The National Company Law Tribunal (NCLT) in Mumbai has admitted a petition filed by State Bank of India (SBI) seeking initiation of personal insolvency proceedings against Reliance Group chairman Anil Ambani, marking a significant development in a long-running dispute linked to loans extended to Reliance Communications and Reliance Infratel.
A Bench comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar ordered the commencement of the insolvency resolution process against Ambani. The tribunal also imposed a moratorium on all debts connected to the proceedings for a period of 180 days, or until a decision is taken on a repayment plan, whichever comes first.
As part of the process, the NCLT directed resolution professional Prashant Jain to issue a public notice within seven days, calling upon creditors to submit their claims within 21 days.
SBI has asserted that Ambani owes approximately ₹1,200 crore under personal guarantees furnished in connection with loans sanctioned in 2016.
The dispute traces its roots to financial assistance granted by SBI to Reliance Communications and its affiliate, Reliance Infratel. Reliance Communications had sought funding of ₹565 crore to refinance existing borrowings, while Reliance Infratel secured facilities amounting to ₹635 crore. The loans were sanctioned through agreements executed in August 2016 and later revised in September that year.
To secure the facilities, Ambani executed personal guarantee deeds in favour of SBI in September 2016.
The borrower companies allegedly defaulted on repayments in early 2017. Their loan accounts were subsequently classified as non-performing assets (NPAs) with retrospective effect from August 26, 2016.
The financial distress of both companies deepened when insolvency proceedings were initiated against them in 2018 following petitions filed by Ericsson India.
After the defaults, SBI invoked Ambani’s personal guarantees in January 2018 and later issued a demand notice in February 2020, stating that no payment had been received from him in his capacity as guarantor. The bank subsequently approached the NCLT under the Insolvency and Bankruptcy Code seeking initiation of personal insolvency proceedings.
During the hearings, Ambani challenged the validity of the guarantees, arguing that they were executed after the date from which the accounts were retrospectively treated as NPAs. According to him, this rendered the guarantees unenforceable.
The tribunal was not persuaded. It observed that the NPA classification had been applied retrospectively under regulatory norms and that such a later classification could not invalidate guarantees that had been lawfully executed.
The NCLT also dismissed Ambani’s contention that SBI lost its right to proceed against him after the approval of the resolution plan for Reliance Communications. The tribunal noted that the approved plans specifically preserved lenders’ rights to enforce personal guarantees and pursue third-party securities wherever applicable.
With the admission of SBI’s plea, the personal insolvency process against Ambani now moves into the claims and resolution stage under the Insolvency and Bankruptcy Code framework.
