**Reliance Communications’ Refund Plea Dismissed by NCLT**
The Mumbai bench of the National Company Law Tribunal (NCLT) has rejected Reliance Communications Ltd’s (RCom) request for a refund of approximately ₹325 crore from Ericsson India Pvt. Ltd. This amount is part of the ₹550 crore that the Reliance Group paid in 2019 to resolve a Supreme Court contempt ruling. The tribunal determined that the payment was made to comply with the Supreme Court’s orders and did not breach insolvency regulations.
In its ruling, the NCLT stated, “We do not find any merit in the contention of the applicant that the money paid to Ericsson pursuant to the NCLAT stay order is required to be refunded… The petitions filed by the resolution professional of the corporate debtor against Ericsson India Private Limited (operational creditor) are dismissed and disposed of.”
This case originates from a 2019 Supreme Court ruling that found RCom, along with Reliance Telecom Ltd and Reliance Infratel Ltd, guilty of contempt for failing to meet a settlement agreement with Ericsson and for missing several court-mandated payment deadlines. To avoid imprisonment of its senior officials, the Reliance Group paid ₹550 crore to Ericsson.
Subsequently, resolution professional Anish Niranjan Nanavaty approached the NCLT for a partial refund, arguing that the full payment to Ericsson constituted preferential treatment, as the operational creditor received its entire claim before secured financial lenders. However, the NCLT dismissed this argument, clarifying that the funds paid to Ericsson did not originate from the assets of the insolvent companies but from other entities within the Reliance Group. The tribunal concluded that since the corporate insolvency resolution process (CIRP) estate was not depleted, the payment could not be classified as preferential or a violation of the moratorium under the Insolvency and Bankruptcy Code (IBC).
RCom sought a refund of only ₹325 crore, as this portion was deemed attributable to RCom and Reliance Telecom, while the remaining amount was associated with Reliance Infratel and other group entities not involved in the current petition.
Ericsson contended that the resolution professional’s claim was unfounded, asserting that the payment was strictly a result of the Supreme Court’s contempt order, not the 2018 NCLAT interim order, which had suggested a refund if appeals were dismissed. Ericsson maintained that any challenge regarding the payment should have been directed to the Supreme Court.
The dispute traces back to a 2013 network maintenance agreement, under which Ericsson claimed over ₹1,500 crore in unpaid dues. Following repeated defaults, Ericsson initiated insolvency proceedings, leading to the contempt action against RCom.
**FAQ**
**Q: What was the basis for the NCLT’s dismissal of RCom’s refund plea?**
A: The NCLT dismissed RCom’s plea because the payment to Ericsson was made to comply with a Supreme Court order and did not violate insolvency norms, as it did not come from the assets of the insolvent companies.
