The Supreme Court rejected the government’s plea challenging the telecom appellate tribunal’s order directing refund of Rs 104.34 crore to Reliance Communications (RcomNSE 0.00 %). The apex court’s verdict will be a blow to the telecom department which was hoping that the amount will be used against any liabilities of the now bankrupt telco.
On Tuesday, a bench of justices R F Nariman and S Ravindra Bhat said, “We don’t find any merits in the appeal”. The response was to Department of Telecommunications (DoT)’s petition against a Telecom Disputes Settlement and Appellate Tribunal (TDSAT)’s order directing the government to return Rs 104.34 crore to Rcom.
TDSAT’s order in December 2018, came on the back of RCom’s plea that the department return the remainder after encashing bank guarantees of Rs 908 crore against spectrum charges of Rs 774 crore. The tribunal had then said that the excess amount cannot be used for other payments.
This case is one of the many battles between RCom and the DoT over dues. RCom had provided DoT with bank guarantees for Rs 908 crore on deferred spectrum charges for the 2013 and 2015 auctions, with payment to be made over 18 years. While RCom wanted the excess money to be returned after the department encashed the bank guarantees, DoT preferred to keep it as buffer for other liabilities of the operator.
The argument peaked when DoT threatened to cancel RCom licences in 14 circles and revoke spectrum allotted in 2013 and 2015 if the bank guarantees were not replenished. RCom complied. The department said it encashed bank guarantees after RCom did not make payment for spectrum in April, breaching license conditions.
Today Rcom and its units , which keeled under a debt of Rs 46,000 crore, are under the reins of resolution professional –Deloitte and have four bidders aiming to buy the assets. They bidders are – Reliance Jio Infocomm, Bharti Airtel, UV Asset Reconstruction Co and private equity firm Varde Partners.
The Committee of Creditors (CoC) of which DoT is also a member, expects to raise at least Rs 14,000 crore from the sale of the telco’s assets, including spectrum, fibre and towers, based on bids received. At that level, the haircut would be about 70% for financial lenders that have filed claims of Rs 49,000 crore against RCom and its units Reliance Telecom and Reliance Infratel.
Assets up for sale include airwaves in the 850 MHz band in 14 of India’s 22 telecom circles, about 43,000 telecom towers, some fibre and data centres. The next CoC meeting is expected this Wednesday.
So far the lenders are negotiating for higher amount from the bidders and the sale, which was expected to be completed by January 10, should get over by first week of February.