Reliance Communications (RCom) has completed the payment of Rs. 458.77 crores to the Swedish telecom gear manufacturer – Ericsson, thereby ruling out the possibility of Anil Ambani – Chairman, Reliance Communications, spending 3 months in prison, as per the order of Supreme Court of India.
Mukesh Ambani – the Chairman and Managing Director of Reliance Industries Limited (RIL) has come too the rescue of his younger brother Anil Ambani by providing him the much needed Rs. 458.77 crores. For the records, as per Forbes March 2019 ranking, Mukesh Ambani is the 13th richest person in the world. The much-needed aid from Mukesh Ambani came a day before the expiry of Supreme Court’s deadline of March 19, 2019, for paying the debts of Ericsson.
Speaking on the occasion, Anil Ambani said, “My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to their strong family values by extending this timely support. I and my family are grateful and deeply touched with their gesture.”
Speaking on the payment, Anil Kher – Senior Advocate for Ericsson said, “Ericsson has received the payment along with upto date interest and it will accordingly be withdrawing the petitions filed for insolvency.
As of now, it is not known whether the money given to Anil Ambani is in a form of a loan or an outright grant. Earlier in January 2019, RCom had deposited Rs. 118 crores with Supreme Court Registry as partial payment of its dues. Ericsson had moved a bankruptcy court in 2017, accusing RCom of not paying Rs. 1,500 crores in dues for a 7-year contract to manage and operate its network. The deal was signed in 2013.
Taking RCom to court, Ericsson won the case. On October 23, 2019, the Court had ordered RCom to pay Rs. 550 crores by December 15, 2019 along with a warning that any delay in payment would result in 12% interest. The dues were also personally guaranteed by Anil Ambani.
Later, Ericsson had moved the Supreme Court seeking initiation of contempt proceedings against Anil Ambani for not making the payments. On February 20, 2019, the Supreme Court had held Anil Ambani and 2 Directors of the group guilty of contempt of court and asked them to pay the amount by March 19, 2019. Failure to comply with the order, would invite a 3 months jail term.
However, the financial woes of RCom don’t end with this payment. It has already defaulted on a Rs. 21 crores spectrum payment to the Telecom Department and needs to pay another Rs. 281 crores to the Government in April 2019.