An appellate tribunal has refused to direct State Bank of India and other lenders to Reliance Communications to release Rs 260 cr of tax refunds, held in a trust fund, to pay the telco’s dues to Ericsson.
The order passed by National Company Law Appellate Tribunal (NCLAT) on Friday is a setback for RCom, which must pay the Swedish telecom gear maker its remaining dues of Rs 453 crore by Tuesday to ensure its chairman Anil Ambani doesn’t go to jail.
The telco has already paid Rs 118 crore of the total Rs 571 crore dues.
“No direction can be given to any party to the settlement (particularly the third party) to perform certain duties to ensure settlement between other parties,” NCLAT said in its order.
The appellate tribunal also decided not to vacate its last year’s order staying insolvency proceedings against RCom and its subsidiaries.
“Supreme Court is in seisin of the matter…we are not vacating the interim order dated May 30, 2018 nor passing any direction to refund any amount to any one or other party, till some order is passed by the…Supreme Court,” it said.
The appellate tribunal also said RCom is free to request the Supreme Court to order SBI to release the funds. “This order will not come in the way of the appellants to ask for relief as sought for in this interim application from…Supreme Court,” it said.
RCom had moved NCLAT, seeking directions to the 37 lenders led by SBI to release Rs 260 crore directly to Ericsson. Lenders have refused to do so, saying public money can’t be used to settle payment to a private party.
NCLAT also asked the three parties — RCom, lenders and Ericsson — to find a way to ensure that the matter does not go back to the corporate insolvency process.
If NCLAT passes an order pushing RCom back into insolvency, then Ericsson would need to refund any funds that it would have got from RCom, the bench observed.
Interestingly, RCom has said it wants to voluntarily go back into the insolvency process, saying it will help it sell its assets in a time bound manner.
Under the Insolvency and Bankruptcy Code 2016, financial lenders such as SBI have priority in getting repaid from the sale of assets, while operational creditors like Ericsson are way down the list.
Source: Economic Times, March 17, 2019