Anil Ambani clears legal hurdle to sell assets to Jio

NEWDELHI: The Supreme Court on Friday cleared the sale of spectrum by Anil Ambani-controlled Reliance Communications Ltd (Rcom) to elder brother Mukesh Ambani’s Reliance Jio Infocomm Ltd (Rjio) on the condition that the seller furnishes ₹1,400 crore as corporate guarantee to the government within two days.

This corporate guarantee, to be furnished by Reliance Realty, a unit of Rcom, is in addition to the land parcel that has to be given as security, as directed by the Telecom Disputes and Settlement Appellate Tribunal (TDSAT) in an October order.

The apex court asked the central government to grant a no-objection certificate (NOC) for the takeover of telecom assets with Rjio within a week from receiving the corporate guarantee.

The centre had challenged a TDSAT October order, which rejected department of telecommunications (Dot’s ) plea seeking bank guarantees before approving the Rcom-jio deal. The tribunal had also asked Rcom to not sell a land parcel worth ₹1,400 crore for the time being so that it could act as a guarantee against Dot’s demand for dues.

Kapil Sibal, counsel for Rcom, opposed the furnishing of a bank guarantee as sought by the centre as the company was undergoing insolvency. He agreed that Reliance Realty would provide a corporate guarantee instead.

A corporate guarantee is enforceable against a corporate person and, therefore, may not be immediately cashable as opposed to a bank guarantee that is immediately cashable against a bank. The bank would then enforce its rights against the borrower.

Sibal asked for the NOC to be granted in time, saying, “If the NOC is not given in time, they will lose ₹10,900 crore.”

Additional solicitor general PS Narasimha opposed the furnishing of land parcels, telling the court that they did not belong to Rcom, “Please see if this security is enough. We can’t go from pillar to post to recover money... one has to look at titles and the deal.”

Narasimha told the SC that the centre was looking for some kind of a security for the outstanding spectrum dues. He said the centre did not have details of encumbrance of the land offered by Rcom as a guarantee.

Narasimha further argued that the telecom guidelines clearly mandate the government to secure outstanding dues only by bank guarantees, and by no other method.

In response to the centre’s plea, Sibal had said Rcom was not in a position to make the payment as it was undergoing insolvency proceedings.