[ By Bobby Anthony ]The High Court of England and Wales is expected to set the terms for the “conditional order” of a payment to court it had granted to three Chinese banks in 2019 against Reliance Communications (RCom) boss Anil Ambani.It may be recalled that the Industrial & Commercial Bank of China Ltd Mumbai Branch, on behalf of itself, China Development Bank and Exim Bank of China,...
The High Court of England and Wales is expected to set the terms for the “conditional order” of a payment to court it had granted to three Chinese banks in 2019 against Reliance Communications (RCom) boss Anil Ambani.
It may be recalled that the Industrial & Commercial Bank of China Ltd Mumbai Branch, on behalf of itself, China Development Bank and Exim Bank of China, had sought 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.
According to court documents, RCom had sought the loan from the Chinese banks in order to meet its obligations under certain foreign currency convertible bonds due to mature on March 1, 2012.
After RCom went on to default on the payments agreed under the loan arrangement, the Chinese banks made demands for payment between February 2017 and November 2017.
On May 24, 2019, the banks eventually issued an application for a summary judgment, alternatively for a conditional order requiring Anil Ambani to pay to the court, all or some of the sum claimed “on the basis that on any view his defense is improbable”.
However, Anil Ambani denied providing authority for any such personal guarantee, resulting in the High Court action in the United Kingdom, which was the jurisdiction agreed to, as part of the terms of the loan agreement with the Chinese banks.
When the case was last heard in December 2019, Justice David Waksman had stated that he was “very nearly prepared” to grant judgment against Anil Ambani because he found the RCom chief's evidence “inexplicably incomplete, implausible and highly unlikely”.
“I think it is highly probable that at trial his defense will be shown to be opportunistic and false. I consider that this is a plain case for the making of a conditional order,” Justice Waksman said, as he granted a conditional order in principle to the Chinese banks.
Such an order would enable the Commercial Division of the High Court to hear arguments on Ambani's financial means and set an appropriate amount as an effective court deposit, pending a full trial in the case.
The focus of Ambani's evidence at the hearing in 2019 revolved around a Power of Attorney (PoA), which he claims he was unaware as being required as security by the Chinese banks.
There are references to a non-binding “comfort letter” and RCom executives, including Hasit Shukla, who allegedly kept him in the dark about the true nature of any kind of personal guarantee.
“The essential thrust of Ambani's evidence is not merely that he was unaware that the PoA was in respect of a guarantee, he was never aware at any stage that this was being required as security by the bank. He had no inkling of it at all,” according to the judgment dated December 16, 2019.
“A truly remarkable feature of Anil Ambani's case is that he has himself proffered no explanation as to why he should have been deceived in this way, nor has he provided any evidence as to what he did when he discovered, in early 2017, the existence of the guarantee signed by Shukla," the judge noted.
After the latest hearing, the judge is expected to deliver his verdict on the amount to be paid to the court or reserve judgment to be delivered at a future date.