The Delhi high court on Monday directed Axis Bank to renew all pending bank guarantees with respect to Reliance Communications Ltd (RCom), whether expired or yet to expire, as an interim measure.
A high court bench comprising justice Rajiv Shakdher was hearing an appeal moved by Anil Ambani-owned RCom against a 16 March direction by the department of telecommunications (DoT) informing all telecom and internet provider companies, associations and officials in the telecom ministry to not accept any new bank guarantees from Axis Bank. The court asked the Centre to submit its response to RCom’s appeal within two weeks.
Counsel appearing for RCom argued that the stay on accepting bank guarantees furnished by Axis Bank was related to the Aircel group and not RCom.
A similar direction staying payments to be made to DoT was passed by the Telecom Disputes Settlement & Appellate Tribunal in January 2018 with respect to Aircel group, which was upheld in March.
The DoT direction was issued after Axis Bank, the country’s third-largest private sector lender, had failed to honour a bank guarantee it had issued on behalf of Aircel group of companies.
Apart from Aircel group, the instruction was sent to Bharti Airtel, Vodafone India, Idea Cellular, Reliance Jio Infocomm and RCom.
Bank guarantees are issued by banks or lending institutions promising to make up for a pre-stated sum of money in case of a default by the entity on whose behalf it is issued.
Telecom companies furnish bank guarantees from time to time to meet their contractual commitments, failing which the government can encash them.
The matter would be next heard on 25 October.
RCom is currently facing insolvency proceedings before a Mumbai bench of the NCLT, on a plea filed by Sweden-based Ericsson earlier this month. The telecom firm’s total debt is of over Rs45,000 crore.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
Source: Livemint, May 21, 2018