New Delhi: The Supreme Court on Monday stayed a National Company Law Appellate Tribunal (NCLAT) order that had allowed for partial sale of assets of Reliance Communications Ltd (RCom) to Reliance Jio Infocomm until the tribunal decides on the case.
The top court order effectively halts the RCom-Jio deal worth Rs25,000 crore to the extent of sale of tower and fibre assets.
The Anil Ambani-led RCom can, however, sell or transfer spectrum, media convergence nodes (MCN) and real estate (at New Delhi, Chennai, Kolkata, Jigni and Tirupati) as part of the deal. The case before NCLAT will be heard next on 18 April.
“Stay of NCLAT’s impugned order until final outcome of the case before the tribunal," said Justice Rohinton F. Nariman.
He also observed that the order passed by the NCLAT was not passed in the right manner and should not have been passed.
HSBC Daisy Investments (Mauritius) Ltd approached the Supreme Court, challenging the NCLAT order of 6 April that had cleared the execution of the RCom-Jio deal.
On 6 April, without vacating the stay on the sale and transfer of Reliance Infratel Ltd’s tower and fibre assets, NCLAT allowed lenders led by the State Bank of India (SBI) to go ahead with the deal in favour of Reliance Jio.
However, NCLAT chairperson justice S.J. Mukhopadhaya asked the joint lenders’ forum to deposit the sale proceeds in a separate escrow account. It also directed the parties to cooperate if SBI intends to execute the sale deed.
“RCom can now proceed with completion of its entire asset monetization plan, covering spectrum, towers, fibre, MCNs (media convergence nodes) and real estate," an RCom spokesperson said in a statement.
“Taking into consideration the fact that if the impugned order is stayed it will amount to grant of final relief, while we are not inclined to stay the impugned order for the present, give liberty to SBI/conveners of joint lenders to reach agreement to sale/sale deed with regard to the mortgaged properties of the company with any reliable purchaser and will keep the amount in a separate escrow account, which shall be subject to the decision of the appeal. If SBI intends to execute the sale deed, the parties will cooperate with it," the order held.
The appellate tribunal had passed an order on Reliance Group unit Reliance Infratel’s appeal challenging an order of the Mumbai bench of the National Company Law Tribunal (NCLT), which prohibited it from selling its assets to Reliance Jio.
The 12 March stay order by NCLT was passed in a plea by offshore investors of Reliance Infratel led by HSBC Daisy Investments (Mauritius) Ltd, alleging oppression of minority shareholders and mismanagement for not taking their consent for the asset sale as per the articles of association of the company. NCLAT’s order of 6 April had come a day after the Supreme Court set aside a Bombay high court order that had stayed the sale of the telecom firm’s assets.
While RCom owes a total of Rs45,000 crore to its lenders, total dues to SBI as on 28 February stood at Rs4,027 crore.
In December 2017, as a part of its debt resolution plan, Anil Ambani-led RCom struck a Rs25,000 crore deal with elder brother Mukesh Ambani’s Reliance Jio for the sale of its assets mortgaged with different banks, to avoid insolvency proceedings. RCom shares fell 5.38% to Rs21.10 on BSE, while the benchmark Sensex gained 0.33% to 34,305.43 points.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.