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MUMBAI – Anil Ambani, chairman of Reliance Communications, was sentenced Wednesday by the Supreme Court of India to pay 4.53 billion rupees to Swedish maker Ericsson within four weeks or to imprisonment after the billionaire was found guilty of contempt of court.
The Supreme Court noted that three companies in the Reliance group – Reliance Communications, Reliance Infratel and Reliance Telecom – did not intend to pay as expected in October. The other two directors of the group, Satish Seth, chairman of Reliance Telecom, and Chhaya Virani, president of Reliance Infratel, were also found guilty of contempt of court.
The decision is a further blow to the youngest brother of India's richest man, Mukesh Ambani, after his heavily indebted company was forced to turn to the court of law. bankruptcy in an attempt to resolve his debt. If he does not pay on time, he will be imprisoned for three months.
This decision followed a payment claim made by Ericsson after an agreement was reached in 2014 to manage the Reliance Communications network. The Swedish company claimed that 5.5 billion rupees of unpaid fees were due to it.
In addition to the Court ordered payment of 4.53 billion rupees, the company was again ordered to pay an additional 1.18 billion rupees to the court registry. Reliance Group companies were also fined 10 million rupees and their non-payment would result in the one-month imprisonment of their directors, the court said.
This order follows several breaches by Reliance Communications in the following court orders. On August 3, the Supreme Court first ordered the company to pay its contributions by the end of September. Reliance Communications has requested an extension and the final December 15 deadline has been set. A request for a second extension was made and subsequently withdrawn.
Ericsson then brought contempt proceedings against Reliance Communications and Anil Ambani for violation of the orders.
In a stock market statement, a spokeswoman for Reliance Communications said: "We respect the Supreme Court's judgment and the RCOM Group must comply." Reliance Communications shares fell 11% in transactions intraday on the Mumbai stock exchanges after the verdict.
The company was once one of the largest telecom operators in India, but was shaken by the arrival of new aggressive players, including Reliance Jio, a telecommunications company run by the older, Ambani.
Already heavily indebted, Reliance Communications has since lost a significant share of its market share in the face of lower prices Jio. In 2017, he was forced to enter into an agreement with the creditors on the debt.
Several creditors, including Ericsson India, had filed for bankruptcy with Reliance Communications, along with the China Development Bank.
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