The Supreme Court Bench headed by Justice L. Nageswara Rao has Dismissed Plea Filled by State Bank of India, seeking resumption of insolvency proceedings against Anil Ambani to recover Rs1,200 crore.
Supreme Court said SBI is at liberty to seek a modification of the stay order before Delhi High Court.
Senior Advocate Harish Salve appearing for Anil Ambani said- “To declare a man as bankrupt has serious consequences,”
The case is among the first high-profile ones after rules were set for personal bankruptcy last year. Bankers and investors in stressed assets are keenly watching the case as its final outcome may decide the power of lenders in taking action against founders who guaranteed repayments of loans by companies that later went bankrupt.
Harish Salve said argument by lenders citing tens of billions of rupees of loans was “delightful rhetoric,”
A bankruptcy tribunal had in August agreed to hear State Bank’s petition to initiate proceedings against Ambani, who guaranteed loans worth about $160 million to his two telecommunication companies.
The tribunal appointed a bankruptcy administrator to assess SBI’s claims. Ambani challenged the case in Delhi High Court, which suspended the bankruptcy case proceedings against him in order to decide on his broader challenge to certain parts of the country’s insolvency law.
Delhi High Court on 27 August, had stayed the insolvency proceedings against Ambani in relation to the recovery of Rs 1,200 crore loans given by SBI to his two firms.
High Court also restrained Ambani from “transferring, alienating, encumbering or disposing of his assets or legal rights and interests therein till the next date of hearing”.
The court had also said that the proceedings would continue in relation to the corporate debtor (the companies), and while dealing with those proceedings, the liability of the petitioner-personal guarantor (Ambani) may also be examined by the IRP.
Ambani in his plea has challenged the constitutionality of the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019.The Centre and the IBBI had opposed the stay of the insolvency process saying it could lead to the guarantor “frittering” away from his assets.
Notice issued to the Centre, the Insolvency and Bankruptcy Board of India (IBBI), and SBI seeking their stand on the plea by October 6.