In a big relief to Reliance Group Chairman Anil Ambani, the Delhi High Court on Thursday stayed Insolvency & Bankruptcy Code (IBC) proceedings against the tycoon in a matter pertaining to a personal guarantee given by him against a loan taken from State Bank of India (SBI) by Reliance Communications Ltd (RCom) and Reliance Infratel Ltd (RITL).
Ambani on Wednesday moved the Delhi HC, challenging the 'constitutional validity' of the 'personal guarantee clause' in the IBC, making the Ministry of Corporate Affairs a party to the case. He has also approached the National Company Law Appellate Tribunal (NCLAT) against an order by the Mumbai bench of National Company Law Tribunal (NCLT), allowing bankruptcy proceedings against him on August 20.
The Division Bench of Justices Vipin Sanghi and Rajnish Bhatnagar, however, asked Ambani not to dispose of or transfer any of his personal assets. The court also said the insolvency process against Ambani should continue as before. It added his liabilities as personal guarantor can also be examined during the resolution process.
The action came on the back of non-repayment of loans to the State Bank of India, which had provided credit facilities of Rs 565 crore and Rs 635 crore to now insolvent RCom and RITL, respectively, in 2016.
However, a spokesperson on Ambani's behalf assured that the NCLT order will have no bearing on the operations of companies under the Reliance Group - Reliance Infrastructure, Reliance Power and Reliance Capital.
The NCLT court had also appointed Jitendra Kothari as resolution professional for insolvency resolution process against Anil Ambani, thus paving the way for personal insolvency proceedings against him.
In January 2018, SBI had invoked the personal guarantees given by Ambani after the defaults in repayment and had issued a notice. Fearing the bank won't be able to recover the loaned amount from the insolvency process of RCom and RITL, SBI had moved the NCLT seeking initiation of personal insolvency against Anil Ambani by virtue of him being the personal guarantor.