Ericsson case against RCom: SC reserves judgment on contempt plea against Anil Ambani, others

By: | Published: February 14, 2019 6:19 AM

Ambani along with Reliance Telecom chairman Satish Seth and Reliance Infratel chairperson Chhaya Virani appeared for the second consecutive day on Wednesday as directed by the Supreme Court.

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Swedish telecom equipment maker Ericsson India on Wednesday told the Supreme Court that Reliance Communications chairman Anil Ambani is guilty of contempt of court and should be given the strictest of punishments for “wilfully and consciously” defying the apex court orders and the undertaking given to pay outstanding dues of about Rs 550 crore. A bench led by justice RF Nariman reserved its judgment on contempt pleas filed by Ericsson against RCom and its promoter Anil Ambani and others.

Ambani along with Reliance Telecom chairman Satish Seth and Reliance Infratel chairperson Chhaya Virani appeared for the second consecutive day on Wednesday as directed by the Supreme Court. Stating that a forensic audit by an independent agency should be done to know what RCom and its other group companies are up to, senior counsel Dushyant Dave, appearing for Ericsson, argued that they (Ambani and other contemnors) “live like emperors… Fly in private jets and live in grand mansions. Surely they can pay. They have money to pay in Rafale, but don’t want to honour the SC order. How are they in all conceivable deals when they can’t pay Rs 550 crore…. They think they are god’s gift to mankind”. He further said Ambani has personal assets worth thousands of crores of rupee and he must pay dues of Rs 550 crore as per his undertaking to the SC. According to Dave, “You (SC) should treat the group as one entity so that nobody suffers”.

However, senior counsel Mukul Rohatgi opposed the Ericsson’s claim. He said RCom’s settlement with Ericsson was conditional on proposed sale of assets to Reliance Jio for Rs 18,000 crore and the same did not go through as planned.  He said RCom has unfortunately fallen on bad days. “Experiment to revive it fell through. Now IBC must take over. There was no unconditional undertaking given to the Supreme Court and the settlement with Ericsson before the NCLAT was conditional on sale of assets to Reliance Jio. Ambani tried to do his best to avert this situation, but Reliance Jio has thrown up his hands.” He said that the insolvency process before the NCLT was halted because everyone, including the banks and Ericsson itself, had agreed that more money will be fetched if a large group of assets such as spectrum, tower and fibre assets are monetised outside the CIRP.

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Rohatgi said even if one assumes that there was wilful default by RCom, even then its chairman cannot be held personally liable for it as the commitment to pay was made by three corporate entities — Reliance Communications, Reliance Infratel and Reliance Telecom. “No personal contempt is made out against Ambani. There is no personal undertaking. The undertaking was given by directors on behalf of the company. RCom is a listed company. The dues of a listed company cannot be paid by an individual. With lakhs of shareholders, neither an individual director nor the entire group can be made liable for liability of the company. Unfortunately, now it has gone to the IBC. The group is not part of any contempt. Such an argument does not hold water for an injunction leave alone contempt,” the senior counsel contended.

Senior counsel Kapil Sibal, appearing for RCom, told the bench that Ericsson went to NCLT to pressurise RCom as it knew that the operational creditor would otherwise get nothing and “we agreed to settle it”. Senior counsel Neeraj Kishan Kaul, appearing for the State Bank of India chairman, lashed out at Ericsson for dragging him to the dispute between RCom and Ericsson. “Even a whisper of (allegation like) collusion hurts us,” he said, adding that RCom may have made commitments to Ericsson, but under the insolvency laws banks retain their rights over assets of a company that has not been able to service its debts.

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