Ericsson misusing IBC for coercion, debt recovery, RCom tells NCLT

The insolvent Reliance Communications (RCom) has alleged that Swedish Telecom company Ericsson has been using India's Insolvency and Bankruptcy Code (IBC), 2016 as a tool for coercion and debt recovery, and to seek 'preference' in repayments over other creditors.

- Priyanka Gawande

Gaurav Joshi, senior counsel appearing for RCom, argued before the National Company Law Tribunal (NCLT), "IBC is not to be used as a tool for coercion and debt recovery by individual creditors. [This is] exactly what Ericsson was doing — improperly using IBC to include insolvency as a substitute for debt enforcement or attempting to obtain preferential payments by coercing the debtor using insolvency proceedings."

A bench led by Justices Prabhat Kumar and Sushil M Kochey of the Mumbai NCLT was hearing RCom's petition seeking a refund of ₹550 crore of dues paid to Ericsson plus interest.

At the heart of the matter is a condition imposed by the National Company Law Appellate Tribunal (NCLAT) in its order of 2018, which said the amount paid under the settlement could be refunded if RCom's insolvency appeals were dismissed. Ericsson had later challenged this condition before the Supreme Court, but the Swedish company withdrew its petition, Joshi told the bench.