8 April 2019: The National Company Law Appellate Tribunal said it would decide on the insolvency of debt-ridden Reliance Communications Ltd. The Anil Ambani-led Reliance Group company has pleaded with the tribunal to go ahead with insolvency proceedings against it as it is unable to pay dues to its lenders.
Swiss telecom gear maker Ericsson, which received its unpaid dues of Rs 550 crore from RCom last month following a Supreme Court order, is opposing the move.
A two-member bench headed by Chairman Justice SJ Mukhopadhaya also observed that if insolvency proceedings against RCom are allowed, then Ericsson would have to return Rs 550 crore.
“Why one party will take amount and let the financial creditors suffer,” said the NCLAT, adding that either it may quash RCom bankruptcy proceedings in NCLT or allow bankruptcy case to proceed.
The appellate tribunal also said that it would consider the reply filed by the Department of Telecom over the RCom’s plea against the show-cause notice issued by it over spectrum charges due on April 30, the next date of hearing.
“DoT reply would be considered on April 30. Let us be very clear which are the assets of corporate debtor, whether they have some right of asset. Can you take away licence? If yes, what is the value of the company (RCom) then,” the NCLAT said.
The NCLAT’s direction came during the hearing of applications moved by three RCom executives. Earlier on Feb. 4, the tribunal had said that until further orders of the NCLAT or the Supreme Court, no one can sell, alienate, or create third-party rights over RCom’s assets.
The NCLAT on March 26 stayed the two notices issued by the DoT to RCom over cancellation of its spectrum licence for a delay in payment. Its two-member bench had also stayed the DoT’s letter dated March 20, 2019, to Axis Bank to encash the bank guarantee of Rs 2,000 crore given by the Anil Ambani group firm.
On May 15, 2018, the Mumbai bench of NCLT had admitted an insolvency petition filed by Ericsson against Reliance Communications and two of its subsidiaries seeking to recover unpaid dues.
However, on May 30 NCLAT granted a conditional stay on insolvency proceedings against RCom and its subsidiaries — Reliance Infratel and Reliance Telecom.
The tribunal had directed RCom and its subsidiaries to pay Rs 550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company.
On Feb. 1, RCom had informed that it has decided to opt for insolvency proceedings following its failure to sell assets for paying back its lenders.
Last month, Anil Ambani warded off a possible jail term as RCom cleared dues of Ericsson on March 18 with money received from elder brother Mukesh Ambani.
Anil Ambani made a Rs 550 crore payment, including interest, to Ericsson just a day before the expiry of the deadline set by the Supreme Court to clear dues or face a three-month jail term.