Authority: National Company Law Tribunal, Mumbai Bench - I

Order Date: 11 June 2026

Case Overview

The State Bank of India (SBI) filed a petition under Section 95(1) of the Insolvency & Bankruptcy Code (IBC), 2016, to initiate an Insolvency Resolution Process (IRP) against Mr. Anil Dhirajlal Ambani in his capacity as a personal guarantor for credit facilities extended to Reliance Communications Limited (RCOM) and Reliance Infratel Limited (RITL). SBI, the financial creditor, claimed a default amount of Rs. 853,25,31,824.21 (Eight Hundred Fifty-Three Crores Twenty-Five Lakh Thirty-One Thousand Eight Hundred Twenty-Four and Twenty-One Paise) as of 01 March 2019, with the date of default for the guarantor being 31 January 2019.

The debt originated from a Rupee Loan Facilities Agreement dated 29 August 2016 (amended on 08 September 2016) where SBI provided loans of Rs. 565 Crores to RCOM and Rs. 635 Crores to RITL. Mr. Ambani executed a Personal Guarantee Deed on 23 September 2016. Both corporate debtors defaulted around January 2017, and their accounts were classified as Non-Performing Assets (NPA) retrospectively from 26 August 2016. SBI invoked the personal guarantee on 31 January 2019.

Corporate Insolvency Resolution Processes (CIRP) for RCOM and RITL were admitted in 2018. UV Asset Reconstruction Company Limited submitted a resolution plan for RCOM, which was approved by the Committee of Creditors (CoC) with 100% voting share. SBI, a major constituent of the CoC, highlighted that clauses 5.18.12 of the RCOM plan and 5.17.12 of the RITL plan expressly preserved lenders' rights to enforce personal guarantees.

Mr. Ambani challenged the proceedings multiple times, including a writ petition in the Delhi High Court and a challenge to the constitutional validity of IBC's personal insolvency provisions before the Supreme Court, which were ultimately dismissed. He also filed Interlocutory Application (I.A.) No. 5420 of 2025 before the NCLT, challenging the report submitted by the appointed Resolution Professional (RP), Mr. Prashant Jain, under Section 99 of the IBC. Mr. Jain's report, dated 06 December 2025, concluded that a valid debt and default existed and recommended accepting SBI's application.

Mr. Ambani's primary contentions in his challenge were that the Resolution Professional's report was prepared in violation of natural justice, that the guarantee was void as it was executed for an account that was retrospectively an NPA, and that the approved resolution plan for RCOM had discharged the debt, extinguishing his liability as a guarantor.

The tribunal analyzed these objections extensively. It relied on Supreme Court precedents, including Dilip B. Jiwrajka v. Union of India, to affirm that the RP's role under Section 99 is administrative and recommendatory, not adjudicatory. It held that complex legal disputes, such as the discharge of a guarantor's liability, are to be adjudicated by the tribunal under Section 100, not by the RP. The tribunal found no merit in the claim that the RP violated natural justice by not sharing all communications between himself and SBI with Mr. Ambani, reiterating the non-adjudicatory nature of the process.

On the substantive legal issue, the tribunal rejected the argument that the guarantee was void. It held that the RBI's prohibition on lending to NPAs is an administrative rule for banks, not a law that renders such contracts illegal or fraudulent under Sections 23 and 24 of the Indian Contract Act, 1872. Furthermore, it found no case of misrepresentation, noting that Mr. Ambani, as a director in control of the RCOM group until November 2019, was or should have been aware of the company's financial status.

Crucially, the tribunal upheld the well-established legal principle that the approval of a resolution plan for a corporate debtor does not ipso facto discharge the liability of a personal guarantor, citing judgments from the Supreme Court (Lalit Kumar Jain v. Union of India, BRS Ventures Investments Limited v. Srei Infrastructure Finance Limited, Electrosteel Castings Ltd. v. UV Asset Reconstruction Company Ltd.) and the NCLAT. It emphasized that the contract of guarantee is independent, and the resolution plans for RCOM and RITL explicitly preserved the rights of creditors to pursue personal guarantors. The tribunal also noted that SBI had not received any meaningful cash recovery from the resolution plans to date, and the debt therefore remained unsatisfied.

Final Outcome

The NCLT admitted the company petition (C.P. (IB)/916(MB)/2020) and initiated the Insolvency Resolution Process against Mr. Anil Dhirajlal Ambani. It dismissed I.A. No. 5420 of 2025 filed by Mr. Ambani. A moratorium under Section 101 of the IBC was declared for 180 days from the order date, staying all legal actions and proceedings concerning Mr. Ambani's debts and prohibiting him from transferring or alienating his assets. Mr. Prashant Jain was confirmed as the Resolution Professional and was directed to publish a public notice inviting claims from all creditors. SBI was directed to deposit ₹75,000 towards the RP's initial fees and expenses.

Topics: Personal Guarantor Insolvency, Debt Enforcement, Contract of Guarantee