A court in the United Kingdom on Friday ordered Reliance Group Chairperson Anil Ambani to pay nearly $717 million (Rs 5,447 crore) to three Chinese banks, within 21 days, PTI reported on Saturday. The banks have been pursuing recovery of funds owed to them as part of a loan agreement made in 2012.
Justice Nigel Teare ruled at the Commercial Division of the High Court of England and Wales in London that a personal guarantee disputed by Ambani is binding on him. “It is declared that the Guarantee is binding on the Defendant,” Justice Teare’s order read. “It is declared that the sum payable by the Defendant to the Claimant (banks) pursuant to the Guarantee is $716,917,681.51.”
However, Ambani’s spokesperson denied that the businessman had provided any personal guarantee, and added that the judgement of the United Kingdom court is not binding in India.
The three banks which are part of the case are the Industrial and Commercial Bank of China (Mumbai branch), the China Development Bank and the Exim Bank of China. The case pertains to a lawsuit filed by the three Chinese banks over an alleged breach of a personal guarantee on a debt refinancing loan of around $925 million (approximately Rs 7,027 crore) to Ambani’s Reliance Communications in in February 2012 with the condition that he personally guarantee the loan. However, Ambani denied this, and claimed he never gave a guarantee tied to his personal assets. Reliance Communications filed for bankruptcy last year.
In February, the United Kingdom High Court had granted a conditional order, directing Ambani to pay a deposit of $100 million into court within six weeks, pending a full trial in the case next year. The court refused to accept Ambani’s argument that his net worth is zero, and hence he cannot pay to the Chinese banks. However, Saturday’s judgement vacates the March 18, 2021 trial date.
Ambani’s spokesperson said on Friday that the amount the court has ordered to pay will substantially reduce following the “imminent” resolution of Reliance Communications’ debt in accordance with the Insolvency & Bankruptcy Code, 2016. “The order of the UK court will have no bearing on the operations of Reliance Infrastructure Limited, Reliance Power Limited and Reliance Capital Limited,” the spokesperson said.
Last year, Ambani was convicted of contempt of court in a case that telecom major Ericsson India had filed, alleging that the Reliance Group had failed to pay back Rs 550 crore. The Supreme Court, which passed the judgement, threatened to jail Ambani if he did not pay the amount within four weeks. But businessman Mukesh Ambani, Anil Ambani’s brother, helped him pay the dues.