RELIANCE COMMUNICATION LIMITED & ORS. versus STATE BANK OF INDIA & ORS.

Citation: [2019] 4 S.C.R. 64 · Decided: 20-02-2019 · Supreme Court of India · Bench: R.F. NARIMAN

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Judgment (excerpt)

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64
SUPREME COURT REPORTS
[2019] 4 S.C.R.
[2019] 4 S.C.R. 64
64
RELIANCE COMMUNICATION LIMITED & ORS.
v.
STATE BANK OF INDIA & ORS.
(Writ Petition (Civil) No. 845  of 2018)
With
(Contempt Petition (C) No. 1838 of 2018, 55 of 2019 and 185 of 2019
in W.P.(C) No. 845 of 2018)
FEBRUARY 20, 2019
[R. F. NARIMAN AND VINEET SARAN, JJ.]
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 120
days’ 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
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65
RELIANCE COMMUNICATION LIMITED v. STATE BANK OF
INDIA
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 any
sale 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
a

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