SC holds Anil Ambani guilty of contempt

SC holds Anil Ambani guilty of contempt

S. Sivadas

S. Sivadas

The Supreme Court has held Reliance Communications Ltd (RCom) and its chairman Anil Ambani guilty of contempt for not paying dues to Ericsson.

A bench headed by Mr. Justice R.F. Nariman directed Ambani to pay Rs. 453 crore to the Swedish telecom equipment maker within a month and said that a 3-month jail term would follow if the payment was not made on time.

It was observed that RCom had no intention to pay and had 'willfully' not paid Ericsson the due amount. An apology by RCom was also rejected by the top court.

A fine of Rs.1 crore each was also imposed on three Reliance Group companies -- RCom, Reliance Telecom Ltd and Reliance Infratel Ltd -- for not adhering with deadlines fixed by the court for payment to Ericsson. The amount has to be deposited with the registry of the Supreme Court.

The court was ruling on Ericsson’s contempt plea against RCom and its chairman Anil Ambani for 'wilful disobedience' of the court’s earlier orders to pay dues of Rs.550 crore to the Swedish telecom equipment maker.

Ericsson had moved three contempt petitions against RCom.

Ambani could not be made personally liable for the dues as RCom is a public listed company with lakhs of shareholders and an individual director or the entire group could not be held liable for liability of the company, Mr. Mukul Rohtagi, appearing for RCom, told the court.

RCom did not make any unconditional undertaking, he said. The offer was conditional on sale to Reliance Jio, which did not come through from the department of telecommunications (DoT), he said. Mr. Rohtagi also denied allegations of RCom having received Rs. 5,000 crore from Jio and told the court that only Rs.780 crore has been received under the failed deal, an amount that was used by lender banks.

Ericsson however, said the company was making huge profit but was not paying its dues.

Ericsson had asked the court to direct Ambani to submit R.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 mentioned by Ericsson include those of  March 3, 2018,  October 23, 2018, and January 7, 2019.

Ericsson 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 also 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 past dues and asked Reliance Jio if it was willing to provide an undertaking to abide by the spectrum trade guidelines. Reliance Jio had expressed difficulty in doing so.

The Supreme Court had on  November 30 cleared spectrum sale by Anil Ambani-controlled RCom to elder brother Mr. Mukesh Ambani’s Reliance Jio on condition that the seller furnishes Rs.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.