NCLAT rejects RCom’s plea on tax refund
Appellate tribunal asks all parties to ensure the settlement plea is followed in letter and spirit
In further trouble for A nil Am ba ni and Reliance Communications, theNCLATon Friday refused top ass interim orders, asking SB It ogive the telecom company ~260- cr ore tax refunds lying with it and other lenders in a trust and retention account.
In further trouble for Anil Ambani and Reliance Communications (RCom), the National Company Law Appellate Tribunal (NCLAT) on Friday refused to pass interim orders asking State Bank of India (SBI) to give the telecom company ~260-crore tax refunds lying with it and the other lenders in a trust and retention account.
RCom had approached the NCLAT with a plea that the tax refunds be released to it so that it could pay Ericsson India ~550 crore by March 19. The payment to Ericsson India has to be made by RCom to purge the contempt of Supreme Court order.
On February 20, the apex court had held Ambani and two others guilty of contempt of court for wilfully violating its order by not paying ~550crore dues to Ericsson. RCom has time till March 19 to pay Ericsson to avoid a jail term for Ambani and two other top executives.
RCom had approached the NCLAT with a plea that since the apex court order had asked RCom and not Ambani personally, to pay the ~453 crore, the monies lying in these two accounts were the only ones available with it to make payment to Ericsson India. Nearly 40 lenders to the company, including SBI, had opposed RCom’s plan to use this money
Nearly 40 lenders to RCom, including SBI, had opposed the Anil Ambani-led firm’s plan to use this money to pay Ericsson, contending that the funds for paying the latter must come from a different source. The banks are trustees of the trust and retention account
to pay Ericsson, contending that the funds for paying the latter must come from a different source. The banks are trustees of the trust and retention account.
In its judgment on Friday, the NCLAT also asked all the parties concerned to take steps to ensure that the settlement deal among the lenders and RCom and its group companies is made in “letter and spirit”, failing which it will have to vacate its interim stay order of May 30, 2018. If the interim order is vacated, the NCLAT said, it would also mean that Ericsson India would have to pay back the total amount of ~550 crore to RCom through the resolution professional of the company.
On May 30, 2018, the NCLAT had stayed a May 15 order of the Mumbai Bench of the National Company Law Tribunal (NCLT) admitting the insolvency petition against RCom, Reliance Telecom, and Reliance Infratel. The insolvency petition had been moved by Ericsson.
It was in NCLAT that the three RCom group companies and Ericsson India had reached an agreement under which it was decided that the telecom company would pay ~550 crore to the Swedish telecom equipment maker, failing which the latter would be at liberty to revive the insolvency petition.
As part of its debt reduction efforts, RCom had, in December 2017, signed a ~25,000-crore deal with elder brother Mukesh Ambani’s Reliance Jio Infocomm. The deal included sale of assets mortgaged with different banks to avoid insolvency proceedings. The company expects to raise ~18,000 crore from sales of its wireless assets to Jio and real estate assets to Canada’s Brookfield, and pare some of its ~46,000-crore debt.