The ongoing tussle between State Bank of India (SBI) and the Chairman of the Reliance Group, Anil Ambani dates back to 2015-16 when Reliance Communications Ltd and its subsidiary Reliance Infratel Ltd. approached SBI for Credit facilities.
The credit facilities were sought to repay certain existing loans. Reliance Communications had approached SBI for a debt of 565 crore Rs. and its subsidiary Reliance Infratel had sought for a debt of 635 crore Rs. In return, the state-owned bank obliged and provided these loans in the year 2016. Mr. Anil Ambani had provided personal guarantees under a deed to the SBI in September 2016. However, both the companies defaulted on repayments in January 2017. Anil Ambani had told National Company Law Tribunal (NCLT) that the reason behind the defaults in repayments was because of the then existing commercial and market conditions.
The Bank declared the accounts as Non-Performing Assets and invoked the personal guarantee issued by Mr. Anil Ambani in January 2018. Despite various attempts by the bank, no repayments were made. The Bank also issued a demand notice dated 20th February 2020 demanding payment; Mr. Ambani did not respond to the notice. In March 2020, the Bank had approached the NCLT with a Section 95 petition under the Insolvency and Bankruptcy Code (IBC). Section 95 petition is an application to the Board by a creditor or group of creditors to initiate insolvency resolution proceedings through a resolution professional.
As per the code, whenever an application is filed under Section 94 or 95, the tribunal must direct the IBC Panel to nominate a resolution professional within 7 days of the application. Jitender Kothari has been appointed as the resolution professional in this case. Reacting to the same, a spokesperson of Mr. Ambani said that appointing a resolution professional does not lead to an admission of SBI’s insolvency application by the NCLT. He further added that the NCLT has declined a request by the SBI on restricting Mr. Ambani from dealing or appropriating his assets. Mr. Ambani is currently taking Legal advice on filing an appropriate appeal in front of the National Company Law Appellate Tribunal (NCLAT).
Mr. Ambani has been facing a lot of troubles in the recent past. Adding to his troubles a clutch of Chinese banks has initiated recovery proceedings against him in the UK. He was ordered to pay 5447.53 crore Rs. within 21 days by the Commercial Division of the High Court of England and Wales. This has created concerns for the State Bank of India which fears that it might affect its recovery rights.
