Twisting insolvency law for debt recovery, Ericsson faces RCom’s charge in a high-stake ₹550 crore battle.
Reliance Communications (RCom) has accused Swedish telecom giant Ericsson of misusing India’s Insolvency and Bankruptcy Code (IBC) as a coercive tool for debt recovery. The allegation was made before the National Company Law Tribunal (NCLT) in Mumbai, where RCom is seeking a refund of ₹550 crore paid to Ericsson under a 2018 settlement.
Senior counsel Gaurav Joshi, appearing for RCom, argued that the IBC was being misapplied by Ericsson as a substitute for debt enforcement. He claimed the company attempted to secure preferential payments by coercing the debtor into settlement through insolvency proceedings.
The matter relates to a condition imposed by the National Company Law Appellate Tribunal (NCLAT) in 2018, when it allowed RCom to settle dues by paying Ericsson ₹550 crore. The NCLAT had specified that if RCom’s insolvency appeals were dismissed, Ericsson would have to refund the settlement amount with interest. While Ericsson challenged this condition before the Supreme Court, it later withdrew its petition.
In response, senior advocate Anil Kher, representing Ericsson, contended that RCom’s refund claim amounted to an “abuse of process,” citing the Supreme Court’s directive under Article 142 of the Constitution, which enabled the settlement to ensure complete justice.
The dispute traces back to September 2017, when Ericsson initiated insolvency proceedings against RCom and its subsidiaries Reliance Infratel and Reliance Telecom over unpaid dues exceeding ₹1,500 crore. The NCLT admitted Ericsson’s plea in May 2018, but the NCLAT later paused proceedings to enable settlement.
In 2019, the appellate tribunal vacated the stay and directed lenders to revive insolvency proceedings against RCom, which remains under bankruptcy resolution.
