Anil Ambani and others guilty of contempt of court for willfully not paying dues to Ericsson [Full report]

Supreme Court: The bench of RF Nariman and Vineet Saran, JJ has held RCom chairman Anil Ambani guilty of contempt of court for wilfully violating its order by not paying Rs 550-crore dues to Telecom equipment maker Ericsson. It held that the RCom chiarman and Reliance Telecom chairman Satish Seth and Reliance Infratel chairperson Chhaya Virani breached the undertaking given to the apex court and the related orders. The three Reliance companies did not adhere to the 120-day deadline and the extra 60 days given by the Court to pay Rs 550 crore to Ericsson.

Some important facts were brought to the Court’s notice:

  • By a letter dated 21.01.2019, the Reliance Companies were willing to pay the entire sum of Rs. 550 crore with interest if two conditions were met, namely, withdrawal of 26 contempt petitions and withdrawal of arbitration proceedings.
  • Ericsson replied on 23.01.2019, stating that this could only be done by moving an application before this Court as contempt proceedings were pending.
  • Maliciously, instead of moving such appropriate application, from 01.02.2019 onwards, an about-turn was taken, and Ericsson was left in the lurch as a decision was taken by the three Reliance Companies that the corporate insolvency resolution process could be revived.

Considering the aforementioned facts, the Court noticed that the three Reliance Companies had no intention, at the very least, of adhering to the time limit of 120 days or to the extended time limit of 60 days plus. It said:

“We have seen that right from the beginning, the sum of INR 550 crore was undertaken to be paid, without having to depend upon any act or omission of a third party. To say that the sum of INR 550 crore would be paid only out of sale of assets of the three Reliance Companies is a deliberate misstatement made in the undertakings as well as the applications for extension of time filed before this Court, which was done with the purpose of circumventing the orders of this Court. We are also of the view that in the facts of the present case, wilful default is made out.”

The Court, hence, ordered that

  • Contemnors will have to purge the contempt by paying Rs 453 crore to Ericsson in four weeks and if they fail to make the payments within the specified period, the Chairmen who have given undertakings will undergo a jail term of three months.
  • The 3 Reliance companies will have to deposit Rs 1 crore each to the Supreme Court registry in four weeks or the chairman of these companies will have to go an additional jail term of one month.

[Reliance Communication Ltd. v. State Bank of India, 2019 SCC OnLine SC 240, decided on 20.02.2019]

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