The National Company Law Appellate Tribunal Wednesday reserved its order on a petition by Reliance Communications which has approached the tribunal seeking the release of income tax refunds to clear dues of Ericsson. Lenders of RCom have opposed the plea, saying that it will lead to outgo of public money for settling payment of a private party.
After hearing both the sides, the NCLAT bench headed by Chairperson S J Mukhopadhaya reserved the order in the case. The chairman said that both the parties should see the case as a resolution process rather than seeing it as a suit and principle of resolution is to save the company so that creditors get the maximum from assets.
He said that in case liquidation proceedings are invoked against RCom then all the creditors including Ericsson will have to pay back the amount that they have received from RCom and projected valuation of company's asset of Rs 38,000 crore may fall to Rs 2,000-3,000 crore. "Ericsson will get 20-30 per cent from it," Mukhopadhaya said.
The NCLAT bench was hearing the petition of RCom to release Rs 259.22 crore received from income tax refund from the Trust and Retention Account (TRA) held with the State Bank of India. All receivables of RCom are deposited in TRA account on which lenders have control.
Senior lawyer Kapil Sibal appearing for Anil Ambani-led Reliance Communications appealed for payment to be made to Ericsson from the TRA. Lenders of RCom led by State Bank of India opposed the application of the company.
Senior lawyer Neeraj Kishan Kaul appearing for SBI argued for rejection of the RCom's appeal, contending that it will lead to outgo of public money for settling payment of a private party. He said that RCom asset monetisation deal failed because Reliance Jio refused to take responsibility of past dues of the Anil Ambani-led firm before the DoT and hence it is not liable to make payment on behalf of RCom.
RCom has been asked by both the Supreme Court and the NCLAT to pay Rs 550 crore to Ericsson. The company has paid Rs 118 crore to Ericsson and if it fails to pay the rest of the amount then RCom group Chairman Anil Ambani may have to face three-month jail term for the contempt of court order.
(With inputs from agencies.)