The bankruptcy court said it will decide next month that the bankrupt Telecom Reliance Communications Co., Ltd. pleas seeking a ₹Swedish telecom equipment manufacturer Ericsson has refunded Rs 550 crore.
In a brief hearing at the National Company Court (NCLT) on Thursday, Ericsson’s lawyers called the defense “frivolous”. The court has directed both parties to submit their responses and listed the hearing on June 11 and 12.
RCOM and its two subsidiaries – Relying on Telecom and Relying on Infratel – Ericsson ₹After the Supreme Court order, it will be $5.5 billion in 2019.
The bankrupt company now believes that since Ericsson is the operating creditor and receives full payment before the secured financial creditor, the payment equals preferential treatment.
In this week’s court petition, RCOM’s resolution professional, Deloitte’s Anish Nanavaty said payments to Ericsson equal “preference” because it has the effect of “the beneficial position of placing the defendant among other creditors of the company’s debtor in the distribution of the company’s debtor”.
When the company’s debtor is RCOM, the respondent here refers to Ericsson.
Ericsson was not in the mood to surrender.
“The requirement for refund is an abuse of legal process because the Supreme Court adopted settlements and commitments under Article 142 of the Indian Constitution,” Anil Kher, a senior defense lawyer representing Ericsson, told MINT earlier. Article 142 allows the Supreme Court to ensure justice through any order.
RCOM approaches NCLT in 2019, seeking a refund from Ericsson, which requires the court to dismiss the petition “At an exemplary cost,” it is called completely wrong. The Swedish company called the petition “in the case where the creditors committee members are also financial creditors committees.” Nanavaty’s petition is a re-joining this week.
RCOM-ERICSSON Controversy: How to implement it
Once India’s leading telecom operator, RCOM was unable to survive a brutal tariff war that began in 2016 and filed for bankruptcy in 2019.
In early 2013, RCOM and its subsidiaries maintained a telecommunications network with Ericsson. By 2017, unpaid membership fees have been crossed ₹Ericsson initiated $15 billion in bankruptcy proceedings.
The case was escalated, and after missing the payment deadline, Ericsson filed a petition to the Supreme Court against former RCOM chairman Anil Ambani and the company’s department.
At that time, RCOM rolled up under the debt burden ₹Rs 460 crore, major financial creditors including the National Bank of India and China Development Bank. Operating creditors include telecommunications departments, tower companies and suppliers.
In early 2019, RCOM filed for bankruptcy and Deloitte was appointed as a resolution expert. In the same year, RCOM cleared Ericsson’s dues – Payment ₹45.877 billion, and there are ₹1.18 million.
Later in 2019, Deloitte filed a petition with the National Court of Appeal of Companies (NCLAT) to refund Ericsson with a preferential amount. The Court of Appeal directed the parties to approach the Mumbai bench in NCLT, which is now retrialing the matter.
In 2020, RCOM’s creditors committee selected UVARCL as the preferred bidder for RCOM and Reliance Telecom, while Reliance Jio was selected as the asset of Reliance Infratel. However, the two deals remain entangled with legal challenges.
