The lenders to Reliance Communications have been warned by an appellate tribunal that their failure to release tax refunds to clear the telecom’s dues may force the court to send the operator back into insolvency proceedings.
“If you don’t pay we will vacate the order (staying insolvency proceedings) and ask for insolvency,” National Company Law Appellate Tribunal (NCLAT) said on Tuesday. “If the payment fails we will pass orders for insolvency,” said a two-member bench headed by Justice SJ Mukhopadhyaya. The tribunal will hear the case on Wednesday.
The court’s comments come on the back of RCom’s request that Rs 260 crore of tax refunds held in a trust fund by lenders be released on behalf of the telco to pay Swedish telecom gear maker Ericsson. RCom needs to pay Ericsson Rs 453 crore out of its Rs 571 crore dues by March 19, else its chairman Anil Ambani will go to jail for three months.
If the tribunal goes ahead with its threat and RCom goes into insolvency — which it had earlier voluntarily applied to the NCLAT for — the payment to Ericsson will be left in the lurch.
Senior advocate Kapil Sibal, appearing for RCom, argued that if the Insolvency and Bankruptcy Code proceedings start, then the telco can’t pay Ericsson, which will “fly in the face of the directions of the Supreme Court.