In a relief to Reliance Group Chairman Anil Ambani, the Supreme Court has dismissed State Bank of India's plea seeking vacation of stay on personal insolvency and bankruptcy proceedings against the businessman. The plea pertains to a personal guarantee given by Anil Ambani against a loan taken from SBI by Reliance Communications and Reliance Infratel.
During a hearing on Thursday, the Supreme Court said the Delhi High Court can take up the issue on October 6 and the state-owned lender can also seek removal or modification of the stay order.
Notably, this is first such case where the personal guarantees of a promoter have been invoked. The IBC covered only Indian companies and not promoters till November last year. However, the new rules are now also applicable against personal guarantees on loans worth Rs 1,000 crore or more too.
SBI had provided credit facilities of Rs 565 crore and Rs 635 crore to the now insolvent Reliance Communications (RCom) and Reliance Infratel (RITL), respectively, on Anil Ambani's personal guarantee in 2016. Both RCom and RITL had defaulted on their loans and their accounts were declared as non-performing accounts (NPAs) with effect from August 2017.
It invoked personal guarantee against Anil Ambani in January 2018 and issued a notice to him. Anil Ambani failed to repay the loans despite various reminders by the bank.
The Delhi High Court had stayed IBC proceedings against the tycoon on August 27. The decision came after Ambani challenged the 'constitutional validity' of the 'personal guarantee clause' in the IBC, making the Ministry of Corporate Affairs a party to the case.
He also approached the National Company Law Appellate Tribunal (NCLAT) against an order by the Mumbai bench of National Company Law Tribunal (NCLT), which allowed bankruptcy proceedings against him on August 20.
The court, however, asked Ambani not to dispose of or transfer any of his personal assets. It also added his liabilities as personal guarantor can also be examined during the resolution process.