Reliance Communications suffered a severe blow by the NCLAT when the tribunal delivered its decision of retracting the order which it passed on April 6. The previous order allowed Reliance Communications to sell its fiber and towers, now the company has been restricted to do so until April 23. The tribunal decided it was better to put a hold on Reliance’s step after supreme court ordered a stay on the sale of assets owned by Reliance Infratel after HSBC Daisy Investments moved to court alleging Reliance of illicit conduct. Now RCom is awaiting for a further decision by NCLAT to move forward on the matter. The head of the NCLAT bench SJ Mukhopadhaya said: “In view of the order passed by the Supreme Court, dated April 16, 2018…interim order dated April 6, 2018, is recalled.”
The supreme court was of the thought that the NCLAT would hear the matter on Wednesday and has thus ordered a stay. The tribunal was to allocate the proceeds for the selling. However, since the matter will be heard again by the tribunal, the bench deemed it right to retract the April 6 order of selling of assets by Reliance Infratel.
It was Justice Rohinton F Nariman’s observation in the supreme court which led to these circumstances for Reliance. He said that the tribunal’s decision of allowing Reliance to sell its assets was wrong and thus proceeded to put a stay on the same. Presently, the March 12th order which had barred Reliance Infratel from selling stays put.
Last December RCom moved forward with its plan to sell towers and fibers for approximately Rs 24,000 crore. However, despite the stay and the order, RCom is free to sell its airwaves and nodes but not the real estate. The money which Reliance will incur in its account will then be used to repay the telco’s huge debt of Rs 45,000 crore.
During the hearing lawyers from both the sides went back and forth regarding the decision. While Justice Mukhopadhaya questioned the scope of NCLT to pass an interim order under Section 242 of the Companies Act when read with Section 241, which talks about operational mismanagement Reliance lawyers found themselves at a loss of words and demanded more time to get back on the issue. Now the decision remains pending until April 23 where the jurisdiction of NCLAT will be debated upon. It remains to be seen whether or nor NCLAT retains the power of passing the decision which it ordered before. This news is reported by Economic Times.
Challenges for Reliance surfaced when HSBC Daisy Investments (Mauritius) Ltd-led minority shareholders, who have just over 4% stake in Reliance Infratel knocked on the doors of Supreme Court challenging the NCLAT order of April 6 which allowed the lenders group led by SBI to sell Reliance Infratel’s assets.
This legal affair comes after Reliance was accused by HSBC Daisy Investment for oppressing minority shareholders and operational mismanagement by selling its assets without any prior permission. Reliance has countered this allegation by saying that the said claim of the shareholder was not more than Rs 200-300 crore.