NCLT Mumbai admits bankruptcy proceedings under IBC against Anil Ambani, Reliance Communications

NCLT Mumbai observed: The RCOM and RITL committed default in repayment in and around January 2017. The accounts were retrospectively declared as Non-Performing Account (NPA) with effect from 26.08.2016 i.e. even before loan agreements had been entered into. The order dated August 20, 2020.

NCLT Mumbai has initiated bankruptcy proceedings under IBC against Chairman Anil Ambani over Reliance Communications Rs 1200 crore personal guarantee to State Bank of India.

The case is related to SBI giving credit facilities to Reliance Communications (R.Comm) and Reliance Telecom Infrastructure Ltd (RTIL), headed by Anil Ambani in August 2016.

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NCLT Mumbai observed: The RCOM and RITL committed default in repayment in and around January 2017. The accounts were retrospectively declared as Non-Performing Account (NPA) with effect from 26.08.2016 i.e. even before loan agreements had been entered into. The order dated August 20, 2020.

The order further states, “Such retrospective declaration seems rather incongruous, akin to the adage ‘putting the cart before the horse’. While debt and default has remained undisputed, the incongruity of declaration of NPA, has not been raised and contested by the Respondent. Besides, reappraisal of the declaration of the NPA by this Authority would not fall within the ambit of the provisions of the Code, under which the instant Applications have been made.”

Loans of Rs 565 crore and Rs 635 crore were given to Reliance Communications and RTIL respectively in August 2016 by SBI.

The spokesperson of RCOM said, “The resolution professional will examine SBI’s insolvency application against Mr. Ambani and then submit a report to the NCLT.”