NCLT Replaces Resolution Professional in Anil Ambani’s Insolvency Case Amid Allegations of Bias

NCLT Replaces Resolution Professional in Anil Ambani’s Insolvency Case Amid Allegations of Bias

New RP Appointed Amid Allegations

The National Company Law Tribunal (NCLT) has appointed a new resolution professional in place of Jitender Kothari to oversee the personal insolvency proceedings against industrialist Anil Ambani. The decision follows allegations from Ambani that Kothari conducted the process “in undue haste and denied him fair and proper opportunity” to provide information and exceeded his mandate under the Insolvency and Bankruptcy Code (IBC) by seeking “unrelated information.” Kothari has denied these allegations.

Background: Personal Guarantee and Loan

The case revolves around Ambani’s personal guarantee for a ₹1,385-crore loan extended by the State Bank of India (SBI) to Reliance Communications in September 2016. The loan was retrospectively classified as a non-performing asset effective late August 2016. Kothari was appointed as the resolution professional in August 2020 and, a few days after his appointment, sought multiple details from Ambani, including information related to a case in a British court.

Legal Challenges and Supreme Court Clarification

Ambani challenged the insolvency proceedings in the Delhi High Court and later in the Supreme Court. His counsel argued that the resolution professional’s requests were overreaching and that more time was needed due to Covid-related restrictions. In May 2021, Kothari submitted his report to the NCLT, recommending that the insolvency petition be admitted despite Ambani’s lawyer seeking more time. A few days later, Ambani’s counsel wrote to the RP that information could only be sought from SBI.

Meanwhile, Ambani’s writ was tagged along with a similar challenge filed by businessman Surendra Jiwarajka. In Jiwarajka’s case, the Supreme Court in November 2023 clarified that the resolution professional’s role is limited to collecting information and submitting a report, and only the adjudicating authority can admit such cases — reinforcing procedural safeguards for guarantors.

Setback for Lenders

Despite Kothari’s claim that his actions complied with the IBC, the NCLT has now replaced him with Prashant Jain as the new resolution professional. The move is seen as a setback for the consortium of lenders led by SBI, who are seeking recovery based on Ambani’s personal guarantee. The case continues to draw attention due to its high-profile nature and its implications for enforcing personal guarantees under India’s insolvency regime.