RCom in its reply to queries from the stock exchanges on the possible settlement with Ericsson said, “Appropriate disclosures will be made in accordance with applicable regulations, as and when any disclosable event occurs.”

An Ericsson spokesperson said, “We would not like to comment on market speculation.” If a settlement happens then the two firms will have to approach the National Company Law Appellate Tribunal (NCLAT) jointly to withdraw the insolvency case against RCom under the Insolvency and Bankruptcy Code (IBC).

Ericsson had filed a petition with the NCLT, Mumbai as RCom had not paid the former dues for services rendered towards maintaining, upgrading and developing the telecommunication infrastructure owned by RCom, and its subsidiaries Reliance Infratel and Reliance Telecom.

On Tuesday, the Mumbai bench of the NCLT comprising Justice Duraiswamy and Justice BSV Prakash Kumar admitted the three telcos belonging to Anil Ambani under the IBC process. RCom owes its lenders around Rs 450 billion as of December 2017.

RCom shares surged by 57 per cent to Rs 16.55 per cent at close on Thursday on the BSE after the buzz of a settlement between the two companies.

Sources said there was precedence of such settlements in prior cases after which the appellate tribunal had allowed the parties to withdraw the case from the IBC process.

“The Supreme Court, however, has in the past allowed an applicant to withdraw its application under Article 142. Hence it may be possible to withdraw on a case to case basis, if RCom can satisfy the court that the settlement will not prejudice the interests of other creditor,” said Sahil Dhavan, associate director at Transnational Capital Advisors, said.

However, it may require approval from other lenders. Dhavan added, “Usually you need 70 per cent of the creditors to approve of the settlement offer first, before the insolvency application can be revoked.”

Tuesday’s order had come as a setback for Anil Ambani’s telecommunication company which had planned to sell assets such as spectrum, mobile towers and optical fibre network to Mukesh Ambani’s Reliance Jio Infocomm (Jio) for Rs 240 billion.

RCom had entered into a standstill arrangement with lenders under which it would not need to pay interest or principal till December 2018 as it planned to raise funds by selling assets and repay banks.

If the IBC process goes forward, it could jeopordise the deal between Jio and RCom. However, under IBC, the RP has to invite bidders for RCom, where other telcos and companies can participate.

However if the NCLAT allows the withdrawal of the application, the restructuring deal with Jio can go through, said a source. "The process of asset monetisation with Reliance Jio and others and the debt resolution shall continue and will proceed as per existing plan," he stated.