Reliance Communication Ltd is directed to furnish bank guarantee of Rs. 10 Crore. Appeal by Reliance dismissed by Delhi High Court.

January 16, 2018

Justice Yogesh Khanna of Delhi High Court dismissed the appeal filed by Reliance Communications Ltd and allowed cross appeal filed by Bharti Infratel Ltd in Arb. A (Comm.) 47 of 2017. The appeal was filed under section 37 of Arbitration and Conciliation Act, 1996 against award passed under section 17 of the Act wherein the Reliance Communication was directed to furnish a bank guarantee of Rs. 10 Crores within 2 weeks and to auction its equipments, removed from the disputed site of Bharti Infratel Ltd within 60 days.

The facts of the case are on 13.04.2010 the Master Service Agreement was entered into between Reliance Communications Ltd and Bharti Infratel Ltd. In December, 2015 the Reliance surrendered / exited from the sites of the Bharti Infratel Ltd for which its 2G licenses have expired. BIL demanded the exit amount to the tune of 39,22,48,384/- vide letter dated 10.01.2016 from the appellants which was also followed by a legal notice dated 10.02.2016. RCL vide its reply dated 03.05.2016 contended the surrender / termination of sites was for reasons beyond its control. On 14.09.2016 the RCL issued a Media Reliance about the merger of its wireless business with Aircel Limited. BIL approached the High Court on 21.12.2016 by filing an application under Section 9 of the Act being OMP (I) (COMM) No.497/2016. The High Court vide order dated 01.10.2017 directed that the Section 9 application of the respondent be treated as an application under Section 17 of the Act before the arbitral tribunal comprising of Ms. Justice (Retd.) Rekha Sharma (Presiding Arbitrator), Ms.Justice (Retd.) Usha Mehra (Co-Arbitrator) and Mr Justice (Retd) S N Aggarwal (Co-Arbitrator). RCL issued a press release on 01.10.2017 about the lapsing of their merger scheme with Aircel Limited. The arbitral tribunal passed order dated 12.10.2017 under Section 17 of the Act. RCL filed appeal with the High Court against the order.

The court said that "There is plethora of decisions of this Court including Unitech Wireless (Tamil Nadu) Private Limited vs. Viom Networks Limited FAO (OS) No.613/2012 decided on 21.12.2012 wherein directions to secure 20% of the amount due was found justified. Further the direction to auction the existing assets lying at the spot is given by the arbitral tribunal but both the respondents says such a direction is not feasible to comply with since there is no buyer in the country of such equipment as alleged. Even otherwise, such direction is to save the assets from depreciating and losing its substantial value, hence need no intervention. Thus there is no ground to interfere in the impugned order merely on a plea some other view could have been taken by the tribunal."

With the above observation the High Court dismissed the appeal filed by RCL.

The court also passed following direction in the appeal filed by BIL:
"Reliance Communication Ltd. to comply with the order of the learned tribunal and furnish the bank guarantee within three days from today lest to file an affidavit in term of Form 16A Appendix-E within two weeks from today giving details of its assets, moveable or immoveable, which can be sold readily, and OMP (ENF.) (COMM.) 143/2017 be listed for further direction on 09.05.2018."

Read the order of Delhi High Court of India in Reliance Communications Ltd v. Bharti Infratel Ltd dated 15.1.2018