Chennai: Chairman of debt-ridden Reliance Communications Ltd (RCom), Anil Ambani was in all likeliness heading to jail except for his brother and richest Indian Mukesh Ambani’s intervention.
In the case regarding paying dues to Swedish company Ericsson, RCom had to pay Rs 550 crore and interest thereon, failing to do so would have seen Anil Ambani behiind bars.
However, in a turn of events, Mukesh Ambani came to the rescue and helped his brother to settle the due. Ericsson, confirmed on Monday it has received Rs 458.77 crore from RCom. The firm had already received Rs 118 crore in February.
“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to their strong family values by extending this timely support. My family and I are grateful and deeply touched with their gesture,” Anil Ambani said in a statement.
An RCom spokesperson stated that the requisite payment of Rs 550 crore and interest thereon to Ericsson has been completed in compliance with the Supreme Court judgment.
In February, the Supreme Court had found Anil Ambani guilty of contempt of court for wilfully failing to pay Ericsson. The court had ordered Anil Ambani and two RCom directors to pay Ericsson the dues within four weeks or face a three-month jail term for contempt of court. The deadline to make the payment expired on Tuesday. With Monday’s payment, the debt laden telco ends its 18-month long battle with Ericsson.
The development comes at a time when RCom had accused in the top court that it was not able to pay dues because of the fallout between RCom and RJio. In 2018, Reliance Jio Infocomm, controlled by Mukesh Ambani, bought RCom’s wireless assets for Rs 3,000 crore.
This also the second time that Mukesh Ambani has come to the rescue of his brother after their famous feud that dogged the Reliance Group and ended up splitting it into two between the two brothers.
RCom, which was once India’s second largest, has struggled for cash partly a result of a price war triggered by the market entrance of Reliance Jio Infocomm.
The company’s attempts to pay part of the dues, including interest, to Ericsson with its income tax refunds of Rs 260 crore failed with the National Company Law Appellate Tribunal (NCLAT) refusing to direct the lenders, including main financial creditor State Bank of India, to release the funds.
The Swedish firm signed a deal in 2014 to manage and operate RCom’s network and last year approached the court over the unpaid dues.
With RCom not meeting the deadline, Ericsson moved Supreme Court, which gave RCom another deadline – December 15, 2018 – to repay dues, both of which were missed by RCom.
|Here is the twist|
|Although Mukesh bailed out Anil from Ericsson issue, RJIL has in its filing to the NSE said it will be terminating its agreements with RCom that were made earlier.
“The following agreements: (i) Master Agreement for acquisition of certain specific assets of RCOM Entities (mentioned therein); and (ii) the Spectrum Trading Agreement for change in allotment of certain specific spectrum (mentioned therein), executed between and amongst RJIL and RCOM Entities was forthwith terminated and with effect from 18 March, without any further obligations and liabilities,” said the filing.
The reasons were stated as – (i) the lenders of RCom entities not granting consents for the proposed transactions envisaged in the said agreements; (ii) The DoT not granting the requisite approvals ; (iii) RCom entities’ application before NCLAT to withdraw their appeals and consequent prayer to reinstate corporate insolvency resolution process, which has been independently affirmed by its Lenders; (iv) the board of directors of RCom passing a resolution to seek fast track resolution through NCLT, Mumbai Bench and disclosing the same to the Stock Exchanges; and (v) the order dated 4 February passed by NCLAT restricting the sale, transfer or alienation of any movable or immovable property of RCom entities.