$717m loan case: Chinese banks will have to move Indian courts against ADAG

Anil Ambani, chairman of ADA Group, can challenge the order of the Commercial Division of the High Court of England and Wales, London, which said a personal guarantee challenged by Ambani binds him, officials said. corporate lawyers.

At the same time, Chinese banks will have to move Indian courts to enforce the order in India, they said. The British court on Friday ordered Ambani to pay nearly $717 million to three Chinese banks within 21 days. The banks are continuing to collect the funds under a loan agreement with Reliance Communications.

ADA Group said Ambani was seeking legal advice and the UK court order will not affect the operations of its other group companies: Reliance Infrastructure, Reliance Power and Reliance Capital.

Lawyers for the company said Ambani could challenge the UK court order on grounds of “finding” under section 13 of the Code of Civil Procedure 1908.

“Before executing a foreign judgment or judgment, the party executing it must ensure that the foreign judgment or judgment passes the tests mentioned in the CPC. If the foreign judgment or decree fails any of these tests, it will not be considered conclusive and therefore unenforceable in India,” said senior counsel Rajiv Bansal.

Bansal said that according to Section 44A of the CPC, an decree of any superior court of a reciprocal territory shall be enforced in India as an decree passed by the Indian District Court. “A judgment of a court in a reciprocal territory can be directly enforced in India by filing an application for enforcement. When filing the petition for enforcement, the original certified true copy of the executive order along with a certificate from the superior court indicating the extent to which the decree has been satisfied or adjusted must be attached to the petition,” he said. declared.

Other leading lawyers have said that India and England are reciprocal countries meaning that judgments will be enforced in India as if they were judgments of an Indian court. “Therefore, the Indian court will not reconsider the arguments but will only execute the judgment. At this stage, Ambani has a very limited number of arguments such as fraud for example and these are unlikely to receive much credit unless there is some substance to the arguments,” said said a Mumbai-based lawyer asking not to be named.

Furthermore, the lawyer stated that any court decision should be executed as a decree. It may be applied against any of Ambani’s assets outside India or against assets in India. In the latter case, Indian legal procedure must be followed, he said.

The dispute between Reliance Communications (RCom) and ICBC-led Chinese banks began after RCom defaulted on its loans to Indian and Chinese banks. Chinese banks claim Ambani had given a personal guarantee for a corporate loan used by RCom in 2012 for a global refinance.

ADA officials said the Industrial and Commercial Bank of China (ICBC) and others based their claim on an alleged guarantee that was never signed by Ambani and that he has always denied authorizing anyone. to execute a guarantee on its behalf.

The amount payable under the alleged security will in any event be reduced upon resolution of RCom’s debt under the Insolvency and Bankruptcy Code 2016. The amount claimed under the alleged security would be reduced by up to 50% under RCom’s debt resolution plan, which has been approved by its lenders and was already filed in the National Company Law Tribunal on March 6.

Regarding the judgment of the UK court, the question of a possible application in India does not arise in the near future, and Ambani seeks legal advice on the way forward.

According to the UK court order, the final amount due under the alleged guarantee will be assessed based on the outcome of the RCom resolution plan filed in the National Company Law Tribunal in Mumbai, ADA officials said.

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