Supreme Court paves the way for sale of RCom assets to Reliance Jio
The Supreme Court also rejected the plea of Reliance Infratel, a subsidiary of RCom, and SBI challenging an NCLT order that stayed an asset sale to Reliance Jio
New Delhi: In a partial relief to Reliance Communications Ltd (RCom), the Supreme Court on Thursday cancelled a March order of the Bombay high court that had rejected the company’s appeal of an order from an arbitration tribunal barring the sale or transfer of its assets.
Accordingly, RCom is at liberty to proceed with the sale of spectrum, media convergence nodes (MCN) and real estate (at New Delhi, Chennai, Kolkata, Jigni and Tirupati) that were previously under challenge.
“It is not a block sale. The court has today paved way for sale of the spectrum, MCNs and real estate,” Punit Garg, executive director of RCom, said in an interview after the court order. Other people aware of the developments have however, maintained that the asset sale is a block deal.
The top court also rejected the plea of Reliance Infratel, a subsidiary of RCom, and the State Bank of India (SBI) challenging an order of the National Company Law Tribunal (NCLT) that stayed an asset sale to Reliance Jio Infocomm Ltd. A two-judge bench headed by justice A.K. Goel asked the parties to approach the National Company Law Appellate Tribunal (NCLAT) in accordance with law. RCom is likely to move the appellate forum on Friday.
“As legally advised, and based on the order of the Hon’ble SC as above, RCom is confident of securing appropriate relief from the NCLAT to enable sales of tower and fibre assets to also be completed at the earliest. The claim of the minority investors (which is fully disputed by RCom) can, in any case, be a maximum of approx. Rs200-300 crore from the sales proceeds,” a RCom spokesperson said.
RCom had moved the top court on 19 March seeking a stay on orders of the Bombay high court and the National Company Law Tribunal (NCLT) Mumbai bench, barring it from selling its wireless assets to Reliance Jio without prior approval. The company was joined by SBI which approached the court on 20 March seeking approval for the sale of RCom’s assets to Reliance Jio.
The tribunal was hearing a petition filed by offshore investors of Reliance Infratel led by HSBC Daisy Investments (Mauritius) Ltd, which are alleging oppression of minority shareholders and mismanagement. 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. On 8 March, the high court had rejected RCom’s appeal against an order of an arbitration tribunal barring the sale or transfer of its assets without prior permission. The tribunal had passed the interim order on a plea by Swedish telecom equipment maker Ericsson for recovery of Rs1,012 crore from RCom.
Ericsson being an unsecured creditor, through its counsel, C.A. Sundaram, said, “It is not that we don’t have any rights. I have the right to recovery. This cannot be a private transaction; one brother selling to another.”
“Am I to be left in the lurch like this? After they sell the assets, they will say that they don’t have money left to pay us,” he remarked. He added that its rights were being defeated and being a small company, it would suffer irreparably. It was observed by the court that as unsecured creditors, it (Ericsson) could not be deprived of its statutory rights.
This was opposed by Mukul Rohtagi, representing RCom who told the court, “Even under civil law or commercial law, secured creditors are above unsecured creditors”.
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.
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