RCom Asked to Clear Dues of Rs 453 Crore to Ericsson Within Four Weeks

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Observing there was a 'wilful default', the Supreme Court on Wednesday held Anil Ambani, chairman of Reliance Communications (RCom), guilty of contempt of court and ordered the debt-laden company to clear the Rs 453 crore dues to Swedish telecom equipment maker Ericsson within four weeks or face a three-month jail term. In a verdict that came as a setback to Ambani, the apex court also pulled up the industrialist for his "cavalier attitude" demonstrated through the affidavit filed in the court and said any "unconditional apology" given must be rejected.

Besides Ambani, the court held Reliance Telecom Ltd chairman Satish Seth and Reliance Infratel Ltd Chhaya Virani as well as their three companies guilty of contempt of court. "The RCom group is directed to purge the contempt of this Court by payment to Ericsson the sum of Rs 453 crore within a period of four weeks from today. In default of such payment, the Chairmen who have given undertakings to this Court will suffer three months imprisonment," said a bench of Justices R F Nariman and Vineet Saran.

It directed the registry of the apex court to pay Rs 118 crore deposited by the RCom group to Ericsson within a period of one week from Wednesday. The court said there is no doubt that the three Reliance Companies have "wilfully not paid the sum of Rs 550 crore plus interest and have thus breached the undertakings given to this Court".

"We are also of the view that in the facts of the present case, wilful default is made out...," the court said, adding it is not a case of accidental or unintentional disobedience.

It also imposed Rs one crore fine on each of the three companies and directed the amount to be deposited with the Supreme Court Legal Services Committee within four weeks from today and in case of default the chairmen of these companies will have to undergo one month's imprisonment.

Shortly after the pronouncement of the verdict, senior advocate Mukul Rohatgi, who appeared for Ambani, said he respects the decision of the apex court and expressed confidence that the group will honour the directions on payment of dues to Ericsson.

"We respect the Supreme Court's order. We have faced our difficulties. However, the court ruled the way it has ruled," Rohatgi told PTI. "I am sure Rcom will honour the Supreme Court's order," he added.

The 41-page verdict by the apex court came on three contempt petitions filed by Ericsson for non-payment of its Rs 550 crores dues for the work of operation, maintenance, and management of RCom's network the telecom equipment maker has done since 2013.

The court while dealing with the facts of the case said the undertakings were given by the three chairmen of the three companies on August 9, last year that Rs 550 Crore dues of Ericsson will be paid subject to the sale of assets was neither in accordance of the apex court's order of August 3, 2018 nor as per the undertaking given by directors of the company before the National Company Law Appellate Tribunal (NCLAT).

"In view of this, it is clear that the three Reliance Companies had no intention, at the very least, of adhering to the time limit of 120 days or to the extended time limit of 60 days plus, as was given by way of indulgence, by the order dated October 23, 2018.

"The undertakings given on the footing that the amount of Rs 550 crore would be paid only out of the sale of assets was false to the knowledge of the three Reliance Companies," it said, and added, "This itself affects the administration of justice, and is, therefore, contempt of court".

Dealing with the affidavit of Ambani filed in the contempt petition of Ericsson, the bench said he has stated RCom has not taken or received any advantage on account of the undertaking submitted before the top court.

Terming the statement of Ambani as "wholly incorrect", the bench said that without filing the said undertaking in the court, RCom could not have sought quashing of the insolvency proceedings.

"We are of the view that any unconditional apology given that there was no intention to make any wrongful undertaking or that the undertaking was submitted bona fide must be rejected. It is clear that this reply affidavit clearly demonstrates the cavalier attitude of the deponent (Ambani) of this affidavit to the highest court of the land," the bench said.

It said that to say that the sum of Rs 550 crore would be paid only out of sale of assets of the three Reliance Companies is a "deliberate misstatement" made in the undertakings as well as the applications for extension of time filed before the Court, which was done with the purpose of circumventing the orders of this Court.

Referring to the letter of January 21, written by advocates on behalf of RCom group to Ericsson offering to clear the dues with interest subject to withdrawal of contempt petitions, the bench said the Reliance Companies were able to pay the outstanding amount but were wilfully refusing to do so.

The apex court dismissed the contempt petition filed by Ericsson with respect to the Chairman of State Bank of India, saying the bank has nothing to do with Rs 550 Crore which has to be paid only by the three Reliance Companies.

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