Holds 3 Group Firms Guilty Of Contempt
The Supreme Court on Wednesday held three Reliance ADAG companies guilty of contempt of court for reneging on an undertaking to pay Rs 550 crore to Swedish telecom company Ericsson, and said failure to pay the balance Rs 453 crore by March 20 will mean three months’ jail for group chairman Anil Ambani.
In the first-ever instance of holding a big industrialist liable for imprisonment for failing to clear dues, a bench of Justices R F Nariman and Vineet Saran said: “We are of the view that contempt of the Supreme Court needs to be purged by payment of the sum of Rs 550 crore together with interest till date in four weeks.”
“As stated by Reliance ADAG’s January 21 letter (to Ericsson), subject to any calculation error, an amount of Rs 453 crore must be paid to Ericsson in addition to the deposit of Rs 118 crore made (by R-ADAG) in the SC registry. The registry is directed to pay over Rs 118 crore to Ericsson within a period of one week,” the bench said.
While directing Reliance Communications, Reliance Telecom and Reliance Infratel to pay Rs 453 crore, it said, “In default of such payment, the chairman (Anil Ambani) who has given undertakings to the Supreme Court will suffer three months’ imprisonment.” The SC also castigated Ambani for showing a “cavalier attitude to the highest court of the land”.
Writing the judgment for the bench, Justice Nariman fined the three companies Rs 1crore each and ordered them to deposit the sum in four weeks with the SC registry. Failure to pay the fine amount would result in month-long imprisonment for chairpersons of RCom (Ambani), RTL (Satish Seth) and RITL (Chhaya Virani).
Immediately after the order, Ambani conferred with senior advocate Mukul Rohatgi for a few minutes and left without responding to reporters’ questions. Later, Rohatgi told TOI, “We respect the judgment and will honour it.”
Anil gave undertaking for Ericsson payment
Under a January 25, 2013 agreement, Ericsson was to provide operation, maintenance and management of network services to RCom. When the Swedish company received no payment for services rendered by it, it had moved NCLT on May 7, 2017against RCom under the Insolvency and Bankruptcy Code. A year later, the NCLAT had, on May 30, 2018, recorded a statement on behalf of Reliance companies that Rs 550 crore would be paid in 120 days to Ericsson as full and final settlement of the Rs 1,500-crore claim.
When the case reached the SC, it heard counsel P Chidambaram and Kapil Sibal on August 3 last year and ordered that Rs 550 crore must be paid by Reliance companies by September 30, 2018. On October 23, Ericsson’s counsel Dushyant Dave cried foul over Reliance companies defaulting on payment. Reliance counsel Sibal promised on that day that the money would be paid by December 15. Ambani gave an undertaking to this effect. But it was breached and the SC was told that RCom had no money as it could not sell its assets as planned.
This breach of undertaking by 60-year-old Ambani incensed the court. “Another disturbing feature of the reply affidavit filed by Ambani is the statement that RCom has not taken or received any advantage on account of the undertaking submitted before the SC. This, again, is a wholly incorrect statement, given the fact that a writ petition was filed in the SC seeking quashing of the corporate insolvency resolution process on settlement of the matter with Ericsson, which could not be achieved without such undertaking being given to this court,” it said.
“We are of the view that any unconditional apology given that there was no intention to make any wrongful undertaking or that the undertaking was submitted bona fide must be rejected. It is clear that this reply affidavit demonstrates the cavalier attitude of Ambani to the highest court of the land,” said Justices Nariman and Saran.