Bombay HC dismisses RCom’s appeal against tribunal order stalling asset sale
Mumbai: The Bombay high court has dismissed the appeal filed by Reliance Communications Ltd (RCom) against an arbitration tribunal order that restrained the telecom firm from selling its assets without prior approval till 9 June. RCom will challenge the single bench order’s at the division bench, a spokesperson said in an emailed response.
An arbitration tribunal had ruled in an interim order on 5 March that RCom and its units could not transfer or sell any assets without its permission after Ericsson moved the tribunal to recover unpaid dues.
On Thursday, RCom and its subsidiaries objected to the arbitration tribunal’s ruling stating that Ericsson was an unsecured creditor. They said that the local arm of Swedish infrastructure provider was using pressure tactics to be on par with secured lenders.
Virag Tulzapurkar, the lawyer appearing for RCom, argued the joint lenders’s forum of RCom was conducting the sale of assets. He said as Ericsson was an unsecured creditor, it would not get money even if it stops the sale from proceeding. Ericsson’s lawyers Anil Kher argued that the arbitration tribunal has not prohibited the sale of assets but has only ordered that its prior approval should be taken.
“There needs to be some checks and balance,” argued Kher, adding that the total liability towards the group is around Rs1,600 crore.
Justice R.D. Dhanuka dismissed the petition filed by RCom and its two subsidiaries.
“We intend to file an appeal against the interim order of the hon’ble Mumbai high court,” said the RCom spokesperson in the email response. “The claims of secured financial lenders stand higher in priority as compared to Ericsson, which is an unsecured operational vendor. Further, the sale of assets is being undertaken in pursuance of the decisions of the secured financial lenders.”
RCom is selling assets including spectrum, mobile towers and optical fibre network to Mukesh Ambani-led Reliance Jio. The deal is expected to be completed by March and bring relief to RCom, which is reeling under debt of around Rs45,000 crore. The development comes a day after the Mumbai bench of the National Company Law Tribunal (NCLT) directed Reliance Infratel Ltd, a RCom unit, to stay the sale of its assets until 13 March. 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.
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.