TDSAT asks DoT not to act on RCom show-cause notice over spectrum cancellation till 10 Aug

New Delhi: Debt-ridden Reliance Communications has got a temporary reprieve from telecom tribunal TDSAT till 10 August on licence and spectrum cancellation show cause notice served by the Department of Telecom.

Posting the matter for directions on 10 August, the tribunal has instructed the respondent, in this case, the Telecom Department "not to give effect to the decision which it may take in the meantime".

"If so advised, the respondent may file a reply or short reply by the next date and bring on record of the decision taken by them, if any. The respondent is directed not to give effect to the decision which it may take in the meantime," TDSAT said in an order today.

The Anil Ambani-owned company RCom had recently approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the government's show-cause notice on the spectrum and licence cancellation.

A source privy to the development said that the company on Monday informed the TDSAT that while DoT has raised a demand for payment of Rs 774 crore on the company, the said payment has already been made to the government through encashment of previous Bank Guarantees or BG.

 TDSAT asks DoT not to act on RCom show-cause notice over spectrum cancellation till 10 Aug

RCom. Representational image. Reuters.

Therefore, RCom only needs to renew the encashed bank guarantees, which anyway will be payable only in March 2019, the source added.

"RCom, in a letter to DoT (Department of Telecom)...has pointed out that the BGs encashed so far were for FY 2018-19, and thus those payments are already vesting with DoT....RCom wrote that DoT is sitting on additional funds far in excess of demand amount (nearly Rs 2,540 crore)," they said.

So the claim on RCom of Rs 774 crore is merely to replenish encashed bank guarantees, said source familiar with the RCom's thinking on the issue.

In its petition, RCom said it had approached the tribunal in anticipation of DoT's move (on termination or revoking of licences and withdrawal of spectrum) given that thousands of jobs and millions of subscribers would be at stake.

RCom requested the TDSAT to set aside and quash the show-cause notices dated 19 June, 2018 and 22 June, 2018 and "restrain" Telecom Department from terminating or revoking the licences or revoking the spectrum held by the company.

In its plea, RCom also sought that time till August 31 be given to the company to reinstate the bank guarantees that have been encashed by the Telecom Department.

RCom has entered into an agreement with Reliance Jio to sell spectrum and other telecom assets for around Rs 17,000 crore and clear its debt partially. If DoT cancels licence or revokes spectrum of RCom, the present deal will be adversely impacted.

RCom is under debt resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC) and has not been paying any dues till the completion of the process.

RCom has said that if the deal with Reliance Jio goes through, the latter will take on deferred spectrum payment liabilities and any BGs given now by RCOM would anyway be replaced by the acquirer shortly.

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Updated Date: Jul 24, 2018 11:05:27 IST