Nearly six years since Ericsson, Sweden won ₹Reliance Communications Ltd (RCOM) Supreme Court Order of 5.5 billion euros, a bankrupt telecommunications company’s request for a refund of the money will appear in court. On Thursday, a Mumbai judge at the National Corporate Court Tribunal (NCLT) will hear a petition from RCOM resolution professionals that a Swedish company is an operating creditor and pays first while financial creditors wait will be a priority treatment situation.
Once one of India’s leading telecom operators, RCOM was unable to survive a brutal tariff war that began in 2016 and filed for bankruptcy in 2019. Alice won the dues after a court battle the same year, but the story didn’t end, but RP sought a refund for the money the same year, and Ericsson refused.
In a court petition this week, RCom’s resolution professional Anish Nanavaty of Deloitte said, “…payment to the respondent amounts to a “preference” as the said payment has the effect of putting the response in a beneficial position vi-a-vis the other creditors of the corporate debtor in the event of distribution being made under liquidation of the corporate debtor. The response here refers to Ericsson while the corporate debtor is RCom.
Ericsson was not in the mood to surrender.
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Anil Kher, a senior advocate representing Ericsson, told MINT: “The need for refunds is an abuse of legal process because the Supreme Court adopted an order under Article 142 of the Indian Constitution.” Article 142 allows the Supreme Court to pass any order to ensure justice.
In 2019, Ericsson asked NCLT to dismiss the petition at an “exemplary cost”, saying it was completely misunderstood. The company also called the petition “in the case where the creditors committee members are also financial creditors.” Nanavaty’s petition this week is a re-joining.
Nanavaty did not respond to email inquiries.
How this is done
In 2013, RCOM and its subsidiaries Reliance Telecom and Reliance Infratel chose Ericsson to maintain their network. Three years later, Reliance Jio’s entry triggered a tariff war that forced most of the weak to fold. In 2017, Ericsson brought telecom companies and their subsidiaries to the bankruptcy court, with membership fees rising to ₹150 billion. The case changed from the National Corporate Court Tribunal (NCLT) to the National Corporate Legal Appeal Tribunal (NCLAT), which requires telecom companies to pay by December 15, 2018. When the deadline crossed the deadline, Ericsson filed a petition of contempt for Anil Ambani, then against Anil Ambani, then the RCOM chair, and then the RCOM chair of the Supreme Court, both Units in this case.
RCOM has fallen ₹460 million, and surrounded by local and foreign lenders including the National Bank of India and China Development Bank. Its operating creditors include telecommunications departments, tower companies and equipment suppliers. In early 2019, it filed for bankruptcy and Deloitte was appointed as RP.
In 2019, RCOM pays ₹Rs 45.877 crore from Swedish telecom equipment manufacturer (approximately ₹Rs 11.8 crore was deposited earlier), clearing outstanding membership fees. At the time, the former chairman thanked his brother and his wife Mukesh and Nita Ambani for their “timely support”.
However, RCOM’s efforts to sell land, towers and spectrum to Reliance Jio and Brookfield failed.
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That same year, when Deloitte moved demanded a refund from Ericsson, a new front opened up, calling it a priority payment. The Court of Appeal directed the parties to go to the Mumbai bench in NCLT. The incident has been resurrected and is expected to be heard on Thursday.
In 2020, RCOM’s creditors committee selected UVARCL as the preferred bidder for RCOM and Reliance Telecom, while Jio was selected as the asset of Reliance Infratel. However, this matter also fell into legal obstacles.
