Insolvency against Anil Ambani

We often come across the word “Insolvency” in our day to day life. This word is very familiar to the people who work in the corporate sector, to the people who involve in entrepreneurship or major businesses, and to the students who are in the field of Commerce and Economics. The term Insolvency means it is a situation in which the debtor is unable to pay off his debts to the creditor.

Economic growth occurs when a country is financially strong. A country can financially be strong only when the companies, firms, industries, etc contributing to the national income, work properly. They work properly when they are free from insolvency issues. To attain this kind of stability in the economy, the Government of every country comes up with its laws to resolve the issues relating to Insolvency against companies, partnerships, and individuals.

Likewise, in India the “Insolvency and Bankruptcy Code, 2016” plays an important role in resolving the issues related to Insolvency.  This paper discusses the concept of Insolvency concerning to the Insolvency against Anil Ambani, Chairman of “Reliance Group”. Recently, the Delhi High Court has granted a stay on the proceedings that were initiated against him for debt taken from the State Bank of India. This paper gives a clear idea of how one of the then world’s richest persons, one who once revolutionized the telecom world, has now fallen to a position where he has to sell his company’s assets to pay his debts.


Anil Ambani, the chairman of the Reliance Group of Industries, leads various corporations including Reliance Infrastructure, Reliance Capital, Reliance Power, and Reliance Communications.

Due to various reasons, in the year 2014, Anil Ambani lead Reliance Communications incurred huge losses. At the same, the other companies of Reliance Group were also not that strong enough. That was the time when Anil Ambani started selling his companies which include Big Cinema, Reliance Big Broadcasting, and Big Magic, to pay the debts, however, he did not succeed.

By 2018, the companies’ total debts accumulated to Rs 1.72 lakh crore, which was a major setback to the Reliance Group of Industries lead by Anil Ambani. The losses kept increasing, and now the company is going through the Insolvency process.

Insolvency and Bankruptcy

Insolvency is a situation of financial distress in which a company finds it difficult or is not able to pay the debts that were taken by it, from the creditors. This may also lead to Insolvency proceedings, under which legal action is taken against the debtor or the Insolvent. In most of the cases in which legal proceedings are initiated, the debtor is asked to sell the assets of his company and are liquidated to pay his debts off. There are other options as well to resolve the Insolvency rather than just selling the assets. A few of them include borrowing money, increasing income, etc.

The term Bankruptcy means the situation in which the Insolvent is left with the final alternative that is available for him after all other options attempt to fail in his debt clearance. It is a stage where the individual or the organization sends an application to the relevant court declaring himself or herself as an insolvent because of its inability to pay off the debts. Then the court may declare the particular person as Bankrupt after which the individual or the company is relieved from all the debts and other disadvantages of Insolvency.

Law Dealing with Insolvency Issues in India

The Insolvency and Bankruptcy Code, 2016” came into force on 28th May 2016. This Act was introduced to make the existing legal framework even stronger, also to create a single Law for resolving the Insolvency issues in India. Till 2015, it took around 4.3 years on average, for Insolvency resolution in India. It is comparatively higher than other countries like the USA and UK. The delay was due to the time taken by the courts to resolve the issue and due to the uncertainty of the legal framework in India to deal with Insolvency resolution.

Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code, 2016 applies to individuals as well as companies. This Act lays out a timely process for resolving insolvency issues. It provides the debtors a 180-day period to come up with their decisions for the payment of their debts, and this process the creditors are not supposed to claim for the payment from the debtors. The Act ensures an uninterrupted resolution process.

The NCLT (National Companies Law Tribunal), determines and adjudicates the proceedings of the Insolvency Resolution process for companies and DRT (Debt Recovery Tribunal) acts as the adjudicating body for the individuals.

Anil Ambani and Insolvency

Two of Anil Ambani lead companies, namely Reliance Communications Limited (RCom) and Reliance Infratel Limited (RITL) proceeded towards the Project Finance Strategic Business Unit of the SBI to seek loans of Rs 565 and Rs 635 respectively. A personal Guarantee on these two loans, which amounted to a whole of Rs 1,200 crore, was given by Anil Ambani when the loan was disbursed to the companies.

The two companies had failed to repay the loans to the SBI i.e., the creditor. As there was a default in repayment of the loan given to the borrower, the SBI invoked the personal guarantee given by Anil Ambani. Even before this getting enforced the Ericsson India Private Limited moved an application in which both his companies were admitted into insolvency.

Insolvency Application against Anil Ambani

While both the companies were already facing the Corporate Insolvency proceedings, the SBI  filed an Insolvency application under Section 95 of the IBC, 2016, before the Mumbai bench of NCLTto initiate insolvency proceedings against Anil Ambani as he had given the personal guarantee against the loans taken by both companies i.e., Reliance Communications Limited and Reliance Infratel Limited. As both the companies were admitted into Insolvency, the companies’ as well as the company promotors’ assets and loans were kept under moratorium.

At the same time, Anil Ambani also faced certain proceedings before the England High Court, which directed him to repay a loan of around Rs 5450 crore to the Chinese Banks. Due to this, the SBI on the apprehension that the Chinese banks would initiate proceedings against Anil Ambani, filed an Interlocutory Application, seeking to appoint Insolvency Professions urgently.

According to the Section 97(3) of the IBC, 2016, it says that the Insolvency and Bankruptcy Board of India (IBBI) is directed by the Adjudicating authority, here it is NCLT, to nominate an Insolvency Resolution Professional for administering the resolution process, within 7 days from the filing of the application. But, since the physical functioning of courts reduced owing to the pandemic, the professional was not appointed as required under the law.

In the recent past, the NCLT, the adjudicating body has accepted the application filed by SBI and ordered to appoint an Insolvency Resolution professional to assess the present issue and take necessary action.

An Insolvency Resolution Professional is the one who administers the resolution process by managing and assessing the debtor’s assets and also to assist the creditors in decision making.

Anil Ambani’s Plea in Delhi High Court

Anil Ambani moved to Delhi Court, filing a petition challenging the Mumbai bench of NCLT’s order in appointing the Insolvency Resolution Professional, for a personal guarantee given by him against SBI loans to two of his companies.

He further challenged the validity of the provision on personal guarantee and bankruptcy, by arguing that there no enabling provision for such an order under the Insolvency and Bankruptcy Code, 2016.

The bench consisting of Justice Vipin Sanghi and Justice Rajneesh Bhatnagar has restricted Anil Ambani from alienating his assets until the next hearing. However, they said that the proceedings against the Corporate Debtors will be continued.

The matter will be taken up by the Court for the next hearing being on 06 October 2020.


The one who once was a major tycoon in the Telecom business and was one of the top richest men in the world is now in the phase of facing Insolvency proceedings. The Insolvency against Anil Ambani is one of the first cases of Insolvency against a major Businessman. As far as the present plea of Anil Ambani is concerned, one of his arguments was that there is no provision enabling the personal guarantee, under the IBC,2016. But, it is so apparent from the concerned code that the provisions of the Insolvency and Bankruptcy Code, significantly apply to him, being a personal guarantor. It is so unlikely that the Delhi High Court may intervene and asks Anil Ambani to proceed towards NCLAT (National Company Law Appellate Tribunal).


Q.1. What is Insolvency?

The Insolvency means, it is a situation in which the debtor is unable to pay off his debts to the creditor. It is a situation of financial distress in which a company finds it difficult or is not able to pay the debts that were taken by it, from the creditors.

Q.2. What is the concept of Personal Insolvency?

The Personal Insolvency is similar to the concept of Corporate Insolvency, whereas in Personal Insolvency if a person or a company is unable to repay the debts taken, the personal guarantee is given by the guarantor, that is the personal assets of the guarantor can be invoked by the Creditors, and they can claim the rights over personal assets only.

Q.3. What is the difference between NCLT and NCLAT?

The expansion of the abbreviations NCLT is National Company Law Tribunal and of the NCLAT is National Company Law Appellate Tribunal. The NCLT holds the primary jurisdiction and the NCLAT holds the secondary jurisdiction. Generally, the petitions are filed under NCLT, where it examines the evidence, and witnesses to take decisions. If the applicant is not satisfied with NCLT’s decision, then he can appeal to NCLAT. NCLAT reviews the decisions of NCLT and checks if it is in accordance with the Law.

Q.4. What happens to Anil Ambani after the Insolvency process against him is over?

After the process of Insolvency is over against Anil Ambani, he can run other businesses which are not under Insolvency. He can start with a clean slate same as in the case of Corporate Insolvency. The Creditors are only able to recover their debts through the collateral deposited or his personal assets.

Q.5. What is the process to resolve insolvency under the Insolvency and Bankruptcy Code, 2016?

The process to resolve the insolvency under the IBC, 2016 is described hereunder:

  1. Initiation: This is the process in which the Insolvency professional administers the process by managing the debtor’s assets and provides information regarding the same to the creditor. This process lasts for 180 days and any legal action against the debtor is prohibited during this time. This process can be initiated by the Debtor or the Creditor.
  2. The Decision to resolve Insolvency: The Insolvency professional forms a committee consisting of the financial creditors who lent money to the debtor. They all together take the decision regarding the debt owed to them. If this decision is not taken after 180 days, then the assets of the debtor go into liquidation.
  3. Liquidation: This process is administered by the Insolvency professional. In this process the assets of the debtor are liquified and the proceeds from the sale of assets are distributed amongst the creditors.



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