The Central government on Monday reiterated before the Supreme Court that it could not grant an approval to Reliance Communications Ltd for spectrum sale to Reliance Jio Infocomm Ltd until either company gives a bank guarantee of Rs 29.4 billion.
Reliance Communications said that it was not in a position to give a bank guarantee and that it had instead given land worth nearly Rs 14 billion as security for the government's dues. The company, represented by senior lawyer Kapil Sibal, also said that its deal with Reliance Jio would fall if the approvals were not in place by mid-December.
The government, however, refused to use the land given by Reliance Communications as security and said it preferred a bank guarantee.
The top court was hearing a plea by the Department of Telecommunications (DoT) which has sought a bank guarantee from Reliance Communications or Reliance Jio. In its petition, DoT, represented by Additional Solicitor General P. S. Narasimha, told the Supreme Court that the Centre was looking for some kind of security from the company before it could allow the spectrum sale.
The court will hear the government’s plea on Tuesday.
The Telecom Disputes and Settlement Appellate Tribunal (TDSAT) had on October 1 allowed debt-ridden Reliance Communications to sell its spectrum to Reliance Jio Infocomm. The approval was granted by the appellate tribunal on a petition moved by Anil Ambani-led Reliance Communications, which had challenged the bank guarantee demand by the telecom department. Monday's appeal by the central government was against the approval granted to Reliance Communications by TDSAT.
As part of debt reductions efforts, Anil Ambani-led Reliance Communications had in December 2017 signed a Rs 250-billion deal with elder brother Mukesh Ambani's Reliance Jio Infocomm. The deal included sale of assets mortgaged with different banks to avoid insolvency proceedings. The company expects to raise Rs 180 billion from sales of its wireless assets to Reliance Jio and real estate assets to Canada’s Brookfield, and pare some of its Rs 460 billion debt.