Insolvency Resolution Passed Against Anil Ambani

Must Read

Delhi HC: Mens Rea Essential Before Passing an Order U/S 14b of EPF Act

  In the matter of M/s Durable Doors and Windows v APFC, Gurugram, the bench allowed the Petitioner's appeal holding...

Delhi HC: Language of Statement and Testimony of Complainant Need Not Be Identical

A single-judge bench of J. Vibhu Bakhru of the Delhi High Court upheld the accused's conviction in Kailash @...

COVID Results Shall Be Conveyed To the Person Within 24 Hours: Delhi High Court

The order has come in a writ petition moved by Rakesh Malhotra. The Petitioner herein seeks to ramp up...

Delhi High Court Sets Aside the Order of the Trial Court in the Chief Secretary Assault Case

In the case of Mr. Arvind Kejriwal & Anr. V. State NCT of Delhi, Mr.Justice Suresh Kumar Kait has...

Delhi High Court Temporarily Restrains Vintage Moments’ Alcohol Sale in Case of Trademark Infringement

The manufacturers of the Alcohol Brand Magic Moments had filed a suit. The Delhi High Court has passed an...

NGT Red-Flags Kaleshwaram Project: Green Clearance Violated the Law, Halt Work

Excerpt The National Green Tribunal (NGT), Principal Bench, dated 20th October 2020, directed the Telangana government to stop all work,...

Follow us

In the case of State Bank of India (SBI) vs Anil Dhirajlal Ambani, the National Company Law Tribunal (NCLT), Mumbai decided to appoint an insolvency resolution process in a Rs 1200 crore case filed by SBI. The financial creditor filed the application against the respondent seeking urgent hearings and orders under section 97(3) of IBC. However, in this case, the respondent i.e. Anil Dhirajlal Ambani was a guarantor of the corporate debtor.

Facts of the Case

Reliance Communication Limited (RCOM) around 2015-16 approached State Bank of India (SBI) for a credit facility of Rs 565,00,00,000 (Five Hundred and Sixty-Five Crore) to repay some pre-existing debts. Another company named Reliance Infratel Limited (RITL), sister concerns also approached SBI for a credit facility of Rs 635,00,00,000 (Six Hundred and Thirty-Five Crore) for repayment of financial indebtedness. The respondent here provided a personal guarantee under a personal guarantee deed dated 23.09.2016 in favor of the financial creditor. Both, i.e. RCOM and RTIL committed defaults around January 2017 and due to it the accounts of both the companies were declared as non-performing accounts from 26.08.2016. Due to default in payments, the financial creditor on 31.01.2018 invoked a personal guarantee and issued an invocation notice. The applicant finally filed an application on 12th March 2020 but due to COVID 19, the matter could not be listed.

Arguments 

Appellant

  1. The appellant contended that suspension of the proceedings would be anathema to the scheme of IBC. 
  2. Section 60(2) of IBC has provided that proceedings against the personal guarantor can be filed simultaneously.
  3. The appellant stated the case of Maharashtra State Electricity Board vs Official Liquidator wherein the Hon’ble court stated that “a discharge which the principal debtor may secure by operation of law in bankruptcy or liquidation proceedings in the case of a company does not absolve the surety of his liability.” 
  4. The Hon’ble court in the above-mentioned case gave a principle wherein it clearly stated that even if the principal debtor goes into liquidation, it would not discharge the liability of the personal guarantor. 

Respondent

  1. The personal guarantee could only be invoked when there has been a shortfall in the recovery of the amount in the credit settlement.
  2. The same was replied in the reply to the letter dated 13.03.2019 wherein the respondent clearly stated that the personal guarantee would not be invoked until the other guarantees have not been invoked. 
  3. The respondent contended that “in all fairness, the applicant should realize and recover the amounts under CIRP from both the companies and if not received then should proceed for the personal guarantor.” 
  4. The debts of RCOM were likely to be in the realization process, therefore no action against the personal guarantor.
  5. The resolution plans for the corporate debtors were pending and it would be prudent not to proceed against the respondent.  

Court’s Analysis

  • Notwithstanding the pendency of resolution plans the personal guarantor can still be proceeded against under section 60(2) read with sections 95 and 97(3) of IBC.
  • Their law has never envisaged that resolution against a personal guarantor can only be followed only when the process of corporate insolvency resolution has ended.
  • Whenever any case is filed under section 95 of IBC, the adjudicating authority shall anyhow within the period of 7 days direct the board to nominate a resolution professional for the insolvency resolution process.
  • Debt and default have remained undisputed, the incongruity of the declaration of NPA has not been raised and contested by the Respondent. Besides, the 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.” 

Court’s Judgment

Mr. Jitendra Kothari (IBBI/IPA-001/IP-P00540/2017-2018/10965) was appointed as the resolution professor under section 97(4) of IBC read with rule 8 of I & B Rules, 2019. Further, the applicant shall take necessary actions under rule 9.


Libertatem.in is now on Telegram. Follow us for regular legal updates and judgments from the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Delhi HC: Mens Rea Essential Before Passing an Order U/S 14b of EPF Act

  In the matter of M/s Durable Doors and Windows v APFC, Gurugram, the bench allowed the Petitioner's appeal holding that mens rea is an...

Delhi HC: Language of Statement and Testimony of Complainant Need Not Be Identical

A single-judge bench of J. Vibhu Bakhru of the Delhi High Court upheld the accused's conviction in Kailash @ Balli v State. The bench...

COVID Results Shall Be Conveyed To the Person Within 24 Hours: Delhi High Court

The order has come in a writ petition moved by Rakesh Malhotra. The Petitioner herein seeks to ramp up testing facilities in Delhi.   Facts of...

Delhi High Court Sets Aside the Order of the Trial Court in the Chief Secretary Assault Case

In the case of Mr. Arvind Kejriwal & Anr. V. State NCT of Delhi, Mr.Justice Suresh Kumar Kait has set aside the 24.07.2019 Order...

Delhi High Court Temporarily Restrains Vintage Moments’ Alcohol Sale in Case of Trademark Infringement

The manufacturers of the Alcohol Brand Magic Moments had filed a suit. The Delhi High Court has passed an order restraining the manufacturing, marketing,...

NGT Red-Flags Kaleshwaram Project: Green Clearance Violated the Law, Halt Work

Excerpt The National Green Tribunal (NGT), Principal Bench, dated 20th October 2020, directed the Telangana government to stop all work, except the drinking water component...

There Can Be No Leniency Shown To Appellant Who Pleaded To Reduce Sentence: Delhi High Court

Facts On 25.2.2016 the victim’s sister who was 13 years old was present with her sister who was 2 years old (victim) at their home....

Violation of Executive Instructions Cannot Be Sole Ground to Invalidate Transfer Orders: Tripura High Court

In Dr Bithika Choudhury vs the State of Tripura & Ors., a Division Bench consisting of Hon’ble Justice S. Talapatra and Hon’ble Justice S.G. Chattopadhyay...

Case Regarding Anticipatory Bail, Applicant May Be Released Imposing Suitable Conditions: Gujarat High Court

A Single-Judge Bench of Gujarat High Court consisting of Honourable Dr Justice A.P. Thakur had been hearing submissions of the Applicant to release him...

Proof of Infliction of Fatal Injury Not Mandatory for Conviction Under Section 307, IPC: Tripura High Court

In the case of Mamin Miah vs the State of Tripura, a Division Bench consisting of Hon’ble Justice S. Talapatra and Hon’ble Justice S....

More Articles Like This

- Advertisement -