Home / Companies / News /  Supreme Court holds RCom, Anil Ambani guilty of contempt in Ericsson dues case

New Delhi: The Supreme Court on Wednesday held Reliance Communications Ltd (RCom) and its chairman Anil Ambani guilty of contempt for failing to pay dues to Ericsson India.

A bench headed by Justice R.F. Nariman directed Ambani to pay 453 crore to the Swedish telecom equipment maker within four weeks and said that a three-month jail term would follow if the payment was not made in time. This will be in addition to the 118 crore already deposited by RCom in the apex court’s registry.

Two other Reliance group companies—Reliance Telecom Ltd and Reliance Infratel—were also held to be contemners.

“There is no doubt whatsoever that the three Reliance companies have wilfully not paid the sum of 550 crore plus interest and have thus breached the undertakings given to this court," the judgement said.

A fine of 1 crore each was imposed on the three Reliance Group companies for not adhering to deadlines fixed by the court for paying Ericsson its dues. In case of default, the chairmen of these companies will be subjected to one month’s imprisonment.

“This is a welcome verdict from Supreme Court. We are hoping it is complied," said Nitin Bansal, Ericsson’s head for network solutions for South-east Asia, Oceania and India.

The court was ruling on Ericsson’s contempt plea against RCom and its chairman Ambani for “wilful disobedience" of the court’s earlier orders to pay dues to the Swedish company. Ericsson had moved three contempt petitions against RCom.

Appearing for RCom, advocate Mukul Rohatgi had argued that Ambani could not be made personally liable for the Ericsson dues as RCom is a public listed company with thousands of shareholders, and an individual director or the entire group could not be held liable for unpaid dues.

RCom’s offer to make the payment was conditional on sale to Reliance Jio Infocomm Ltd which was not cleared by the department of telecommunications, he said.

Rohatgi also denied allegations of RCom having received 5,000 crore from Reliance Jio and told the court that only 780 crore had been received under the failed deal, an amount that went to RCom’s lender.

Ericsson had asked the court to direct Ambani to submit 550 crore, along with interest of 12% per annum, and urged that, till then, his investment in firms, including Reliance Capital Ltd, Reliance Inceptum Pvt. Ltd and Reliance Innoventures Pvt. Ltd, be frozen. The court orders sought to be enforced by Ericsson include those of 3 March 2018, 23 October 2018 and 7 January 2019.

“We respect the judgement of the Hon’ble Supreme Court. The RCom Group shall comply with the same," an RCom spokesperson said.

Ericsson had also sought contempt proceedings against Reliance Infratel Ltd, its chairperson Chhaya Virani, Reliance Telecom Ltd, its chairman Satish Seth, and State Bank of India. It sought that Ambani be “detained in civil prison" until the payment is made.

In January, the apex court highlighted the need for RCom and Reliance Jio to sit together and resolve the issue of outstanding dues and asked Jio if it was willing to provide an undertaking to abide by the government’s spectrum trading guidelines.

Reliance Jio had expressed difficulty in doing so.

The Supreme Court had on 30 November cleared the spectrum sale by Anil Ambani-controlled RCom to elder brother Mukesh Ambani’s Jio on condition that the seller furnishes 1,400 crore as corporate guarantee to the government within two days. This corporate guarantee, to be furnished by Reliance Realty, a unit of RCom, was in addition to the land parcel that had to be provided as security.

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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