Supreme Court on Wednesday Saw Anil Ambani, chairman of debt-laden Reliance Communications (RCom), guilty of contempt of court for wilfully failing to pay Rs. 550 crores ($77.29 million) to Electronics Manufacturer Ericsson.
The court ordered the billionaire and two RComsupervisors to cover Rs. 450 crores to Ericsson within four months or threat a three-month prison term, according to a judgment from a two-member seat headed by Supreme Court judge Rohinton Fali Nariman.
RCom previously deposited over Rs. 100 crores with the courtroom.
In a statement, the telco said it respected the judgment and”shall comply with exactly the same”.
An Ericsson spokeswoman said the company welcomed the judgment looked forward to RCom’s compliance.
The Swedish company signed a deal in 2014 to handle and operate RCom’s community and last year approached the courtroom over the unpaid dues.
The court requested RCom to refund the dues by December 15, a deadline the company missed.
RCom has struggled for cash partly as a consequence of a price war triggered by the market entrance of Reliance Jio Infocomm, controlled by Anil’s senior brother and Asia’s richest person, Mukesh Ambani.
Earlier this month, RCom advised the court that a deal to sell fibre and tower assets to Reliance Jio failed, prompting RCom to turn to bankruptcy courts for debt settlement and hence wasn’t in a position to pay the dues.
RCom owed banks $7 billion (roughly Rs. 49,800 crores) as of March 2017, as it last made its debt level public. It also owes money to electronics vendors.
“It will be quite hard for RCom to meet the ordered payment and group businesses may be utilised to pay the dues through inter-corporate loans,” said Sameer Kalra, equity research analyst and founder of Target Purchasing.
“This puts risk on group companies as well and may lead to the delay in the sale of stakes in other businesses,” he said.