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Insolvency Resolution process initiated against Anil Ambani by NCLT

The National Company Law Tribunal, Mumbai (NCLT) in State Bank of India vs Anil D Ambani [CP(IB)916 (MB) of 2020] allowed the initiation of Insolvency Resolution proceeding against Anil Ambani, Chairman of the Reliance ADA Group.

Background

Project Finance Strategic Business Unit of State Bank of India (Financial Creditor) had filed two applications against Anil Ambani for necessary orders u/s 97(3) of IBC. Anil Ambani was the personal guarantor of Reliance Communications Limited (RCOM) and Reliance Infratel Limited (RITL) when it took a credit of Rs. 565 crores and Rs 635 crores respectively, from SBI. In January 2018, the Financial Creditor invoked the personal guarantee agreement. Anil Ambani in response to the application contended that since the Resolution Plan for the  two Corporate Debtors is already formulated,  it would be prudent not to proceed against the personal guarantor i.e. Anil Ambani.

Held

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. 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.

 

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