The Supreme Court on Monday agreed to hear the government’s plea seeking Rs 2,940-crore bank guarantee from Reliance Communications in a case related to outstanding spectrum dues.
A bench led by Justice AK Sikri said it will hear the case on Tuesday.
Seeking that the bank guarantee be furnished, additional solicitor general PS Narasimha, appearing for the government, reiterated the demand for Rs 2,940-crore bank guarantee as a condition for giving nod to Reliance Communications to sell its spectrum to Reliance Jio Infocomm.
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In December 2017, as a part of its debt resolution plan, RCom had struck a Rs 25,000-crore deal with Mukesh Ambani’s Reliance Jio for sale of its towers, spectrum and fiber assets mortgaged with different banks to cut down its debt of around Rs 45,000 crore.
Challenging the TDSAT October 1 order asking it to issue no objection certificate to the spectrum deal, the Department of Telecommunications said RCom had to pay the spectrum usage charge and if it is allowed to sell its spectrum without any bank guarantee, then it will become impossible to recover the money.
The ASG said the October 2015 guidelines for trading of access sepectrum made it mandatory upon the government to secure outstanding dues only by bank guarantee and nothing else. “There is no precedent for Union of India accepting land/buildings as security towards the unpaid dues… the land provides no such securitisation and cannot be monetarised on demand… Undertaking not to alienate property worth Rs 1400 crore is not in compliance of trading guidelines,” the government said in its appeal.
RCom, through its senior counsel, said the company cannot give any bank guarantee as it is already undergoing insolvency proceedings.
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“It can’t give a bank guarantee. Banks are the secured creditors and the money from the sale will go to them. If the spectrum sale is not approved, banks will also not get anything. They will be in jeopardy and the deal will fall through,” the counsel said while refusing to give any bank guarantee.
However, he said the company is ready to provide land as collateral in place of bank guarantee, an offer that the telecom tribunal had accepted.
The TDSAT had on October 1 allowed RCom to go ahead with its spectrum sale to Reliance Jio and had also asked the government to give a no-objection certificate. The tribunal had also directed RCom not to alienate its Navi Mumbai property so as to secure the government at least for Rs 1400 crore for the time being.