Anil Ambani moves Delhi HC challenging the NCLT order; Delhi HC stays insolvency proceedings against him

The Delhi High Court has issued notice and stayed the proceedings initiated against Anil Ambani under Part III of the Insolvency And Bankruptcy Code (IBC). However, the Division bench of Justices Vipin Sanghi and Rajneesh Bhatnagar has restricted Anil Ambani from alienating his assets till the next hearing.

After the National Company Law Tribunal (NCLT) approved the initiation of insolvency proceedings against Anil Ambani for Rs. 1200 crore owed to the State Bank of India (SBI), he has approached the Delhi High Court challenging the tribunal’s order which allowed the appointment of an Interim Resolution Professional (IRP). He is also challenging the constitutional validity of the personal guarantee clause in the Insolvency And Bankruptcy Code (IBC). Ambani has also sought to make the Ministry of Corporate Affairs (MCA) party to the case.

Ambani in his petition is relied on a recent order of the Delhi High Court in the matter of businessman Lalit Jain, where the Court stayed insolvency proceedings and issued notices to MCA, Insolvency and Bankruptcy Board of India (IBBI) & the Law Ministry.

Ambani had in June said that the loans were not a personal borrowing. The proceedings initiated by SBI are related to SBI giving credit facilities to Reliance Communications and Reliance Telecom Infrastructure Ltd (RTIL), companies under the Reliance ADAG group headed by Anil Ambani in August 2016. SBI gave loans of Rs. 565 crore and Rs. 635 crore to Reliance Communications and RTIL respectively in August 2016 and Anil Ambani provided a personal guarantee for availing the credit facility from SBI in September 2016.

According to the provisions on personal guarantee in the IBC, lenders have to approach the NCLT to appoint an IRP to assess the assets and liabilities of the guarantor. If the NCLT accepts the plea, it will seek a panel of names from the Insolvency & Bankruptcy Board of India (IBBI) and choose one of them as the IRP.

RCom had filed for bankruptcy last year. In August last year, lenders submitted claims of around Rs. 49,000 crore.

In March this year, the SBI board approved a resolution plan for RCom that envisaged lenders recovering around Rs. 23,000 crore, or less than half of their loans outstanding. RCom owes nearly Rs. 5,000 crore to SBI.