A UK court on Friday directed Reliance Group chairman Anil Ambani to pay nearly $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 statement related to the judgment has been sought from the Reliance Group.
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 $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 $717 million to be paid by Ambani comprises of the principal amount outstanding under the Facility Agreement of $549,804,650.16; interest outstanding as of May 22 of $51,923,451.49; and default interest due of $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.
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 $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 $100 million.
The Reliance Group at the time had said the industrialist plans to appeal against the ruling.
“The order pertains to an alleged personal liability of Mr Ambani and will have no bearing on the operations of the Reliance Infrastructure Limited, Reliance Power Limited and Reliance Capital Limited,” a spokesperson for Anil Ambani had said at the end of the February hearing.