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Reliance Communication has been restrained by an Arbitration Tribunal from selling and transferring assets without its permission while dealing with an issue of telecom company lead by Anil Ambani to pare debt by March end under a plan driven by its lenders. The next date of hearing has been set as June 9 in the matter.
The interim order dated March 5 of the Arbitration Tribunal states that the claimant i.e., Reliance Communications and its affiliates are directed to restrain themselves from selling, transferring, alienating, encumbrance or disposing off the assets without the prior specific permission from the tribunal.
The tribunal comprised of former Supreme Court judges - Justice Swatanter Kumar, Justice VS Sirpurkar and Justice SB Sinha has stated that the argument made by the Ericsson (Respondent) makes a good case and in the event, if the relief is denied to them they will suffer an irreparable injury.
Reliance Communication has stated that they will file an appeal in High Court against the order of Arbitral tribunal. The order is given by the tribunal in a case between Ericsson and Reliance Communication with the Swedish equipment maker who is trying to recover its Rs 1012 crore.
It has been said by the equipment maker that if Reliance Communication is allowed to either sell or transfer its assets it would turn into a shell company and Ericsson won't be able to recover its money.
The order of the tribunal has stalled the selling of the wireless assets of the company including spectrum, tower, fiber, and media coverage nodes Mukesh Ambani owned Reliance Jio for over Rs 20,000 crore. The planned sale was scheduled to be executed by March end.
The funds raised from the proposed deal were to be used to repay 35 lenders. In case if Reliance Communication is unable to repay its lenders the lenders can take the company to the National Company Law Tribunal for insolvency proceeding under Insolvency & Bankruptcy Code, 2016.
Anil Kher, Senior Advocate representing the Ericsson has said that tribunal has protected our interest by passing such an order. He further said that Rs 1012 crore was due till March 2017 and a separate claim for Rs 1600 crore has also been filed which is due as of October 11, 2017. Ericsson has also filed a petition before NCLT to recover its dues the hearing of same is fixed on 9 March.
Reliance Communication had managed to avoid the possibility of ceding control to banks under a strategic debt restructuring programme, with the proposed sale of assets to Jio in December. After the sale to Jio, Reliance Communication exited the debt recast process. But the latest order puts a cloud on the sale process. The latest order said that substantial part of dues claimed by Ericsson has been unequivocally admitted to by Reliance Communication and transfer of assets if allowed at this stage, would render award passed by Tribunal in favour of respondent redundant.