RCom-Ericsson Case: Supreme Court Finds Anil Ambani Guilty of Contempt

The court ordered the billionaire and two RComsupervisors to pay Rs. 450 crores into Ericsson within four weeks or risk a three-month prison term, according to a ruling from a two-member seat headed by Supreme Court judge Rohinton Fali Nariman.

RCom formerly deposited more than Rs. 100 crores with the court.

In a statement, the telco said it respected the judgment and”shall comply with exactly the same”.

An Ericsson spokeswoman said the company welcomed the judgment and looked forward to RCom’s compliance.

The Swedish company signed a deal in 2014 to manage and run RCom’s network and final year approached the courtroom over the outstanding dues.

The court asked RCom to repay the dues by December 15, a deadline the company missed.

RCom has struggled for money partly as a result of a price war triggered by the market entry of Reliance Jio Infocomm, commanded by Anil’s senior brother and Asia’s richest person, Mukesh Ambani.

Earlier this month, RCom advised the courtroom that a bargain to sell fibre and tower resources to Reliance Jio failed, prompting RCom to turn to bankruptcy courts for debt resolution and hence was not in a position to pay the dues.

RCom owed banks $7 billion (approximately Rs. 49,800 crores) as of March 2017, when it last made its debt level public. It also owes money to telecom equipment vendors.

“It will be quite difficult for RCom to satisfy the ordered payment and group businesses might be utilized to pay the cash through inter-corporate loans,” said Sameer Kalra, equity research analyst and founder of Target Investing.

“This puts danger on group companies as well and may result in the delay in the sale of stakes in other businesses,” he said.

After the ruling, stocks dropped sharply in Anil Ambani-controlled companies such as Reliance Capital, Reliance Infrastructure, Reliance Power, Reliance Naval and Engineering, Reliance Home Finance, and Reliance Nippon Life Asset Management.