Case Summary: Reliance Communication Limited & Ors. vs. State Bank of India & Ors.

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This post has been written by Mamta Kumari, a law student of Banasthali Vidyapith.

CASE TITLE: Reliance Communication Limited & Ors. v. State Bank of India & Ors.

DATE OF DECISION: 20.02.2019

PETITION NO.: Writ Petition (Civil) No. 845 of 2018

COURT: Supreme Court of India

PARTIES: PETITIONER– Reliance Communications Limited & Ors.

               : RESPONDENT– State Bank of India & Ors.

LAWYERS: PETITIONER– Shri Neeraj Krishan Kaul

                 : RESPONDENT– Shri Dushyant Dave

FACTUAL BACKGROUND

In this case three contempt petitions were filed before Supreme Court of India by Ericsson Pvt. Ltd. Against Reliance Companies i.e. Reliance Communication, Reliance Telecom Ltd. And Reliance Infratel Ltd.

  • 25.01.2013– Ericsson India Pvt. Ltd. [Ericsson] and Reliance Communication entered into an agreement where Ericsson agreed to provide managed service to Reliance Communication for its network.
  • 07.05.2017– Ericsson asked the Reliance Companies for the payment of the money in return of providing service but was not successful in getting the same and issued three notice to these companies under Insolvency and Bankruptcy Code,2016 for the payment of due amount i.e. Rs. 9.78 crore.
  • 10.05.2017– The three Reliance Companies replied to the notice issued and said that the service provided by the Ericsson was not up to the mark. After a lot of discussion between the parties the conclusion was arrived for the payment of due amount.
  • 07.09.2017– Even after the coming with the understanding of payment, still Ericsson issued notice to all three companies for the termination of agreement between them and for the payment of outstanding balance.
  • 08.09.2017– Three applications were filed by Ericsson under section 9 of Insolvency and Bankruptcy Code.
  • 15.05.2018– The petition was admitted by National Company Law Tribunal (NCLT).
  • 18.05.2018– NCLT appointed three interim Resolution Professionals for proceeding with the insolvency process. And after this, against the order of NCLT appeals were also filed to the National Company Law Appellate Tribunal [NCLAT].
  • 30.05.2018– NCLAT stayed the order of NCLT and heard the counsel on behalf of Reliance Companies that the settlement is made by agreeing to pay Rs.550 crore within 120 days. The Tribunal also recorded that both the parties have to file the affidavit of the said settlement.
  • 17.07.2018– Reliance Companies file writ petition in the Supreme Court for quashing the corporate insolvency process.
  • 03.08.2018– The court heard the counsel on behalf of Reliance Companies and stated that the period of 120 days given for the payment of due amount must be strictly adhered. And the Companies must file the undertaking regarding this.
  • 09.08.2018– The undertaking was given before the companies and was decided to sale the assets for the payment of amount.
  • 01.10.2018-First contempt petition was file by Ericsson on the ground that the undertakings by the companies were not in accordance with the terms of court and the companies do not have any intention to pay the amount within the agreed time period.
  • 27.09.2018– Reliance Companies again filed for the extension of time of 60 days on the ground that the sale is not yet completed in order to pay the amount.
  • 23.10.2018– The court heard both contempt and extension petition and had given last opportunity for the payment and stated that the payment has to be made on or before 15.12.2018 along with 12% interest starting from 30.09.2018.
  • 12.02.2018– Another petition for extension of time was filed.
  • 13.12.2018– Court dismissed the second extension application.
  • 02.01.2019– Second contempt petition filed.
  • 21.01.2019– Advocate on behalf of three companies has written a letter and stated that Rs. 110 Crore has already been paid to the Registry of the court on 09.01.2019 and remaining would be paid by 30.01.2019 upon condition of withdrawal of second contempt petition.
  • 01.02.2019– Third contempt petition was filed as Reliance Communication had written to various stock exchange and made it clear that they will not resit the corporate insolvency process which is stayed. Issuance of notice of contempt against the Chairman of State Bank of India was also prayed.

ISSUES

  • Whether the petitioners are liable for contempt of Court?
  • Whether the petitioner hampered the administration of justice by giving two different undertakings before NCLT and Supreme Court?

ARGUMENTS

  • Petitioners Arguments-

Petitioners contended that due to the objection of the Department of Telecommunication, the assets of the company could not be sold.

Further it was stated by the petitioner that there was no breach of undertaking as the undertakings were in consonance with the order of Supreme Court and NCLT.

Further stated that the petitioners were not able to sell three assets, so the insolvency process should be start again after which the companies would be able to pay the outstanding amount to Ericsson. Petitioner also stated that the companies had already paid some percentage of amount.

  • Respondents Arguments

Respondent contended that it was never said by the Supreme Court and NCLT that the amount of Rs. 550 would be paid upon the condition of sale of assets or spectrum of petitioners.

Further contended that the petitioners would be liable for contempt as no bonafide attempts were made for the payment of money and the undertakings by the petitioners were in contravention of order of Supreme Court and NCLT.

DECISION

The Supreme court held the petitioner to be liable for the contempt of court and has hampered the administration of justice by submitting two different undertakings before NCLT and Supreme Court of India. Court directed to make payment of Rs 118 to Ericsson which was earlier paid to the Registry of the court within one week.

The court also directed the Reliance Communication to pay Rs. 453 to Ericsson within four weeks to purge contempt of court. In default of the payment of outstanding amount, the Chairman will suffer three months imprisonment who has given undertaking to the court.

Further court ordered to pay Rs. 1 Crore fine to Registry of Court for each Company within four weeks. And this sum will be paid to the Supreme Court Legal Service Committee. The Chairman of these Companies will suffer the imprisonment of one month in default of payment of fine.

REFERENCES

Insolvency and Bankruptcy Code, 2016

http://indiankanoon.org/doc/180851423/

https://www.scconline.com/blog/post/2019/02/20/anil-ambani-and-others-guilty-of-of-contempt-of-court-for-wilfully-not-paying-dues-to-ericsson/

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