SC to Anil Ambani: Pay dues or go to prison
On Wednesday, the Supreme Court, while hearing Ericsson's case against Anil Ambani-led Reliance Communications for non-clearance of dues, found Ambani guilty of contempt. As it stands, the business magnate will have to spend three months in prison if he does not pay a sum of Rs. 453cr to Ericsson. Ambani has four weeks to clear his dues. Here are the details.
Will disobedience on Ambani's part: SC
While giving its verdict, the SC observed that "Anil Ambani and others breached their undertaking [with Ericsson]" and termed this breach "wilful disobedience" of its earlier order that had directed Reliance to clear Ericsson's dues.
Shares of Reliance Group companies slumped after the verdict
In the aftermath of the SC's verdict, shares of Reliance Group companies slumped. Reliance Communications shares fell as much as 9.46% on the BSE, while shares of Reliance Infrastructure, Reliance Capital, and Reliance Power fell by 8.75%, 10.26%, 5.53%, respectively. Additionally, shares of Reliance Naval and Engineering tumbled by 8.56% while Reliance Home Finance shares dipped by 4.26%.
The court had earlier asked Ambani to clear dues
Telecom equipment maker Ericsson had filed a contempt plea against Ambani, Reliance Telecom chairman Satish Seth, and Reliance Infratel chairperson Chhaya Virani, for their failure to clear dues to the tune of Rs. 550cr. The court had, in October last year, asked Ambani to clear his dues by December 15, 2018, saying that a delayed payment would attract a 12% per annum interest.
The SC had reserved its verdict on February 13
Subsequently, in a hearing on February 13, Ericsson alleged that Ambani had the money to invest in the Rafale deal, but that Reliance was not clearing its dues. However, Ambani said that Reliance Communications had entered into insolvency proceedings as a result of its failed asset sale to Mukesh Ambani-led Reliance Jio. He said that he was not in control of funds. The bench had then reserved its verdict.