Swedish telecom giant Ericsson had filed three contempt petitions against RCom and Anil Ambani for failing to clear Rs 550 crore of dues.

Pay Rs 453 cr or go to jail SC holds Anil Ambani guilty of contempt in Ericsson case
news Court Wednesday, February 20, 2019 - 14:10

The Supreme Court on Wednesday held Reliance Communication (RCom) Chairman Anil Ambani and two of its directors – Reliance Telecom Chairman Satish Seth and Reliance Infratel Chairperson Chhaya Virani – guilty of contempt for not paying its dues of Rs 550 crore to Swedish telecom giant Ericsson. The court ordered Anil Ambani and the two directors to pay a sum of Rs 453 crore to Ericsson within four weeks. If they fail to do, they could have to serve a jail term of three months.

Ericsson AB filed three contempt petitions against RCom and Anil Ambani for failing to clear Rs 550 crore of dues. Senior advocate Dushyant Dave, appearing for Ericsson India, argued that the court had ordered RCom to pay the amount by September 30 and their failure to pay despite extensions constituted contempt of the top court’s order. On August 3 and October 23, 2018, the apex court had directed RCom to clear Ericsson’s dues.

“Three Reliance companies had no intention of payment of money, it amounts to contempt,” the SC said in its judgement.

On Wednesday, the Supreme Court asked RCom to pay Rs 453 crore, besides the Rs 118 crore that is already in the court’s registry. The court has also reportedly slapped a fine of Rs 1 crore on RCom, Reliance Telecom Ltd and Reliance Infratel Ltd, which also has the same time limit as the dues owed to Ericsson. Failing this, the directors will have to serve a jail term of one month.

“Unconditional apology by Reliance can’t be accepted given the attitude of the deponent to the highest court of the land,” the judgement reportedly stated.

The order in the case was reserved by a division bench comprising Justice Rohinton Fali Nariman and Justice Vineet Saran. Appearing for Anil Ambani, senior counsel Mukul Rohatgi told the court he could not be saddled with any liability to pay Ericsson Rs 550 crore with interest, as the liability of RCom did not transcend to Ambani and he had no vicarious liability to pay.

“The dues of a listed company can’t be paid by an individual,” he said rejecting the argument that Ambani was liable to pay. “The company in question (RCom) will pay, not the directors personally. It is directed to corporate entity, which is the subject matter of the case,” the court was told.

In 2014, Ericsson India had signed a seven-year deal with RCom to manage its network. It had approached the Supreme Court over unpaid dues in 2018.

Following the Supreme Court order, the shares of multiple entities of the Reliance Group of companies, including RCom, Reliance Infrastructure, Reliance Naval and Engineering, Reliance Power and Reliance Home Finance tumbled. The RCom share price alone dropped as much as 9.2% to Rs 5.45.

(With IANS inputs)

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