LONDON: A UK court on Friday directed Reliance Group chairman Anil Ambani to pay nearly USD 717 million to three Chinese banks pursuing the recovery of funds owed to them as part of a loan agreement within 21 days.
At a remotely held hearing, in line with procedures in place for the COVID-19 pandemic, 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 (Ambani)," Justice Teare's order notes.
"It is declared that the sum payable by the Defendant to the Claimant (banks) pursuant to the Guarantee is USD 716,917,681.51,"it reads.
A spokesperson for Anil Ambani said the matter pertains to an alleged personal guarantee for a corporate loan availed by Reliance Communications Limited (RCom) in 2012 for global refinancing.
"It is emphasised that it is not a personal loan of Mr Ambani.
"ICBC (Industrial and Commercial Bank of China) made their claim based on an alleged guarantee that was never signed by Mr Ambani and he has consistently denied having authorised anyone to execute any guarantee on his behalf," the spokesperson said.
"As far as the judgment of the UK court is concerned, the question of any enforcement in India does not arise in the near future, and Mr Ambani is seeking legal advice on the future course of action," the spokesperson said.
The banks 'Industrial and Commercial Bank of China Ltd Mumbai Branch, China Development Bank' and 'Exim Bank of China', had taken their claim for a summary judgment to the UK High Court and in February were granted a conditional order, in effect a deposit to be paid into court pending a full trial in the case.
Judge David Waksman, presiding over that hearing on February 7, had set a six-week timeline for the payment of USD 100 million pending a full trial in 2021.
The court order this week vacates a trial date previously set for March 18 next year and also issues a court costs order in favour of the banks, adding a further 750,000 pounds to the overall amount owed.
According to the court order, the nearly USD 717 million to be paid by Ambani comprises of the principal amount outstanding under the Facility Agreement of USD 549,804,650.16; interest outstanding as of May 22 of USD 51,923,451.49; and default interest due of USD 115,189,579.86.
"The final amount owed by the Defendant (Ambani) to the Claimant (banks) under the Guarantee shall be assessed subject to the outcome of the RCom Insolvency Action," the court order states, leaving the option open to the banks to revisit the final amount in future.
The reference is to an ongoing State Bank of India (SBI) Insolvency Application in the National Company Law Tribunal (NCLT) in India related to Reliance Communications (RCom), which the Chinese banks' legal team had argued had no bearing on the English Court's ability to proceed to determine their clients' claims.
Ambani's spokesperson said the amount ordered to be paid based on the "alleged guarantee", will "reduce substantially" upon the imminent resolution of RCom's 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.
The Industrial and Commercial Bank of China Ltd Mumbai Branch, on behalf of the three Chinese banks, had sought the summary judgment against Ambani over an alleged breach of a personal guarantee on a debt refinancing loan of around USD 925 million in February 2012.
Ambani denies providing authority for any such guarantee, resulting in the High Court action in the UK the jurisdiction agreed upon as part of the terms of the loan agreement.
At the last hearing in the case in February, Justice Waksman had ruled that he did not accept Ambani's defence that his net worth was nearly zero or that his family would not step in to assist him when "push came to shove" to cover the conditional order amount of USD 100 million.(THE NEW INDIAN EXPRESS)