Billionaire Mukesh Ambani stepped in to bail out younger brother Anil Ambani by helping him repay Reliance Communications’ (RCom’s) dues to Ericsson. The last-minute rescue spares the younger Ambani a three-month jail term for contempt of court.
RCom on Monday cleared the entire dues to Ericsson India to purge the contempt of a Supreme Court order. The debt-ridden company had already paid Rs 118 crore of the Rs 550-crore dues. In addition, the company had paid around Rs 3 crore in penalties to Ericsson.
“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita for standing by me during these trying times and demonstrating the importance of staying true to our strong family values by extending this timely support,” said Anil Ambani in a media statement. RCom had time until Tuesday to make the payment, failing which Anil Ambani, its chairman, would have had to serve a three-month jail term, according to the court’s order.
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“My family and I are grateful we have moved beyond the past, and are deeply grateful and touched with this gesture,” he added. On February 20, the apex court had held Ambani and two others guilty of contempt for wilfully violating its order by not paying Rs 550-crore dues to Ericsson.
RCom had requested for the withdrawal of Rs 260-crore tax refunds, lying in a trust and retention account, to pay the Swedish telecom equipment manufacturer, but the plan was opposed by its lenders, including State Bank of India (SBI). Following this, RCom had approached the National Company Law Appellate Tribunal (NCLAT) with a plea that since the apex court order had asked RCom, and not Ambani personally, to pay Rs 453 crore, the money lying in the two accounts was all it had to make payment to Ericsson. RCom’s plea was, however, rejected by the NCLAT on March 15.
On May 30, 2018, the NCLAT had stayed a May 15 order of the Mumbai Bench of the 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 the NCLAT that the three Reliance Group companies and Ericsson India had reached an agreement under which the former would pay Rs 550 crore, failing which the Swedish firm would be at liberty to revive the insolvency petition.
The company’s failure to repay lenders and service providers coupled with Ambani’s personal repayment guarantee made him liable of contempt of court in case of non-payment.