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The Application was filed by Project Finance Strategic Business Unit of State Bank of India for necessary orders under Section 97(3) of the Insolvency and Bankruptcy Code, 2016.
The National Company Law Tribunal, Mumbai has appointed Resolution Professional in a SBI unit's application for initiation of insolvency resolution process against Anil Ambani, Chairman of the Reliance ADA Group. The application has been filed under Part III of the Insolvency & Bankrupcty Code. (State Bank of India vs Anil D Ambani)
The order was passed by a two-member Bench of Member (Judicial) Janab Mohammed Ajmal and Member (Technical) Ravikumar Duraisam.
Project Finance Strategic Business Unit of State Bank of India (Financial Creditor) had filed two applications against Anil Ambani for necessary orders under Section 97(3) of the Insolvency and Bankruptcy Code, 2016.
With Anil Ambani as the personal guarantor, Reliance Communications Limited (RCOM) and Reliance Infratel Limited (RITL) had taken credit facility to the tune of Rs. 565 crores and Rs 635 crores respectively, from SBI.
The purpose behind the facility was repayment of certain existing financial indebtedness. The Financial Creditor, pursuant to a Loan Facilities Agreement, provided the above amounts as loans to RCOM and RITL.
The accounts were later declared as Non-Performing Account (NPA) with effect from August 26, 2016.
Apprehending that it would not be able to recover the claim amount from the ongoing corporate insolvency resolution process (CIRP), in January 2018, the Financial Creditor invoked the personal guarantee agreement.
Given the fact that the Industrial and Commercial Bank of China Limited, China Development Bank and Exim Bank of China had already initiated recovery proceedings against Anil Ambani in the United Kingdom qua other personal guarantee agreements, the Financial Creditor further feared attempts to initiate enforcement or execution proceedings in India including attachment or restraint of Ambani’s assets in India and abroad.
In response to the application, Ambani informed the NCLT that while UV Asset Reconstruction Company Limited had submitted a Resolution Plan in the CIRP of RCOM, Reliance Digital Platform & Project Services Limited had submitted a resolution plan for RITL.
It was thus submitted that in view of the existence of Resolution Plans for the two Corporate Debtors, it would be prudent not to proceed against the personal guarantor i.e. Anil Ambani at this point.
There was no urgency in the present case as the personal guarantee would stand fully and completely discharged after the plans are accepted and implemented, it was said.
After hearing the parties, NCLT perused the provisions of the IBC and observed that it was "fallacious" to assume that no action could be taken in the present case against the personal guarantor.
NCLT stated that a plain reading of Section 60(2) read with Sections 95 and 97(3) IBC indicated that even while an application for CIRP or liquidation proceedings of corporate debtors is pending, an application against the personal guarantor is also allowed to be filed.
Thus, in view of the fact that the furnishing of personal guarantee for the credit facilities by Anil Ambani was not in dispute, NCLT opined that it had no other option than to issue the direction under Section Section 97(3).
Accordingly, Jitender Kothari was appointed as the Resolution Professional under section 97 (4) IBC read with Rule 8 of the I&B (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors) Rules, 2019.
SBI was represented by the DSK Legal team comprising Nirav Shah (Partner) and Ryan D’souza (Associate), led by Senior Counsel Venkatesh Dhond.
Anil Ambani was represented by Senior Advocates Harish Salve, J J Bhatt with Advocates DJ Kakalia, JP Mishra, Raghavi Sharma, instructed by M/s. Mulla & Mulla & Cragie Blunt & Caroe.
Read the Order: