Banks oppose RCom’s proposal to use tax refunds to pay Ericsson dues

Banks oppose RCom’s proposal to use tax refunds to pay Ericsson dues

New Delhi, Feb 28: The troubles for Anil Ambani-led Reliance Communications (RCom) seem to be compounding as the company’s financial creditors, including the State Bank of India (SBI), have opposed its bid to withdraw tax refunds lying in a bank account.
Nearly 44 banks, including SBI are trustees of the bank account in which RCom’s tax refunds worth nearly Rs 260 crore lie. RCom wants to use these refunds to clear Ericsson India’s Rs 453 crore dues. The banks have, however, opposed RCom’s plea and said that the money due to Ericsson should come from an independent source and not from these refunds.
“This appellate tribunal is not the appropriate forum to decide on the issue. The Supreme Court has already considered the issue. The sum has to come independently,” Senior Advocate Krishnan Venugopal, appearing for SBI said.
During the hearing, National Company Law Appellate Tribunal (NCLAT) asked banks and all other parties’ to file their replies to the application moved by RCom by March 8. The matter would be next heard on March 11. RCom had to approach the NCLAT to seek vacation of the stay it had ordered on February 4.
Hearing a plea moved by RCom, the NCLAT had then said that there would be a complete stay on sale, transfer or alienation of any assets belonging to the company. The bank guarantees, mortgages or other instruments had also been placed under the moratorium by the NCLAT.
Earlier, the apex court had on February 20 held Anil Ambani guilty of contempt of court and asked it to clear Ericsson India’s dues within four weeks, failing which the Ambani and two other executives belonging to the Anil Dhirbubhai Ambani Group company would have to go to jail for three months. Of the 550 crore, RCom has already deposited nearly Rs 118 crore that it got as tax refunds. The top court had then ordered that this money would be released to Ericsson India within one week.
The top court’s judgement had come in a contempt plea moved by Ericsson after RCom had failed to pay it Rs 550 crore despite repeated assurances. Ericsson India had in September 2017 moved insolvency petitions against RCom, Reliance Telecom, and Reliance Infratel at the Mumbai Bench of the National Company Law Tribunal (NCLT) for failing to pay dues amounting to nearly Rs 1,500 crore.
The petition was admitted by the NCLT in May 2018, following which the three Reliance group companies approached the National Company Law Appellate Tribunal (NCLAT). It was in the NCLAT that Ericsson India and the three Reliance companies had come to a settlement that the latter would pay Rs 550 crore within 120 days, which was September 30, 2018. The NCLAT had then noted that if RCom and its two subsidiaries failed to pay the said amount within the timeline, Ericsson India would be at liberty to revive the insolvency application.