New Delhi: The National Company Law Appellate Tribunal reserved Wednesday its order on a petition by Reliance Communications Ltd (RCom) seeking release of income tax refunds to clear dues to Swedish telecom equipment maker Ericsson Inc. Lenders of RCom have opposed the plea, saying that it will lead to outgo of public money for settling payments of a private party.
After hearing both sides, the NCLAT bench—headed by chairperson S.J Mukhopadhaya—reserved the order in the case.
The chairman said that both the parties should see the RCom-Ericsson dues case as a resolution process rather than seeing it as a suit and that the principle of resolution is to save the company so that creditors get the maximum out of an asset.
Mukhopadhyay said that in case liquidation proceedings are invoked against RCom, then all the creditors—including Ericsson—will have to pay back the amount that they have received from RCom and projected valuation of company's asset of ₹38,000 crore may fall to ₹2,000-3,000 crore. "Ericsson will get 20-30% from it," he said.
The NCLAT bench was hearing the petition of RCom to release ₹259.22 crore received from income tax refund from the Trust and Retention Account (TRA) held with the State Bank of India. All receivables of RCom are deposited in the TRA account controlled by lenders.
Appearing for Anil Ambani-led RCom, senior lawyer Kapil Sibal appealed for payment to be made to Ericsson from the TRA. Lenders of RCom, led by State Bank of India, opposed the application of the company.
Senior lawyer Neeraj Kishan Kaul, appearing for SBI, argued for rejection of the RCom's appeal, contending that it will lead to an outgo of public money for settling payment of a private party.
He said that RCom's asset monetization deal failed because Reliance Jio Infocomm Ltd refused to take responsibility of past dues of the Anil Ambani-led firm before the DoT and hence it is not liable to make payment on behalf of RCom.
RCom has been asked by both the Supreme Court and the NCLAT to pay ₹550 crore to Ericsson. The company has paid ₹118 crore to Ericsson and if it fails to pay the rest of the amount, then RCom group chairman Anil Ambani may have to face three-month jail-term for contempt of court.
Sibal said if ₹259 crore is released from TRA, RCom will look at raising rest of the amount to clear all of Ericsson's dues.
The Supreme Court has given RCom time till 19 March to pay out Ericsson.
