Lenders of Reliance Communications claims first right over IT refunds

Lenders of Reliance Communications (RCom) Tuesday contended before the NCLAT that they have the first right over Rs 260 crore, which the debt-ridden company has received as the income tax refund. The SBI along with other members of Joint Lenders' Forum (JLF) said that under the RBI guidelines, they have the right over the retention and trust account in which the refunds have been deposited.

A two-member bench headed by Chairman Justice S J Mukhopadhaya will continue the hearing tomorrow in the matter. Senior advocate Neeraj Kishan Kaul, representing the SBI, submitted before the tribunal that JLF could not be blamed for not recovering Rs 37,000 crore from sales of assets of RCom.

"Settlement did not fail because of JLF. It failed because Jio declined to pay RCom's past debt," he said. Lenders further said that the retention and trust account had been set up before the insolvency process against RCom, and thus it has to be kept out of the current proceedings.

"The retention and trust account has separate Reserve Bank of India (RBI) guideline which says that no third party encumbrances can be created. RCom cannot saddle the responsibility of paying Ericsson on the banks," he said. On Monday, National Company Law Appellate Tribunal (NCLAT) had pulled up the SBI, the lead lender of debt-ridden Reliance Communications, along with others for giving a 'false impression' to monetise Rs 37,000 crore from asset sales of the telecom company to Reliance Jio.

The NCLAT was hearing RCom's plea, which has approached the appellate tribunal, seeking waiver over the moratorium placed by it on February 4. However, its financial creditors are opposing its plea to release the Income-tax refunds to clear dues of Ericsson, to whom the company has to pay Rs 550 crore.

On February 20, the Supreme Court held RCom chairman Anil Ambani along with two others guilty of contempt of court for willfully violating its order by not paying Rs 550-crore dues to telecom equipment maker Ericsson. The apex court had said they faced a three-month jail term if remaining Rs 453 crore was not paid to the telecom equipment maker in four weeks.

Earlier on February 4, the appellate tribunal had said that until further orders of the NCLAT or the Supreme Court, no one can sell, alienate, or create third party rights over RCom's assets.

(With inputs from agencies.)