NCLAT bars RCom from selling assets till 12 February
05 February 2019
Beleaguered telecom service provider Reliance Communications (RCom) failed to get any immediate relief from the National Company Law Appellate Tribunal (NCLAT) as the appellate tribunal restricted the company from selling its assets till 12 February.
The NCLAT passed the order in a petition filed by RCom. The order also stated that RCom or any third party should not sell, transfer or alienate any of its assets (movable and immoveable), without its or the SC’s permission.
The bar on RCom’s asset sale hinges on its contractual obligation to pay around Rs550 crore to Swedish telecom equipment manufacturer Ericsson.
In May 2018, the Mumbai Bench of National Company Law Tribunal (NCLT) had passed an order after RCom reached an agreement to pay Rs550 crore to Ericsson. The NCLT stated that RCom will be put under the Insolvency and Bankruptcy Code, 2016, in case the agreement was not honoured.
RCom had appealed against that order, and now with the company deciding to voluntarily move the NCLT, it had sought to withdraw the appeal.
The appellate tribunal has given Ericsson time till 8 February to file its reply, while the next hearing has been posted for 12 February. It has also restrained RCom from selling its assets or invoking any bank guarantee till that date.
RCom, meanwhile got some reprieve with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) directing the Department of Telecommunications to return a Rs2,000-crore bank guarantee provided earlier.
The tribunal, which is hearing an RCom petition against DoT on the one-time spectrum charge issue, also stated that up to 5 MHz of CDMA and up to 6.2 MHz of GSM spectrum have been exempted from one-time levies.
TDSAT had, in July 2018, directed DoT to release the bank guarantees that RCom had provided in 2016 for spectrum, based on RCom’s appeal.
With RCom now moving the NCLT, Ericsson will continue to be an operational creditor.