The Supreme Court has overturned a High Court refusal to continue orders restraining Eircell from terminating its mobile phone airtime supply contract with Meridian Ltd and from presenting a petition to wind up the company.

Yesterday's decision, which operates for 14 days, facilitates the proposed sale by Meridian of the 20,000-customer base of its Imagine service, which the virtual mobile phone operator calculates could be worth up to £10 million (#12.7 million).

The Supreme Court attached a number of conditions to its orders, including a stipulation that all cash raised from the sale be lodged in court. It also ordered Meridian to lodge a further £200,000 in court on top of all monies received from its customers from April 1st last to May 11th.

Meridian was also directed not to dissipate any of its assets other than the sale of its subscriber base and not to incur any further debts except those associated with the wind-down of the company.

During a day-long hearing, the court was told Meridian does not intend to continue in its virtual mobile business in the future, but simply wants to dispose of its customer base. It was said contracts had been drawn up for the sale but, because the matter was before the court, these could not be signed.

During yesterday's proceedings, Eircell claimed it was owed £6.7 million by Meridian for services provided to date and that provision of airtime to Meridian for a fortnight would cost it a further £560,000. It contended Meridian was currently insolvent by virtue of its failure to meet its debts as they fell due.

Counsel for Meridian, Mr John Gordon SC, alleged Eircell did not want Meridian to sell its customer base because it did not want these customers to fall into the hands of its competitors, Esat and Meteor.

Asked by the court if the company was able to pay its debts, Mr Gordon said it was - but only on the basis of it being permitted to sell its principal asset, its customer base.

The matter will come before the Supreme Court again on May 10th next for mention.

Eircell welcomed the Supreme Court's judgment on the Meridian appeal, saying it believed it provided a framework to conclude the long-running dispute.