In what could delay the proposed merger of Reliance Communications and Aircel, the department of telecommunications (DoT) on Wednesday informed the Mumbai bench of the National Company Law Tribunal (NCLT) that the deal needed to be blessed by the Supreme Court. “It is humbly submitted that petitioners may be directed to take suitable permissions from the Honourable Supreme Court before submission of the proposed scheme of arrangement,” DoT affidavit said.
In the affidavit filed before the NCLT, Beni Chatterji, counsel for DoT, cited a Supreme Court order dated January 6, 2017, which had restrained Aircel from “earning of any revenue by using the 2G spectrum licences which were originally granted” to the telco. Aircel’s counsel Navroz Seervai countered the affidavit saying the salient features of the arrangement had been brought to the Supreme Court’s notice and the apex court had not objected to it. Seervai added that the matter was pending before the Supreme Court and has nothing to do with the merger between Aircel and RCom.
Meanwhile, RCom’s counsel Janak Dwarkadas said that China Development Bank (CDB), which had objected to the merger in a hearing on July 27, had subsequently agreed to the merger petition being admitted to the court. However, CDB’s consent was subject to there being no transfer of assets without its knowledge and approval. He added that Standard Chartered Bank and HSBC Daisy Investments too had consented to the merger proposal being admitted to the court on the same conditions.
RCom owes the Chinese lender close to Rs 9,000 crore. The telco’s gross debt stood at Rs 45,000 crore in FY17, of which the company owes domestic lenders Rs 25,000 crore. Appearing for another objector to the merger, Chennai Network Infrastructure (CNIL), Ravi Kadam said Aircel owed it more than Rs 1,000 crore. CNIL, a subsidiary of GTL, was objecting in the capacity of an operational creditor. Kadam along with other objectors, including Ericsson, argued the NCLT should direct RCom and Aircel to hold a meeting of creditors before admitting the case. It may be recalled that a clutch of creditors (secured and unsecured) have objected to the sale and merger of RCom and Aircel alleging a meeting of creditors had not been convened by RCom and that their approval had not been sought.
On its part, RCom, citing a Mumbai NCLT order dated March 15, said the court had granted it some dispensation. However, objectors responded saying the order had been misinterpreted by RCom. RCom had informed the court on July 27 it does not intend to call a meeting of creditors as it believed this was not necessary. RCom has received the approval for the merger from the Securities and Exchange Board of India and is awaiting a nod from the National Company Law Tribunal (NCLT). According to the merger terms, both RCom and Aircel’s controlling firm Maxis Communications will hold an equal stake of 50% each.