Anil Ambani-led RCom moves Supreme Court against DoT

By: | Updated: December 13, 2018 6:42 AM

Reliance Communications and its subsidiary Reliance Telecom on Thursday moved the Supreme Court, asking it to initiate appropriate contempt proceedings against the department of telecommunications (DoT) for “wilfully and deliberately disobeying” its November 30 order.

reliance communications, sc, dotThe apex court will hear the fresh application on Thursday.

Reliance Communications and its subsidiary Reliance Telecom on Thursday moved the Supreme Court, asking it to initiate appropriate contempt proceedings against the department of telecommunications (DoT) for “wilfully and deliberately disobeying” its November 30 order that directed DoT to grant no objection certificate (NoC) to the firms by December 7 to trade its spectrum with Reliance Jio Infocomm.

Stating that they are under imminent threat of insolvency proceedings that is solely attributable to the “wilful and deliberate disobedience of DoT”, the firms said that if NoC is granted by DoT, they will exit the insolvency proceedings, protect their deferred spectrum liabilities to the tune of Rs 10,900 crore and enable the asset monetisation scheme by which their lenders, including 17 PSU banks, will received Rs 38,000 crore.

The apex court will hear the fresh application on Thursday.

In December 2017, as a part of its debt resolution plan, Anil Ambani’s Reliance Communications (RCom) had struck a Rs 25,000-crore deal with elder brother Mukesh’s Reliance Jio (RJio) for the sale of its towers, spectrum and fibre assets mortgaged with different banks to cut down its debt of around Rs 45,000 crore.

The Reliance firms told the apex court that “it is evident that DoT and the contemner Aruna Sundararajan, the secretary, DoT, has scant regard and respect for the orders of the SC. They are wilfully and deliberately disobeying/defying the mandatory directions of the SC. Apart from the defiance… the non-obedience is also causing grave prejudice and harm to the public interest”.
While clearing the decks for RCom’s spectrum trading deal with Reliance Jio, the SC had last month asked Reliance Realty, the subsidiary of the debt-ridden telecom firm, to furnish a corporate guarantee of Rs 1,400 crore within two days.

It also asked the government to give a NoC for the spectrum sale within a week after receiving the corporate guarantee furnished by the firm. The corporate guarantee was in addition to the land parcel, which has to be put up as security, according to the TDSAT’s October 1 order.

The nod for the spectrum deal was seen as a huge relief to RCom which is trying to pare off its Rs 45,000-crore debt. The deal is also crucial for the telco as its deadline to pay Rs 550 crore to Ericsson India is ending on December 15. If Rcom fails to pay the Swedish telecom equipment manufacturer within the stipulated time, insolvency proceedings against the firm would be restored.

The November 30 order from a bench led by Justice RF Nariman had come on an appeal by the government which was seeking Rs 2,940-crore bank guarantee from RCom in a case related to outstanding spectrum usage charges. Seeking that the bank guarantee (BG) be furnished, the government had reiterated the demand for Rs 2,940-crore BG as a condition for giving nod to RCom to sell its spectrum to RJio.

Also read: RCom share price soars 18% as firm submits Rs 1,400 crore as a guarantee for deal with Mukesh Ambani’s Jio

Challenging TDSAT’s October 1 order asking it to issue NoC to the spectrum deal, the ministry said RCom has to pay the spectrum usage charge and if it is allowed to sell its spectrum without any BG, it will become impossible to recover its money. It also said telecom guidelines clearly mandate the government to secure outstanding dues through BGs and no other method.

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