THE SUPREME Court Wednesday held Reliance Communications Ltd (RCom) chairman Anil Ambani guilty of contempt of court for not
honouring an undertaking to pay Rs 550 crore in dues to Ericsson India Ltd
A Bench of Justices R F Nariman and Vineet Saran slammed the RCom chief’s “cavalier attitude…to the highest court of the land” and also held the chairpersons of Reliance Telecom Ltd and Reliance Infratel Ltd guilty of contempt.
The Bench asked them to pay Rs 453 crore to Ericsson within four weeks failing which the three would have to undergo imprisonment of three months. It directed the Registry to transfer the Rs 118 crore already deposited in court to Ericsson within one week.
The Court also asked the three companies to pay a fine of Rs 1 crore each to the Registry within one week failing which the three chairpersons will have to serve one month in prison. “This sum will be paid over to the Supreme Court Legal Services Committee,” the Court said.
The matter relates to undertakings given in pursuance of orders by the National Company Law Appellate Tribunal (NCLAT) and subsequently to the Supreme Court by RCom companies that they would pay Rs 550 crore to Ericsson in settlement of dues between them.
While RCom argued that the undertaking to pay was subject to the sale of its assets, Ericsson contended that there was no such caveat. The Bench concluded that there was no such linkage in undertakings given pursuant to the NCLAT order in June 2018 but such a clause was found in undertakings given to the Supreme Court in August 2018.
The Court held that the undertakings given to it “have obviously not been given in accordance” with its order and “are contrary to the undertakings given by the authorized persons of these very Companies pursuant to the NCLAT order…”.
The judgment said “in this view of matter, it is clear that the three Reliance Companies had no intention, at the very least, of adhering to the time limit” to pay.
“The undertakings given on the footing that the amount of INR 550 crore would be paid only out of the sale of assets was false to the knowledge of the three Reliance Companies. This itself affects the administration of justice, and is therefore, contempt of court,” the Bench ruled.
The Court held that “there is…no doubt whatsoever that the three Reliance Companies have wilfully not paid the sum of INR 550 crore plus interest and have thus breached the undertakings given to this Court.”
It was also critical of the contention by Anil Ambani in the reply affidavit that “RCom has not taken or received any advantage on account of the undertaking” submitted to the Court.
“This, again, is a wholly incorrect statement, given the fact that a writ petition was filed in this Court seeking quashing of the corporate insolvency resolution process on settlement of the matter with Ericsson, which could not be achieved without such undertaking being given to this Court,” the Court said.
The judgment added that “it is clear that this reply affidavit clearly demonstrates the cavalier attitude of the deponent of this affidavit to the highest court of the land”.
According to case records, Ericsson entered into a Managed Service Agreement with RCom in January 2013 under which it agreed to provide managed services – operation, maintenance, and management of RCom’s network. The arrangement ran into problems and the deal was terminated in September 2017. The matter reached the National Company Law Tribunal and NCLAT where the two sides struck a deal to settle their dues.