The Delhi High court on Monday allowed the interim moratorium granted under the provisions Insolvency and Bankruptcy Code (IBC) to be in continued in effect on Anil Ambani’s personal asset in order to ensure that the interest of the State Bank of India is protected, during the pendency of the case.
The High court also agreed to hear the impleadment application filed by Ambani seeking a direction to add the Chinese lenders in the present case to the court proceedings being conducted in India.
The Counsel representing State Bank of India opposed the impleadments application of Ambani seeking adding of Chinese banks to Indian cases, stating their own concern with respect to further delays in the case. SBI also raised that their apprehension with respect to the impleadment of Chinese lenders stating that these lenders will seek directions from the Indian court to secure their own dues.
Explaining the reasons for the impleadment of the Chinese banks in Indian proceedings, Ambani’s lawyer apprised the court that irrespective of the Indian laws and case proceedings the Chines bank could still purse legal remedies in United Kingdom. Further non-payment to these Chinese lenders might trigger contempt case in UK, added Ambani.
As reported by Bloomberg, the trio of Chinese lenders won a ruling in a London court in May after pursuing Ambani for more than $700 million in a dispute over defaulted loans. In the London case, the Chinese lenders argued that they provided funding to Ambani’s Reliance Communications Ltd. in 2012 with the condition that he personally guarantee the debt. They have yet to receive any funds despite winning that ruling.
“Will be caught between courts in UK and India” said Ambani and added that impleadement of the Chinese lenders is the most logical step right now.
The SBI had filed an application requesting the moratorium on recovering from any sale of personal assets of Ambani’s. It added that the Chinese bank might execute the UK order and it would leave Indian lenders emplty handed. The Court accepted the plea.
The court has now listed the case to be heard next on 10 November.
Commenting on developments in the Delhi High, a spokesperson for Mr. Ambani said: “A Division Bench of the Hon’ble Delhi High Court inter alia passed the following orders:
1. SBI’s application for interim moratorium under section 96 of the IBC to continue was accepted, thereby protecting SBI’s interests; 2. Since SBI had based its application to continue the moratorium on the basis that the three state owned Chinese Banks may attempt to enforce a UK Court order, the Division Bench issued notice on the application for impleadment of the three state owned Chinese Banks (i.e. ICBC, CDB, C-Exim) in the proceedings before the Hon’ble Delhi High Court.
The Hon’ble Delhi High Court has fixed the cases for hearing on 10 November 2020 and allowing all parties to complete pleadings. The matter in the UK Court of the state-owned Chinese Banks pertains to an alleged personal guarantee for a corporate loan availed by Reliance Communications Limited in 2012, 8 years ago, from 3 state owned Chinese banks, and not a personal loan of Mr. Ambani.
Mr. Ambani will continue to take all steps as he may be legally advised to defend himself to the best of his ability in any further proceedings that may be brought in this matter.”
On 26 August, Ambani had moved Delhi High Court against the appointment of a Resolution Professionals on personal guarantees given to SBI for securing corporate loans. Ambani had challenged the validity of the section pertaining to personal guarantee and asked if there is any enabling provision in IBC for such an order.
A high court division bench of Justice Vipin Sanghi and Justice Rajnish Bhatnagar had on 27 August passed an interim order staying the Mumbai bankruptcy tribunal’s order permitting part of bankruptcy proceedings. The bench said proceedings against the corporate debtors will continue and issued notice to the central government, SBI and others. The bench also restrained Ambani from selling or transferring any of his personal assets.
On 17 September, the Supreme court had dismissed the petition filed by SBI seeking to lift a stay on initiating personal bankruptcy proceedings against Anil Ambani, chairman of Reliance Group.