ADAG stocks fall 1-9% as SC holds Anil Ambani guilty of contempt in Ericsson case

The court said Anil Ambani, the promoter of ADAG companies, wilfully did not pay Rs 550 crore to Ericsson and had a cavalier approach.

Telecom operator Reliance Communications shares fell 9 percent intraday Wednesday after the Supreme Court held Anil Ambani guilty of contempt in Ericsson case.

The top court said Ambani and two directors of the company will have to pay Rs 453 crore with interest to Ericsson India within four weeks, failing which they could face three-month jail.

The Supreme Court held Reliance Communications chairman Anil Ambani guilty of contempt on three applications filed by telecom equipment maker Ericsson over unpaid dues.

The court said Anil Ambani, the promoter of ADAG companies, wilfully did not pay Rs 550 crore to Ericsson and had a cavalier approach.

A bench of Justices RF Nariman and Vineet Saran had on February 13 reserved judgement when Ericsson India had alleged that Ambani’s firm has money to invest in the Rafale jet deal but was unable to clear its Rs 550-crore dues, a charge which was vehemently denied by the Anil Ambani-led company.

Supreme Court also imposed a penalty of Rs 1 crore on Anil Ambani.

In a filing to exchanges, a Reliance Communication spokesperson said, “We respect the Honourable Supreme Court judgement. The Reliance Communications Group shall comply with same.”

RCom, which is already in Insolvency & Bankruptcy Code process, after promoter voluntarily declared defaulter. The company has cash and bank balance of Rs 824 crore and debt of Rs 32,700 crore at end of September 2018.

“It will be very difficult for the company to meet the ordered payment and the group companies might be utilized to pay the due through inter-corporate loans. This puts the risk on group companies as well and might result in a delay in the sale of a stake in other companies,” Sameer Kalra – Equity Research Analyst at Target Investing told Moneycontrol. He has a sell rating on RCom, Reliance Capital, Reliance Power, and Reliance Infrastructure.

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