State Bank of India's application for insolvency proceedings against Ambani upheld, despite complex legal challenges
In a significant development, the National Company Law Tribunal (NCLT), Mumbai Bench, has admitted the insolvency resolution process against Mr. Anil Dhirajlal Ambani, who acted as a personal guarantor for loans extended by State Bank of India (SBI) to Reliance Communication Limited (RCOM) and Reliance Infratel Limited (RITL). The tribunal's decision, delivered on June 11, 2026, came in response to SBI's petition under Section 95 of the Insolvency and Bankruptcy Code, 2016.
The case stemmed from a substantial default amounting to over ?853 crores, which was initially declared a non-performing asset (NPA) by the bank. SBI contended that despite invoking the personal guarantee and multiple correspondences, repayment was not forthcoming from Mr. Ambani or the principal borrower.
The tribunal addressed several intricate legal disputes raised by Ambani, including the validity of the guarantee post the approval of RCOM's resolution plan and the retrospective NPA classification. However, the tribunal cited precedents, including the Supreme Court's rulings, affirming that a personal guarantor's liability persists independently unless explicitly discharged. The tribunal emphasized that the approval of a resolution plan does not automatically absolve personal guarantors of their obligations.
The decision underscores the non-adjudicatory role of the Resolution Professional (RP) under the IBC, whose function is to recommend based on prima facie evidence rather than adjudicate complex legal disputes. The RP had confirmed the existence of a debt and default, which the tribunal found sufficient to proceed with the insolvency process.
The tribunal's order mandates a moratorium on legal actions concerning Ambani's debts for 180 days and appoints Mr. Prashant Jain as the Resolution Professional to oversee the insolvency proceedings. The order reflects the judiciary's stance on upholding creditor rights while balancing the procedural fairness towards the guarantors.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Personal Guarantor's liability under a deed of personal guarantee remains enforceable despite approval or implementation of a resolution plan in the Corporate Insolvency Resolution Process (CIRP) of the principal borrower. Resolution Professional's role under Section 99 of IBC is recommendatory and non-adjudicatory, and the final determination of disputes rests with the Adjudicating Authority under Section 100 of the Code.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 95, 99, 100, 101; Indian Contract Act, 1872 Sections 23, 24
State Bank of India v. Anil Dhirajlal Ambani, (NCLT)(Mumbai Bench - I) : Law Finder Doc id # 2921925
