SC reserves order on Ericsson's contempt plea against Anil Ambani, two others

The RCom chairman asserted that he was not in contempt of court for not clearing the dues since the undertakings were conditional.
SC reserves order on Ericsson's contempt plea against Anil Ambani, two others
SC reserves order on Ericsson's contempt plea against Anil Ambani, two others
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Reliance Communication (RCom) Chairman Anil Ambani on Wednesday told the Supreme Court the Rs 550 crore dues could not be paid to Ericsson in pursuance to the undertaking, as its Rs. 18,100 crore deal with the Reliance Jio did not fructify.

Asserting that he was not in contempt of court for not clearing the dues, the RCom Chairman said the undertakings were conditional and the payment was subject to the deal with Jio going through.

He said this to the Division Bench of the top court, comprising Justice Rohinton Fali Nariman and Justice Vineet Saran, which reserved its order on Ericsson's contempt plea against Ambani, RCom Chairman, Satish Shah, Chairman of Reliance Telecom, and Chhaya Virani, Chairman of Reliance Infratel.

Appearing for 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 him 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 case", the court was told.

Telling the court that RCom has "fallen in unfortunate times", Rohatgi said there was an experiment during NCLT proceedings to get over the crisis but it failed. "You don't send a person to jail" for not being able to carry out an undertaking to pay Ericsson.

Senior counsel told the court that every effort was made to save the company and there was an "experiment" but all fell though as the deal of Rs. 18,100 crore with Jio did not succeed.

"The entire basis of the exercise was an agreement for the sale of assets to Jio and finally Jio raised its hands," Rohatgi told the court.

The court was told that the company received just Rs 780 crore through the deal with Jio, which was paid to DoT to save the spectrum possessed by RCom.

RCom put an affidavit its assertion that they received only Rs 780 crore from Jio on pursuance to Rs 18,100 crore deal. The affidavit also stated the share-holding pattern of RCom, Reliance Telecommunication and Reliance Infratel.

The court had sought the affidavit in the course of the hearing on Wednesday.

The court was also told Rs 5,000 crore (Rs 2,000 crore and Rs 3,000 crore), which is claimed by Ericsson that RCom received from Jio did not come through.

Appearing for Shah and Virani, senior counsel Kapil Sibal questioned as to why Ericsson, as an operational creditor, was being favoured as there were other operational creditors. "We tried hard to persuade lenders to pay Ericsson to facilitate the undertaking," Sibal said, adding the attempts to trade in spectrum, to raise the funds, as is permitted under the government policy did not succeed as DoT did not issue the no-objection certificate.

Describing the case as "extraordinary", senior counsel Dushyant Dave, appearing for Ericsson, said he was not getting preferential treatment and claimed it was they who had agreed to pay.

Alleging that the non-payment of dues was nothing but a virtual disobedience of the court order, Dave said, the financial institutions were interested in saving RCom.

Dave said the order of NCLT is superimposed by the top court order saying they "shall pay".

Referring to the argument by Rohatgi that the undertakings were conditional, Dave said "Am I so foolish or naive that I will agree to an undertaking that I will get money subject to the agreement with Jio."

Appearing for the SBI Chairman, who too was made a contemnor, the court was told the financial institutions have not assisted RCom in the violation of the undertaking.

Wondering how the SBI Chairman could be made a contemnor, senior counsel Neeraj Kishan Kaul described as "irresponsible" the allegation that "I colluded with RCom".

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