The National Company Law Tribunal (NCLT) in Mumbai has decided to appoint an interim resolution professional (RP) in a case filed by State Bank of India against chairman of Reliance Communications Anil Ambani over the company's Rs 1200-crore loan default to the lender.
Anil Ambani had furnished his person guarantee along with other collateral to avail the loan. The lender moved NCLT after the company failed to pay up its dues even after invoking the personal guarantee.
The case is related to SBI giving credit facilities to Reliance Communications (R.Comm) and Reliance Telecom Infrastructure Ltd (RTIL), companies under the Reliance ADAG group headed by Anil Ambani, in August 2016.
A spokesperson of Anil Ambani has said the company is reviewing the NCLT order and taking advice on filing appropriate appeal against appointment of the RP.
The appointment of an RP does not constitute admission of SBI's application. The NCLT order directing appointment of the resolution professional does not constitute an admission of SBI's insolvency application by the NCLT, the spokesperson noted.
"The resolution professional will examine SBI's insolvency application against Anil Ambani and then submit a report to the NCLT."
The spokesperson also clarified that NCLT order will have no bearing on the operations of Reliance Infrastructure Limited, Reliance Power Limited and Reliance Capital Limited.
In its order, NCLT observed that 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.
The order further states, "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 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."
Moreover it maintained that it is wrong to assume that no action can be taken until a resolution plan is accepted.
"Sec 60(2) clearly provides for proceedings to be launched against personal guarantors, running parallel to CIRP. Fallacious to assume that no action can be taken against guarantors until Resolution Plan is accepted," says the order issued on August 20.
Loans of Rs 565 crore and Rs 635 crore were given to Reliance Communications and RTIL respectively in August 2016 by SBI.
In September 2016, Anil Ambani provided a personal guarantee for availing the credit facility.
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.
Subsequently in February 2020, SBI issued a demand notice to Anil Ambani seeking recovery of dues to which there was no response received.
Recently, Chinese Banks had secured an order from the UK courts to recover Rs 5,447 crore loans given to Reliance Communications.
SBI fears that upon non-payment of Rs 5,447 crore to Chinese banks, they are likely to invoke similar personal guarantees issued by Anil Ambani to them.
Recovery proceedings, or invocation of personal guarantees of Anil Ambani by the Chinese would adversely affect recovery proceedings in India under IBC.
Note:-Photo used here for representation purposes and the contents are for educational purposes only as the blog is non commercial .
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