NCLT approves initiation of bankruptcy proceedings against Anil Ambani for over Rs. 1200 crore owed to SBI
By : Legal Era
Update: 2020-08-21 11:07 GMT
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The National Company Law Tribunal (NCLT) Mumbai has approved the initiation of bankruptcy proceedings against Anil Ambani - Chairman of Reliance Communications (R Comm) over the company’s over Rs. 1200 crore personal guarantee to State Bank of India(SBI).The case is related to SBI giving credit facilities to Reliance Communications and Reliance Telecom Infrastructure Ltd (RTIL), companies...
The National Company Law Tribunal (NCLT) Mumbai has approved the initiation of bankruptcy proceedings against Anil Ambani - Chairman of Reliance Communications (R Comm) over the company’s over Rs. 1200 crore personal guarantee to State Bank of India(SBI).
The case is 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.
Later in 2017, accounts of R.Comm and RITL were held to be in default, retrospectively, since Aug 2016. In January 2018, SBI invoked the personal guarantee issued by Anil Ambani. In February 2020, SBI issued a demand notice to Anil Ambani seeking recovery of dues which evoked no response from Anil Ambani.
The NCLT observed, “The RCOM and RITL committed default in repayment in and around January 2017. The accounts were retrospectively declared as Non-Performing Account (NPA) with effect from 26.08.2016 i.e. even before loan agreements had been entered into. Such retrospective declaration seems rather incongruous, akin to the adage ‘putting the cart before the horse’.”
The order further stated, “Such retrospective declaration seems rather incongruous, akin to the adage ‘putting the cart before the horse’. While debt and default has remained undisputed, the incongruity of declaration of NPA, has not been raised and contested by the Respondent. Besides, reappraisal of the the declaration of the NPA by this Authority would not fall within the ambit of the provisions of the Code, under which the instant Applications have been made.
It went on to hold that, the submissions made by the Respondent that NCLT shoud have waited till the resolution of the Corporate debtors are completed accordingly cannot be accepted. “Therefore, in our considered opinion we feel it appropriate to issue the direction in terms of Section 97(3) of the Insolvency & Bankruptcy Code (Code). Rule 8 of the I & B (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors) Rules, 2019 provides that for the purposes inter alia of sub section (2) of section 97 the Insolvency and Bankruptcy Board of India (IBBI) may share the database of Insolvency Professionals and share a panel of Insolvency Professionals for the purpose inter alia of subsection (4) of section 97 of the Code. The IBBI has since shared the panel (valid till 25th November 2020) under its letter dated 25th June 2020. Therefore, there is no need to direct the IBBI to nominate the name of a Resolution Professional. This Authority can appoint one from the panel.”
The NCLT order directed that a Resolution Professional be appointed and asked SBI to take the necessary action. Moreover it maintained that it is wrong to assume that no action can be taken until a resolution plan is accepted.