Personal bankruptcy: SC dismisses SBI’s appeal against Anil Ambani

By: |
September 18, 2020 7:15 AM

Senior counsel Harish Salve, appearing for Ambani, opposed the SG’s stand, arguing that “declaring a man bankrupt has serious consequences”.

The SC Bench led by Justice L Nageswara Rao refused to interfere with the HC’s August 27 order.The SC Bench led by Justice L Nageswara Rao refused to interfere with the HC’s August 27 order. (File image)

The Supreme Court on Thursday dismissed the appeal of State Bank of India (SBI) seeking vacation of the stay granted by the Delhi High Court on personal bankruptcy proceedings initiated by the bank against Reliance Group chairman Anil Ambani.

SBI’s case is that it had granted credit facilities to Reliance Communications (RCom) and Reliance Infratel (RTIL) in 2015 and the same were personally guaranteed by Ambani pursuant to a deed of personal guarantee of September 23, 2016, furnished by him. SBI had granted a total loan of Rs 1,200 crore to the two firms.

The SC Bench led by Justice L Nageswara Rao refused to interfere with the HC’s August 27 order.

The HC is scheduled to next hear the matter on October 6. It also gave liberty to the lender to seek modification of the stay order.

While staying the order of the NCLT, Mumbai, the HC had allowed the proceedings against corporate debtors to continue. It had also restrained Ambani from selling or transferring any of his personal assets and listed the matter for hearing on October 6.

Stating that “great prejudice” and “irreparable damage” would be caused if the HC order is not stayed, SBI told the SC that the HC was not justified in passing the interim order that stayed the insolvency proceedings initiated by SBI against Ambani who owes to the bank public money to the tune of around Rs 1,707 crore.

It said the HC should not have entertained Ambani’s petition as the territorial jurisdiction was in Mumbai and the demand notices were also issued by the bank in Mumbai. Besides, the insolvency proceedings were pending before the NCLT, Mumbai bench, and Ambani himself resides in Mumbai and the petitioner bank also has its headquarters and corporate office in Mumbai, the appeal added.

Senior counsel Harish Salve, appearing for Ambani, opposed the SG’s stand, arguing that “declaring a man bankrupt has serious consequences”.

Ambani had challenged the appointment of a resolution professional and the validity of the provision pertaining to personal guarantee in the HC.

The NCLT had also initiated insolvency against RCom and RTIL originally in 2018 and the lenders had submitted claims of around Rs 49,000 crore. The CoC of RCom and RTIL has already approved the resolution plans in March 2020 and is awaiting approval from the NCLT.

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