Now Get InvestmentGuruIndia.com news on WhatsApp. Click Here To Know More
MUMBAI - An Indian appellate tribunal has lifted a stay on insolvency proceedings against business tycoon Anil Ambani's debt-laden Reliance Communications, the Economic Times reported on Tuesday.
The decision by the National Company Law Appellate Tribunal (NCLAT) could potentially force Sweden's Ericsson to return 5.5 billion Indian rupees ($79.06 million) in dues and interest that RCom paid the telecoms equipment maker last month.
Ericsson dragged RCom to the National Company Law Tribunal last year over unpaid dues from a deal it had signed in 2014 to deliver and operate RCom's network, but the proceedings had been stayed as the two sides negotiated an out of court settlement.
India's bankruptcy code though does not allow an appellant to withdraw a case once admitted, as other creditors stand to lose out if one party reaches a private settlement in such cases. Also, financial creditors like banks typically would get precedence over operational creditors, such as Ericsson, in debt payments, according to India's insolvency laws.
The NCLAT this month said Ericsson would have to refund that money back to RCom if insolvency proceedings against the telecoms company begin, the Economic Times earlier reported.
RCom did not respond to requests for comment while the tribunal does not usually comment on its proceedings. Ericsson said it won't comment since the matter is sub judice.
RCom, once India's second-biggest phone carrier, will now move back into the insolvency process at the National Company Law Tribunal, India's bankruptcy court, in the country's financial capital of Mumbai.
($1 = 69.5700 Indian rupees)
(Reporting by Sankalp Phartiyal; editing by Emelia Sithole-Matarise)