Anil Ambani-led Reliance Communications Ltd. agreed to sell its assets to Reliance Jio Infocomm Ltd., the telecom arm of his elder brother Mukesh Ambani, by March-end. The deal has faced legal hurdles and is yet to go through.
The Bombay High Court granted a stay on sale of assets which was set aside by the Supreme Court. The top court, however, granted a stay on the National Company Law Appellate Tribunal’s decision allowing sale of towers. That came on a petition of minority shareholder HSBC Daisy Investments (Mauritius) Ltd. The appellate tribunal will now hear the matter April 18.
The planned asset sale by debt-laden RCom stems from its inability to repay lenders Rs 45,000 crore. The company had shelved an earlier plan to merge with Aircel Ltd. and sell towers to Blackstone that had helped it win a seven-month moratorium from banks.
Here are the details of the two legal challenges to RCom’s asset sale to Reliance Jio:
Arbitration Case With Ericsson
Telecom equipment maker Ericsson initiated arbitration proceedings against RCom. The arbitration tribunal passed an interim order on March 5 against the sale of assets, the Economic Times reported.
Ericsson has made an arguable case and the tribunal is of the opinion that in the event it is denied any relief, it will suffer an irretrievable injury, the report said quoting the tribunal’s order passed by Justice Swatanter Kumar, Justice VS Sirpurkar and Justice SB Sinha—all former Supreme Court judges.
The next date of hearing of the arbitration case is June 9.
RCom challenged the order in the Bombay High Court on March 8 but was denied relief. The matter headed to the Supreme Court where a bench of Justice AK Goel and Justice Rohinton Fali Nariman set aside the stay. That paved the way of sale of assets, except towers.
‘’There is no legal restriction any more on the company to proceed with sale of its spectrum, MCNs (media convergence nodes) and real estate, and RCom is duly proceeding with the same,” a company spokesperson said in a statement today.
Litigation With HSBC Daisy, Others
The genesis of this case was the plea against the tower sale filed by HSBC Daisy Investment and a few others citing oppression of minority shareholders to stop the deal from going through.
The National Company Law Tribunal ordered a stay until further orders. Reliance Infratel Ltd., RCom’s tower arm, along with State Bank of India approached the Supreme Court, which on April 5 said the matter must first be heard by the National Company Law Appellate Tribunal.
The very next day, the NCLAT allowed banks to sing an agreement for RCom’s tower assets and ordered that the proceeds of the sale be held in an escrow account until it decides on a dispute with HSBC Daisy and others. The NCLAT fixed April 18 as the next date of hearing for hearing.
Against the interim order, the minority shareholders approached the Supreme Court which stayed the sale till the NCLAT finally decides on the dispute.