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Reliance Communication Limited & Ors. v. State Bank of India & Ors. (with Contempt Petitions)

Writ Petition (Civil) · 2019 INSC 242Decided 20 Feb 2019
Writ Petition (Civil) No. 845 of 2018
Justice Rohinton Fali Nariman · Justice Vineet Saran

Background

Reliance Communications Ltd. and its group companies (RCom, RTL, RITL) owed Ericsson India roughly Rs. 1,500 crore for network management services. After insolvency proceedings were initiated against them and admitted by the NCLT, the NCLAT stayed the process on the basis of a settlement where the Reliance companies agreed to pay Rs. 550 crore to Ericsson within 120 days. The Reliance companies then approached the Supreme Court in this writ petition seeking closure of the insolvency process, and the Court, relying on sworn undertakings given personally by the companies' Chairmen (including Anil Ambani for RCom), repeatedly extended the payment deadline. When the companies failed to pay the agreed sum even after multiple extensions and attempted to link payment to the uncertain sale of spectrum assets, Ericsson filed three contempt petitions alleging wilful breach of the undertakings given to the Court.

Decision Breakdown

The Supreme Court held that the undertakings given by the Chairmen were unconditional promises to pay Rs. 550 crore by fixed dates, with no genuine linkage to asset sales as the companies later claimed, and that the companies' conduct amounted to wilful and deliberate breach of undertakings given to the Court, constituting civil contempt. The Court held that contempt of this nature must be purged by actual payment: it directed the Rs. 118 crore already deposited in the Registry be released to Ericsson immediately, and ordered the RCom group to pay the remaining approximately Rs. 453 crore (with interest) within four weeks, failing which the Chairmen who gave the undertakings would face three months' imprisonment. It additionally imposed a fine of Rs. 1 crore on each company payable to the Supreme Court Legal Services Committee, with a further one month's imprisonment in default of that fine. The three contempt petitions were disposed of on these terms.

Lesson Learnt

A personal undertaking given to the Supreme Court is treated as seriously as a court order, breaking it, even by a large corporation's chairman, is civil contempt that can result in personal imprisonment, not just a financial penalty on the company.

Official source (sci.gov.in)View Judgment (PDF)

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