Key facts
- The National Company Law Tribunal (NCLT) has admitted State Bank of India's (SBI) plea to initiate personal insolvency proceedings against Anil Ambani.
- SBI is seeking to recover over Rs 1,200 crore from Ambani, who acted as a personal guarantor for Reliance Communications' loans.
- The NCLT's decision allows for insolvency proceedings against Ambani in his capacity as a personal guarantor under the Insolvency and Bankruptcy Code.
- Ambani's spokesperson stated the guarantee in question was allegedly extended in 2016, prior to the enactment of personal insolvency laws.
- The spokesperson indicated that the order will be reviewed and challenged through appropriate legal remedies.
The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted a plea by the State Bank of India (SBI) to initiate personal insolvency proceedings against Anil Ambani. SBI is seeking to recover over Rs 1,200 crore from Ambani, who acted as a personal guarantor for loans taken by Reliance Communications.
The admission of the petition allows for insolvency proceedings against Ambani under the Insolvency and Bankruptcy Code. The bank argued that Ambani personally guaranteed loans for Reliance Communications after the company defaulted and was admitted into Corporate Insolvency Resolution Process (CIRP).
A spokesperson for Ambani stated that the order pertains to a disputed personal guarantee allegedly extended in 2016, prior to the promulgation of personal insolvency laws. The spokesperson added that the underlying facility was for Reliance Communications' borrowings from Chinese lenders, and Ambani derived no personal benefit. The legal team will review the order and challenge it.
Legal experts note that the ruling raises a significant question about whether a personal guarantor can be subjected to a statutory framework that did not exist at the time the guarantee was allegedly executed. This could impact other pending insolvency proceedings involving personal guarantors. SBI had approached the NCLT under Section 95(1) of the IBC, which allows creditors to initiate insolvency resolution against individuals, including personal guarantors.