Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

NCLAT Refuses To Allow Release Of Income Tax Refunds For RCom To Clear Ericsson Dues

The National Company Law Appellate Tribunal refused to allow release of income tax refunds to help Reliance Communications Ltd. pay Ericsson’s dues and avoid the risk of the Supreme Court sending its Chairman Anil Ambani to jail.

The bench refused to direct any party (particularly third party) to perform “certain duties to ensure settlement between other parties”, according to the judgment uploaded on the appellate tribunal’s website.

“The parties should take steps to ensure that settlement in terms of the order dated May 30, 2018 is made in its letter and spirit to save three corporate debtors from the corporate insolvency resolution process enabling the financial creditors—State Bank of India and other banks—and Ericsson India Pvt. Ltd., operational creditor, to recover maximum dues. Otherwise this appellate tribunal will have no option but to vacate the interim order dated May 30, 2018,” it said in the order. The tribunal in its May 30 order had halted bankruptcy proceedings against RCom after the debt-laden wireless operator and Swedish telecom equipment maker agreed to settle a dispute over unpaid dues.

RCom had sought urgent approval from its lenders to pay Ericsson Rs 260 crore directly from its trust and retention account. RCom also contended that its asset sale with Reliance Jio Infocomm Ltd. did not go through because of the lenders. The banks, however, opposed the petition. They argued that the Supreme Court judgment found Ambani guilty of contempt and made it clear that the onus of the asset sale deal not going through lies only on RCom.

The Supreme Court had given RCom four weeks to clear dues of Ericsson, failing which the chairman of the Reliance Group will face a three-month jail term. Of the total dues worth Rs 550 crore, Rs 118 crore is deposited with the Supreme Court registry and will be transferred to Ericsson, the top court had said. RCom will have to pay the remaining amount by March 19.