Banks Oppose RCom’s Plea To Use Tax Refunds To Clear Ericsson’s Dues

The financial creditors of the Anil Ambani-led Reliance Communications (RCom) are opposing the company’s bid to withdraw income tax refunds worth nearly Rs 260 crore that are lying its bank account.

RCom needs this money to clear dues owed to Swedish telecom equipment maker Ericsson and avoid the Supreme Court’s anger.

The apex court last week held Ambani guilty of contempt and ordered RCom and two other companies to pay Rs 453 crore in dues to Ericsson within four weeks.

After the Supreme Court’s verdict, RCom had moved the National Company Law Tribunal (NCLAT) seeking a waiver over a previous order by the tribunal that held no one can “sell, alienate or create third party rights over RCom’s assets”.

The company’s lenders however opposed RCom’s plea before the NCLAT, saying that Ericsson’s dues should come from an independent source and not these tax 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, who was appearing for the State Bank of India, said.

A two member bench of the NCLAT headed by Justice S.J. Mukhopadhaya has asked  RCom’s financial creditors (which includes SBI) to file their reply on the matter by March 8. Over 40 banks, including SBI, are currently the trustees of the bank account in which RCom’s tax refunds lie.

According to agency reports, the NCLAT will next hear the matter on March 11, 2019.

Deadline to be met

On February 20, the Supreme Court held that if RCom and two other companies didn’t find the money in four weeks, Ambani and two others could face a potential prison sentence.

As The Wire has reported earlier, out of the Rs 550 crore that is supposedly due, the Anil Ambani-led firms have already deposited Rs 131 crore (net of tax Rs 118 crore) with the Supreme Court registry.

At the time, Ericsson had indicated that RCom had two income tax refunds coming its way, money that could be used to pay the Swedish company. The first refund was Rs 129 crore and another forthcoming refund was in the range of Rs 134 crore.―The Wire