| Headnote |
Contempt of Courts Act, 1971 – s.12(4) – Agreement between Ericsson and Reliance Communications (RCom) – Ericsson agreed to provide managed services, i.e., operation, maintenance, and management of RCom’s network – It raised invoices, however on receiving no payment, ultimately issued notices – Notices replied by three Reliance Companies (RCom and its group companies, Reliance Telecom Ltd. & Reliance Infratel Ltd. – Understanding reached for making payment of the outstanding invoices – However, even this understanding fell through – Ericsson terminated the agreement calling upon the three Reliance Companies to pay the outstanding amount in full – Ericsson filed three applications u/s.9, Insolvency Code – National Company Law Tribunal (NCLT) appointed three Interim Resolution Professionals to carry out the corporate insolvency resolution process – In appeal, NCLAT by order dtd. 30.05.2018, stayed the orders – Statement of counsel appearing on behalf of the Reliance Companies that the matter was agreed to be settled for a sum of INR 550 crore, which would be paid within 120days’ time – Undertakings filed – Writ petition filed by the three Reliance Companies before Supreme Court seeking quashing/closure of the corporate insolvency resolution process in view of settlement of disputes – By order dt. 03.08.2018, Supreme Court recorded that the timeline of 120 days shall be strictly adhered to and payment of INR 550 crore is to be made on or before 30.09.2018 – Pursuant to the order, undertakings dt. 09.08.2018 given by the Chairmen of these Companies in Supreme Court, however, stating that the sum of INR 550 crore will be paid “upon sale of assets of the company”–First contempt petition filed by Ericsson– Reliance Companies applied for extension of time for payment by 60 days – Supreme Court inter alia ordered that as a last opportunity, the amount must be paid on or before 15.12.2018 – Second application to extend time – Dismissed, as withdrawn – Second contempt petition filed by Ericsson for non-payment of INR 550 Crore on or before 15.12.2018– Third contempt petition filed by Ericsson – Held: Order dt. 03.08.2018 clearly recorded that the payment of INR 550 crore will be made on or before 30.09.2018, and an undertaking was to be given by the Chairmen of the Reliance Companies to that effect– Order separately noted that the sale of assets will continue, as stated in the orders of the NCLT and the NCLAT– Undertakings that were to be given by the Chairmen of the Reliance Companies concerned were only that the payment of INR 550 crore was to be made on or before 30.09.2018 – There was no linkage with anysale of assets of these Companies – However, a perusal of these undertakings would show that they are contrary to the undertakings given by the authorized persons of these very Companies pursuant to the NCLAT order dt.30.05.2018– Those undertakings were unconditional, however, these undertakings are now conditional upon sale of assets of the Companies – Statements made by RCom and its group companies that they were “disabled” from paying the amount of INR 550 crore plus interest; that they “were and are unable to pay”; is belied by the letter dt. 21.01.2019 written by the advocates of the Reliance Companies inter alia stating that the full payment would be made by 31.01.19 if two conditions were met namely, withdrawal of contempt petitions and withdrawal of arbitration proceedings – The three Reliance Companies had no intention, at the very least, of adhering to the time limit of 120 days or to the extended time limit of 60 days plus, as given by way of indulgence – Undertakings given on the footing that the amount of INR 550 crore would be paid only out of the sale of assets was false to the knowledge of the three Reliance Companies and was a deliberate misstatement made with the purpose of circumventing the orders of Supreme Court – This itself affects the administration of justice, and is therefore, contempt of court – In the facts of the present case, wilful default is made out – However, contempt petition against the Chairman of SBI would not lie inasmuch as the Ericssontrans action and the sale of assets by the Joint Lenders’ Forum are completely independent of each other – The three Reliance Companies are guilty of contempt of this Court – Contempt of this Court needs to be purged by payment of the sum of INR 550 crore together with interest till date – As stated in the letter dt. 21.01.2019,subject to any calculation error, INR 453 crore must be paid to Ericsson in addition to the deposit of INR 118 crore made in the Registry of Supreme Court – Registry to pay over the sum of INR118 crore to Ericsson within one week from today – RCom group is directed to purge the contempt of this Court by payment to Ericsson of the sum of INR 453 crore within four weeks from today – In default, the Chairmen who have given undertakings to Supreme Court will suffer three months’ imprisonment – In addition to therefore said sum being paid, a fine amounting to INR 1 crore for each Company must also be paid to the Registry within four weeks from today, which sum will be paid to the Supreme Court Legal Services Committee – In default, the Chairmen of these Companies will suffer one month’s imprisonment – Insolvency & Bankruptcy Code, 2016. |
