT) on Friday refused to pass interim orders asking the State Bank of India (SBI) to give the telecom company Rs 260 crore tax refunds lying with it and other lenders in a trust and retention account.
RCom had approached the NCLAT with a plea that tax refunds lying in the trust and retention account be released to it so that it could pay Ericsson India Rs 550 crore by March 19. The payment to Ericsson India has to be made by RCom to purge the contempt of a Supreme Court order.
On February 20, the apex court had held Ambani and two others guilty of contempt for willfully violating its order by not paying Rs 550-crore dues to Ericsson. RCom has time till March 19 to pay off Ericsson to purge the contempt and avoid a jail term for Ambani and two of his top executives.
RCom had approached the NCLAT with a plea that since the apex court order had asked RCom, and not Ambani personally, to pay the Rs 453 crore, the money lying in these two accounts was all it had to make payments to Ericsson India. Nearly 40 lenders of the company, including the SBI, had opposed RCom’s plan to use this money to pay off Ericsson, contending that the funds for paying the latter must come from a different source. The banks are trustees of the trust and retention account.
In its judgement on Friday, the NCLAT also asked all the parties concerned to take steps to ensure that the settlement deal between the lenders and RCom, and its group companies is made in “letter and spirit”, failing which it will have to vacate its interim stay order of May 30, 2018. If the interim order is vacated, the NCLAT said, it would also mean that Ericsson India would have to pay back to the total amount of Rs 550 crore to RCom through the resolution professional of the company.
On May 30, 2018, the NCLAT had stayed a May 15 order of the Mumbai bench of National Company Law Tribunal (NCLT) admitting the insolvency petition against RCom, Reliance Telecom, and Reliance Infratel. The insolvency petition had been moved by Ericsson.
It was in NCLAT that the three RCom group companies and Ericsson India had reached an agreement under which it was decided that the telecom company would pay Rs 550 crore to the Swedish telecom equipment maker, failing which the latter would be at liberty to revive the insolvency petition.
As part of its debt reduction efforts, RCom had, in December 2017, signed a Rs 25,000 crore deal with elder brother Mukesh Ambani’s Reliance Jio Infocomm (Jio). The deal included the sale of assets mortgaged with different banks to avoid insolvency proceedings. The company expects to raise Rs 18,000 crore from sales of its wireless assets to Jio and real estate assets to Canada’s Brookfield, and pare some of its Rs 46,000 crore debt.