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NCLAT Reserves Order On RCom’s Plea To Release Income Tax Refunds

The National Company Law Appellate Tribunal reserved its order on a plea by Reliance Communications Ltd. seeking the release of income tax refunds to clear dues of Ericsson, less than a week before the Supreme Court’s March 19 deadline to pay Rs 550 crore to the Swedish telecom equipment maker ends.

The Anil Ambani’s company sought the urgent approval from its lenders to pay Ericsson Rs 260 crore directly from its trust and retention account. The lenders forum led by State Bank of India opposed the petition, claiming their right over the money in that account.

The lenders contended that the Reserve Bank of India’s rules don’t allow the release of funds for payment to Ericsson. The financial creditors had no role in the failure of the asset sale deal between RCom and Reliance Jio Infocomm Ltd., they told the appellate tribunal.

“The deal did not go through because RCom wanted the payment of spectrum dues to be made by Reliance Jio. The banks had no role in it, and the Supreme Court judgment that found Anil Ambani guilty of contempt also puts the onus for the failure of the deal on RCom,” Senior Advocate Neeraj Kishan Kaul told the bench on behalf of SBI.

Senior Advocate Kapil Sibal, who is representing RCom, said the money for the payment to be made to Ericsson has to be done from the trust and retention account. He also blamed the banks for the failure of the deal between Reliance Jio and RCom. After the new RBI rules, Sibal said any resolution plan needs the unanimous support of the financial lenders. The sale with Reliance Jio did not go through because of them.

The Supreme Court, on Feb. 20, found Ambani guilty of contempt for not paying dues to Ericsson, saying that the chairman of the Reliance Group will face a jail term if he fails to comply. The apex court has given RCom four weeks to clear the dues. Of the total dues worth Rs 550 crore, Rs 118 crore is deposited with the Supreme Court registry and will be transferred to Ericsson, the top court had said in its order.―Bloomberg Quint

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