Reliance Communications (RCom) and Reliance Jio were dealt a heavy blow by a government decision not to approve a long-planned spectrum trading agreement on the grounds it goes against guidelines.

The rejection by the Department of Telecommunication (DoT) comes days after Jio sought assurances it won’t be held responsible for RCom’s past spectrum-related charges, which could total as much as INR29.5 billion ($420.5 million), The Economic Times (ET) reported.

A DoT representative told ET spectrum trading rules state the buyer is liable for dues not recovered from the seller, adding “since Jio imposed conditions, we cannot accept” the deal.

The source said: “the ball is in their court…Till then, this deal is off the table”.

In early 2018, RCom reached a deal with Jio to sell off assets including 800MHz spectrum to repay part of its huge debt. The DoT later demanded payment of the dues as a condition for approving the agreement, but RCom is disputing the spectrum charge.

DoT’s decision complicates RCom’s efforts to pay Ericsson INR5.5 billion for a settlement of unpaid service charges. The former mobile operator missed the original payment deadline of 30 September, and last week the Supreme Court turned down a plea to extend a 15 December deadline.

The earlier extension was granted by the court due to a delay in finalising the sale of its assets to Jio.

Missing the latest deadline could result in the renewal of an insolvency order against RCom and contempt of court proceedings.