Supreme Court of India rejected a petition by the State Bank of India seeking to resume a personal bankruptcy case against business tycoon Anil Ambani, chairman of the Reliance Group. The bank had sought vacation of the stay granted by the Delhi High Court on the bankruptcy proceedings.
Instead, a Bench headed by Justice L Nageswara Rao directed the Delhi High Court to consider the issue of Ambani’s challenge on the insolvency law on October 6, while ruling that the bankruptcy case against the former billionaire will remain suspended.
This is the first high-profile case after the rules were set last year for personal bankruptcy. 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 guarantee repayments of loans by companies that later went bankrupt.
Senior advocate Harish Salve, appearing for Ambani, told the court, “To declare a man bankrupt has serious consequences.” He dubbed as “delightful rhetoric” the lenders’ claim of loans running into tens of crores of rupees. Mr. Anil Ambani has challenged the Insolvency and Bankruptcy Code, 2018, a corollary of which is that the business goes into liquidation and stops trading or goes into administration and is sold to a new owner.
The SBI went to the Apex Court with a petition that the High Court did not grant it an opportunity to file a counter affidavit while staying the insolvency proceedings against Ambani “who owes to the bank public money to the tune of Rs 1707 crore.”The bench, also comprising Justices Hemant Gupta and S. Ravindra Bhat, gave liberty to the SBI to go back to the High Court to seek modification of its stay order passed on August 27. “Why don’t you go back to High Court to argue your case,” it asked.
On August 27, the High Court had passed an interim order, staying the Mumbai bankruptcy tribunal order, while holding that the proceedings against the corporate debtors will continue and restraining Ambani from selling or transferring any of his personal assets and listed the matter for further hearing on October 6.