A bench of Justices Vipin Sanghi and Rajnish Bhatnagar, while putting on hold the IRP under the Insolvency and Bankruptcy Code (IBC), also restrained Ambani from "transferring, alienating, encumbering or disposing of his assets or legal rights and interests therein till the next date of hearing".
The Delhi High Court Thursday put on hold the insolvency resolution process (IRP) proceedings against Reliance Communications (RCom) then Chairman Anil Ambani in relation to recovery of Rs 1,200 crore loans given by SBI to his two firms. Ambani had given personal guarantees for the Rs 565 crore and Rs 635 crore SBI loans to RCom and Reliance Infratel Ltd (RITL), respectively, in August 2016.
A bench of Justices Vipin Sanghi and Rajnish Bhatnagar, while putting on hold the IRP under the Insolvency and Bankruptcy Code (IBC), also restrained Ambani from “transferring, alienating, encumbering or disposing of his assets or legal rights and interests therein till the next date of hearing”. It issued notice to the Centre, the Insolvency and Bankruptcy Board of India (IBBI) and State Bank of India seeking their stand on the plea by October 6, the next date of hearing.
The court also said that the proceedings would continue in relation to the corporate debtor (the companies), and while dealing with those proceedings, the liability of the petitioner-personal guarantor (Ambani) may also be examined by the IRP. “However, proceedings against the petitioner (Ambani) under Part 3 of the IBC shall remain stayed,” it said.
Ambani in his plea has challenged the constitutionality of the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019. During the hearing via video conferencing, the Centre and the IBBI — represented by Additional Solicitor General Chetan Sharma, central government standing counsel Akshay Makhija and advocate Madhavi Divan opposed stay of the IRP saying it could lead to the guarantor “frittering” away his assets.
SBI too raised similar apprehensions during the hearing. It also urged the court to allow the resolution professional appointed by the NCLT to go on with his work and give a report, but the bench did not agree to it. The National Company Law Tribunal (NCLT) on August 20 had directed initiation of insolvency proceedings against Ambani under the personal guarantee clause of the bankruptcy law. It had ordered the appointment of a resolution professional and asked SBI to take the necessary action.
The NCLT had also said both 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 August 26, 2016, even before loan agreements had been entered into.
According to the NCLT order, around 2015-16, RCom had sought credit facilities of Rs 565 crore for repayment of certain existing financial debts and for credit facilities of Rs 635 crore for its sister concern RITL, also for the repayment of existing financial debts.
RCom filed for bankruptcy last year, consequently, its secured debt was estimated at around Rs 33,000 crore, while lenders submitted claims of around Rs 49,000 crore in August 2019. Recently, in March the SBI board had approved a resolution plan for RCom that envisaged lenders recovering around Rs 23,000 crore, entailing a haircut of nearly 50 per cent RCom owes nearly Rs 5,000 crore to SBI.