Anil Ambani, chairman of Reliance Communications. (Photographer: Dhiraj Singh/Bloomberg)

Supreme Court Finds Anil Ambani Guilty Of Contempt In Ericsson Case

The Supreme Court found Anil Ambani guilty of contempt for not paying dues to Ericsson AB, saying that the chairman of the Reliance Group will face a jail term if he fails to comply.

The apex court has given Reliance Communications Ltd. four weeks to clear the Rs 450-crore dues to Ericsson, which once supplied telecom network equipment to them. The court also said Ambani will face three months in jail if the dues aren’t cleared by then, adding that the Reliance Group companies had no intention of adhering to the payment schedule for outstanding dues.

Shares of Reliance Group companies fell between 5 and 10 percent after the court's judgment. The order came weeks after RCom decided to approach the insolvency court for bankruptcy after failing to secure the government’s approval to sell towers and spectrum to Reliance Jio Infocomm Ltd. to pare its Rs 47,000 crore debt by more than half.

Also read: Anil Ambani Group Loses A Third Of Its Market Cap In Five Days

The judgment read out in open court by Justice Rohinton F Nariman said the action of the group companies “affects the administration of justice, and is therefore, contempt of court”.’

The top court outright rejected the argument by Ambani and RCom that the payment of dues was subject to its deal for sale of assets to Reliance Jio. To say that the sum of Rs 550 crore would be paid only out of sale of assets of the three companies is a deliberate misstatement made in the undertakings as well as the applications for extension of time filed before this court, “which was done with the purpose of circumventing the orders of this court,” the judgement said. “We are also of the view that in the facts of the present case, wilful default is made out.”

The court had strict words for Ambani’s companies for their attitude in the proceedings. Ericsson had earlier sought jail term for Ambani, arguing that the payment was to be made unconditionally and that the group companies “later mischievously tried to insert the condition of asset sale for the dues to be paid”.

“It is clear that this reply affidavit clearly demonstrates the cavalier attitude of the deponent of this affidavit to the highest court of the land,’’ said the top court.

Supreme Court Finds Anil Ambani Guilty Of Contempt In Ericsson Case

Three Ambani companies will have to pay Rs 1 crore each to the apex court as legal aid in four weeks, according to the judgment. The chairman will face one month of jail if this payment isn't made, it said.

“We respect the Hon’ble Supreme Court judgment. The group shall comply with the same,” an RCom’s spokesperson said in a statement.

To be sure, Rs 118 crore has already been deposited by RCom. with the Supreme Court, which will be handed over to Ericsson.

Ericsson had filed contempt of court proceedings against the Ambani-owned firm in October last year for not clearing its dues within the Sept. 30 deadline set by the apex court. In December, the court rejected a plea by RCom that sought more time to make the payments.