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SBI chief faces Ericsson contempt plea

Staff reporter, New Delhi
06/02/2019   0 Comments

Ericsson has filed a contempt of court petition against the State Bank of India (SBI) chairman in the Supreme Court for not fulfilling its assurance of settling Reliance Communications’ dues to the telecom equipment maker as the lead banker. The Swedish firm has also filed its third contempt petition against RCom chairman Anil Ambani, urging the top court to freeze his personal assets and not allow him to leave the country “for breaching the top court’s orders multiple times,” a person aware of the development said. “As lead banker, SBI is also responsible for ensuring the court’s orders of payment are followed.” 

The petition has also sought to add RCom units Reliance Telecom and Reliance Infratel as parties, the person said. SBI was lead banker in RCom’s asset monetisation plan which aimed to bring down Rs 42,000-crore debt by at least Rs 18,000 crore through a wireless assets sale to Reliance Jio Infocomm and land parcel sale to Canadian firm Brookfield. SBI has previously been a co-petitioner, requesting courts to allow sale of RCom’s assets so lenders can recover their money. SBI and RCom didn’t respond to ET’s emailed queries, while Ericsson declined to comment. The Supreme Court has listed all matters relating to RCom and Ericsson for February 12. Shares of RCom plummeted by 27.95% to close at Rs 5.44 on the BSE on Tuesday, following a 35% fall on Monday. 

Sources said Ericsson filed a third contempt petition when RCom decided to file for bankruptcy and a debt resolution programme to sell assets, repay lenders and pare debt in 270 days. Ericsson has interpreted this move as RCom’s way of wriggling out of a court-mandated Rs 550-crore settlement. That is because according to the 2016 bankruptcy rules, operational creditors are not at par with financial creditors, who have the first claim over money coming through insolvency proceedings. Ericsson had already filed two contempt petitions against Ambani for repeatedly failing to pay the dues despite Supreme Court’s stipulated deadlines of September 30 and December 15. In its last hearing on the earlier contempt petitions, the apex court had directed Ambani to appear in court at the next date of hearing. It’s not clear if Ambani will appear in court on February 12. 

Ericsson, which in 2014 signed a seven-year deal to operate and manage RCom’s telecom network, had moved the National Company Law Tribunal (NCLT) last year, seeking bankruptcy proceedings against RCom over Rs 1,000-crore dues. SBI opposed Ericsson’s claims, arguing that 14 public sector banks would lose thousands of crores if insolvency proceedings are admitted. Later, a settlement of Rs 550 crore was reached in National Company Law Appellate Tribunal (NCLAT), subsequently backed by Supreme Court, which saved RCom from insolvency earlier. The battle between Ericsson and RCom is also being played out in the appellate tribunal. On Monday, RCom approached NCLAT to withdraw its appeal against the May 2018 NCLT order that had admitted bankruptcy proceedings.

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