Companies

Supreme Court rejects SBI plea in Anil Ambani bankruptcy case

Bloomberg September 17 | Updated on September 17, 2020 Published on September 17, 2020

Directs Delhi High Court to decide on tycoon’s challenge to the insolvency law

The Supreme Court on Thursday gave relief to Reliance Group Chairman Anil Ambani by rejecting a plea by State Bank of India for resuming bankruptcy proceedings against him.

A three-judge Bench of Justices L Nageswara Rao, Hemant Gupta and S Ravindra Bhat ‘dismissed’ SBI’s plea for vacating a stay given by the Delhi High Court on August 27. The High Court had said: “The proceedings against the petitioner under Part-III of the IBC shall remain stayed.”

However, the apex courtrestrained Anil Ambani from transferring, alienating, encumbering, or dealing with, or disposing of any of his assets, or his rights, or beneficial interest therein till October 6, the date of next hearing.

Also read: RBI rejects lenders’ plea to put Reliance Home Finance, Reliance Commercial under NCLT resolution

The apex court directed the Delhi High Court to consider the matter on October 6. It said the bank is at liberty to seek modification of the stay order.

The issue came up when a Bench of the National Company Law Tribunal (NCLT) on August 21 cleared the appointment of a Resolution Professional to verify SBI’s claims that loans of ₹1,200 crore were provided to Reliance Communications (RCom) based on personal guarantees from Anil Ambani. Based on the RP’s report, the Bench will decide whether to admit or reject SBI’s Interlocutory Application.

Credit to RCom, RITL

In 2016, SBI extended credit of ₹565 crore to RCom and another loan of ₹635 crore to Reliance Infratel Ltd (RITL). Both RCom and RITL defaulted in January 2017, the bank said before the NCLT.

The case is among the first high-profile ones after rules were set for personal bankruptcy last year. Bankers and investors are watching the case as its final outcome will decide the power of lenders in taking action against founders who guaranteed loans of companies that later went bankrupt.

 

More on the Delhi High Court order here: Delhi HC stays insolvency case against Anil Ambani

 

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Published on September 17, 2020
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