Reliance Communications (RCom) chief Anil Ambani was saved from a possible jail-term in the Ericsson deal over the non-payment of dues after Reliance Industries Limited (RIL) Chairman Mukesh Ambani lent his younger brother's company Rs 450 crores on Monday.
The extension of help by the elder brother to his younger brother came just a day before the deadline by Supreme Court, which had in its previous order instructed Anil Ambani to pay off Ericsson's dues by Tuesday, or face the prospect of being jailed.
Following this massive development, the RCom chairman thanked his elder brother and his wife Nita Ambani for their support, suggesting it showed how family is together in such tough times.
"My sincere and heartfelt thanks to my respected elder brother, Mukesh and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to our strong family values by extending this timely support. I and my family are grateful we have moved beyond the past, and are deeply touched with this gesture," read the statement issued by Anil Ambani.
The apex court had on February 20 held Anil Ambani guilty of contempt of court for willfully violating its order and not paying up the Rs 550 crore owed to the India arm of the Swedish telecom equipment major. The Justice RF Nariman-led bench had ordered RCom to pay Rs 453 crore to Ericsson India within four weeks failing which the younger Ambani would face a three-month jail term. The remainder of the amount had already been paid.
The deal between Reliance Communications - once a big player in the telecom space - and Ericsson extends back to 2014, long before RCom came to be encumbered by a massive debt at a time when Reliance Jio's entry disrupted the telecom market and triggered a massive consolidation. In fact, a deal had even been agreed for the sale of RCom's assets to Reliance Jio in an effort to pare debt, but it fell through on account of the Department of Telecom (DoT) holding that Jio should also be transferred RCom's arrears. Since then, RCom filed has entered the NCLT (National Companies Law Tribunal) for a resolution. Both these - the failed assets sale to Jio and the insolvency proceedings - had been cited by RCom for its earlier inability to pay off the dues owed to Ericsson.