Reliance Communications (RCOM) chairman, Anil Ambani, and two other directors were held guilty by Supreme Court on February 20, Wednesday, in a contempt of court petition filed by Telecom major Ericsson India. The two other directors held in this case are Reliance Telecom chairman, Satish Seth, and Reliance Infratel chairperson, Chhaya Virani.
Telecom company, Ericsson, had filed a contempt of court petition against Anil Ambani’s Reliance Communications for not clearing the dues of Rs. 550 crore, despite of Supreme Court’s order. SC ruled that RCOM and two other companies have to pay Rs. 453 crore in four weeks, failure of which would lead to jail term of at least 3 months. The RCOM has, reportedly, deposited Rs. 131 crore to it’s counter part, Ericsson India, with the Supreme Court registry, from it’s working capital.
The three companies of Reliance were also imposed a fine of Rs. 1 crore each by the apex court, failure to pay this amount within a month will lead to one month jail to the business tycoon and his other 2 directors.
Advocate Mukul Rohatgi, who represented Ambani in the case, said that he respects the judgement and Reliance Communications will comply with the court’s order in paying dues to Ericsson within four weeks.
A bench comprising of Justice Rohinton Nariman and Justice Vineet Saran on February 13 reserved their judgement after Ericsson India had alleged that Reliance Communications and two other companies (Subsidiaries of Reliance Communications) had money to invest in Rafale jet deal and not for paying it’s dues. However, the charge was vehemently denied by RCOM.
Senior Advocate Dushyant Dave who appeared for Ericsson India argued that RCOM and the other two companies were disobedient of the orders passed by the SC for payment of the dues and so contempt of court action should be initiated against them. On the other hand, Advocate Mukul Rohatgi who appeared for RCOM counter-argued that no orders of the apex court were violated and hence no contempt of court action should be taken.
On October 23 last year, the court had asked RCOM to clear the dues by December 15, adding that delay in the payment of dues would lead to paying an interest of 12 per cent per annum. The Ericson India had pleaded to the apex court to direct Anil Ambani and lenders forum, as per it’s October 23 order, to deposit Rs. 550 crore with interest from sale proceeds.
Hence, Justices R Nariman and Vineet Saran observed that the three Reliance companies had no intention of paying the money they owed Ericsson India which led to the contempt of court. They also rejected Reliance Communications’ unconditional apology.
Anil Ambani told the apex court that with the failure of sale deal of his assets with Mukesh Ambani’s Reliance Jio, his company has entered insolvency proceedings and is not in control of the funds. RCOM told the court that it tried to move “heaven and earth” to ensure Ericsson India gets it’s dues but was unable to do so due to failure of assets sale deal with Reliance Jio.
Earlier the apex court had refused to clear RCOM’s plan to sell spectrum to Reliance Jio unless the Mukesh Ambani-owned company agreed to assume payment liabilities of RCOM. Reliance Jio stood firm on it’s stand, reiterating that the telco can’t be held liable for RCOM’s past liabilities and wanted an assurance from the telecom department (DoT) on this, which the centre refused to give.
Defending Anil Ambani, Senior Advocate Mukul Rohatgi had said that the undertaking to pay dues was subject to the spectrum sale deal between RCOM and Reliance Jio going through. Despite of best efforts to get permissions to sell the assets to Jio, the deal could not go through due to failure to secure a no-objection certificate from the Department of Telecommunications (DoT), Rohatgi had said.
Moreover, RCOM had filed contempt of court proceedings in SC against the Department of Telecommunication (DoT) alleging it for delaying a spectrum sale that would have helped the company to clear dues to Ericsson India and other lenders.
Meanwhile, the February 20 SC order has led to fall in the prices of shares of the Reliance Group companies.