Reliance Jio-RCom deal: SC asks who will pay spectrum dues to DoT

Reliance Jio-RCom deal: SC asks who will pay spectrum dues to DoT

The Supreme Court on Monday asked Reliance Communications (RCom) and Reliance Jio Infocomm (RJio) to resolve among themselves as to who will pay the past liabilities of the former, once the spectrum trading deal between the two is cleared by the government. The court said this after Reliance Jio refused to give an undertaking that it will pay dues of the former, if any came to light, once the trading deal was through.

A bench led by Justice RF Nariman said the department of telecommunications (DoT) would give the required no-objection certificate only after RCom and RJio resolved the issue between themselves over the past dues. “Sit down and resolve this between yourselves, it is not for us. Till you don’t resolve between yourself, we can’t do anything,” the judge said.

The apex court also sought response from RCom chairman Anil Ambani on a plea by Swedish telecom equipment manufacturer Ericsson India seeking initiation of contempt proceedings against him and two others for failing to clear its dues of Rs 550 crore. Ericsson has sought that Ambani be “detained in civil prison” and restrained from travelling abroad unless the payment is made.

Allowing RCom to deposit `118 crore towards its dues to Ericsson with the SC registry, it refused to exempt Anil Ambani and others from personal appearance before it on the next date of hearing after four weeks. Ericsson had also sought from the court directions to the home ministry to prevent Anil Ambani, Reliance Telecom chairman Satish Seth and Reliance Infratel chairperson Chhaya Virani from leaving the country.

Ericsson had signed a seven-year deal in 2014 to operate and manage Rcom’s nationwide telecom network. After RCom failed to pay for its supplies procured from Ericsson, the latter initiated insolvency proceedings against it before the National Company Law Tribunal (NCLT) to recover Rs 1,150 crore. Subsequently, the two parties made an out-of-court settlement by which Rcom was required to pay `550 crore.

RJio, which was not party to the case so far, refused to undertake to clear the past liabilities of RCom that may arise, following the company’s `25,000-crore spectrum trading acquisition deal with the former. When the apex court questioned RJio if it was willing to give an undertaking to abide by the spectrum trading guidelines regarding the dues RCom owes DoT, senior counsel Harish Salve, appearing for RJio, expressed his inability, saying that can happen on the condition that RCom offered bank guarantees. “Knowing the problems with prior dues and when giving physical guarantee, we can’t take the risk,” he said.

The court then refused to interfere and asked the two firms to discuss and resolve the matter among themselves. It also posted the matter for further hearing on Friday. The SC was responding to two contempt petitions — one filed by RCom against DoT for failing to give a no-objection certificate to RCom’s spectrum deal with RJio even after the court had directed it to do so and other by Ericsson.

The Supreme Court had on November 30 cleared the sale of spectrum by RCom to RJio on the condition that the former furnished Rs 1,400 crore as corporate guarantee to the government within two days. This guarantee, to be furnished by Reliance Realty, a unit of RCom, was in addition to the land parcel that had to be provided as security as per the Telecom Disputes Settlement and Appellate Tribunal’s order. DoT had asked Rcom to provide bank guarantee of Rs 2,950 crore towards outstanding spectrum charges to approve its spectrum sale to Reliance Jio. Senior counsel Kapil Sibal and Mukul Rohatgi appeared for Rcom.