New Delhi: The National Company Law Appellate Tribunal on Tuesday asked Anil Ambani owned Reliance Communication Ltd to “settle its dispute" with respect to the non-payment of dues with the Swedish based telecom equipment manufacturer Ericsson India Pvt Ltd, following an offer of Rs. 500 crore made by the telco as a settlement amount.
A two judge NCLAT bench headed by Justice S.J Mukhopadhyay was hearing an appeal preferred by Reliance Communication against a 15 May order of the Mumbai bench of the National Company Law Tribunal (NCLT) initiating insolvency proceeding against it on a plea made by Ericsson for recovery of unpaid dues of over Rs. 1,150 crore.
Apart from Reliance Communications and Ericsson, other parties before the Appellate Tribunal include the lenders to Rcom group--China Development Bank, State Bank of India and Standard Chartered Bank.
Ericsson had signed a 7-year deal in 2014 with Reliance Communications to operate and manage its nationwide telecom network. After non-payment of dues since 2016, Ericsson moved NCLT under the Insolvency and Bankruptcy Code against Reliance Communications and its two subsidiaries- Reliance Infratel and Reliance Telecom in September 2017.
Arun Kathpalia appearing for Ericsson informed the court that the principal due amount of over Rs. 900 crore has now inflated to Rs. 1600 crore.
Post insolvency proceedings, the efforts by Reliance Communications to strike an out of court settlement with Ericsson have reportedly not worked out.
The admission kick-starts a time-bound 180-day insolvency resolution process for RCom, which can be extended by an additional 90 days. The management control of RCom along its two units now vests with resolution professionals appointed by NCLT.
Initiation of insolvency proceedings also puts a question mark on the fate on Reliance Communication’s Rs25,000 crore deal with Mukesh Ambani’s Reliance Jio for the sale of its assets mortgaged with different banks, as a debt resolution plan.
Part of the deal with respect to the sale of tower and fibre asset is already pending before NCLAT, after NCLT Mumbai bench had imposed a stay on its sale in a plea by offshore investors of Reliance Infratel led by HSBC Daisy Investments (Mauritius) Ltd.
A stay imposed by the Bombay high Court on sale of spectrum, media convergence nodes (MCN) and real estate (at New Delhi, Chennai, Kolkata, Jigni and Tirupati) was vacated by the Supreme Court on 5 April.
The matter would be next heard by the appellate tribunal on 30 May.
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.