Having failed to recover a whopping Rs 37,000 crore from sales of assets of Reliance Communications (RCom), which filed for bankruptcy last month, lenders to the company are now calling dibs on the Rs 260 crore it received as income tax refund.
The SBI-led Joint Lenders' Forum (JLF) contended before the National Company Law Appellate Tribunal (NCLAT) yesterday that they have the right over the Retention and Trust Account in which the refunds have been deposited under the RBI guidelines.
The Anil Ambani company's financial creditors are opposing its plea to release the income tax refunds to clear dues of Ericsson.
The Supreme Court, on February 20, held Ambani and two others guilty of contempt of court for wilfully violating its order by not clearing the Rs 550 crore debt owed to the Swedish telecom equipment maker. RCom still has to repay Rs 453 crore out of that amount by March 19, else Ambani faces a three-month jail term.
However, senior advocate Neeraj Kishen Kaul, appearing for SBI, submitted before the NCLAT that "RCom cannot saddle the responsibility of paying Ericsson on the banks".
According to him, the Retention and Trust Account had been set up before the initiation of the insolvency process against RCom, and hence it has to be kept out of the current proceedings. The account "has separate RBI guideline which says that no third party encumbrances can be created", Kaul had added.
According to The Economic Times, the appellate tribunal in response warned RCom's lenders that their failure to release tax refunds to clear the telco's dues may force the court to send the operator back to bankruptcy court.
"If you don't pay we will vacate the order [staying insolvency proceedings] and ask for insolvency," the two-member NCLAT bench, headed by Chairman Justice SJ Mukhopadhaya said yesterday. "If the payment fails we will pass orders for insolvency."
Senior advocate Kapil Sibal, appearing for RCom, reportedly argued that if the Insolvency and Bankruptcy Code proceedings start, then the telco can't pay Ericsson, which will "fly in the face of the directions of the Supreme Court". The NCLAT is scheduled to continue hearing the case today.
With PTI inputs