RCom’s Plea to release income tax refunds to pay Ericsson, NCLAT Reserves Order

 Reliance Communications Ltd.( RIL) 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. National Company Law Appellate Tribunal reserved its order on a plea.

RIL 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.

Financial creditors of the debt- ridden Reliance Communications on Wednesday opposed its plea to release the income- tax refunds to clear dues of Ericsson before the National Company Law Appellate Tribunal (NCLAT).

The NCLAT was hearing a plea from RCom, which has approached the appellate tribunal seeking waiver of the moratorium placed by it on February 4.

A two-member bench of the NCLAT headed by Justice S J Mukhopadhaya has directed the financial creditors of the company, including the State Bank of India, to file their reply on the issue by March 8.

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.

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.

 

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