Reliance Communications needs to give bank guarantee before spectrum sale – What Centre told Supreme Court

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RCom, via its senior counsel, stated the corporate can’t give any bank guarantee as it’s already present process insolvency proceedings.

The Supreme Court on Monday agreed to hear the federal government’s plea looking for Rs 2,940-crore bank guarantee from Reliance Communications in a case associated to excellent spectrum dues.

A bench led by Justice AK Sikri stated it should hear the case on Tuesday.

Seeking that the bank guarantee be furnished, extra solicitor normal PS Narasimha, showing for the federal government, reiterated the demand for Rs 2,940-crore bank guarantee as a situation for giving nod to Reliance Communications to promote its spectrum to Reliance Jio Infocomm.

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In December 2017, as part of its debt decision plan, RCom had struck a Rs 25,000-crore take care of Mukesh Ambani’s Reliance Jio for sale of its towers, spectrum and fiber belongings mortgaged with totally different banks to lower down its debt of round Rs 45,000 crore.

Challenging the TDSAT October 1 order asking it to problem no objection certificates to the spectrum deal, the Department of Telecommunications stated RCom had to pay the spectrum utilization cost and whether it is allowed to promote its spectrum with none bank guarantee, then it should turn out to be not possible to recuperate the cash.

The ASG stated the October 2015 pointers for buying and selling of entry sepectrum made it obligatory upon the federal government to safe excellent dues solely by bank guarantee and nothing else. “There is no precedent for Union of India accepting land/buildings as security towards the unpaid dues… the land provides no such securitisation and cannot be monetarised on demand… Undertaking not to alienate property worth Rs 1400 crore is not in compliance of trading guidelines,” the federal government stated in its enchantment.

RCom, via its senior counsel, stated the corporate can’t give any bank guarantee as it’s already present process insolvency proceedings.

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“It can’t give a bank guarantee. Banks are the secured creditors and the money from the sale will go to them. If the spectrum sale is not approved, banks will also not get anything. They will be in jeopardy and the deal will fall through,” the counsel stated whereas refusing to give any bank guarantee.

However, he stated the corporate is prepared to present land as collateral instead of bank guarantee, a suggestion that the Telecom tribunal had accepted.

The TDSAT had on October 1 allowed RCom to go forward with its spectrum sale to Reliance Jio and had additionally requested the federal government to give a no-objection certificates. The tribunal had additionally directed RCom not to alienate its Navi Mumbai property in order to safe the federal government not less than for Rs 1400 crore in the intervening time.

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