China banks will have to move Indian courts against ADAG
Ambani, chairman of the ADA group, can challenge the order by the Commercial Division of the High Court of England and Wales, London, which said a personal guarantee he disputed was binding on him, say corporate lawyers.
The British court on Friday asked Ambani to pay nearly $717 million to three Chinese banks within 21 days. The banks are pursuing the recovery of funds as part of a loan agreement with Reliance Communications (Rcom).
The Chinese banks will have to move Indian courts to enforce the order in India, they said.
The ADA group has said Ambani is seeking legal advice and the UK court order will have no bearing on the operations of its other group companies: Reliance Infrastructure, Reliance Power, and Reliance Capital.
Corporate lawyers said Ambani could challenge the order on grounds of “conclusiveness” under Section 13 of the Code of Civil Procedure, 1908. “Before enforcing a foreign judgment or decree, the party enforcing it must ensure that the foreign judgment or decree passes the tests mentioned in the CPC. If the foreign judgment or decree fails any of these tests, it will not be regarded as conclusive and hence not enforceable in India,” said Rajiv Bansal, senior advocate.
Bansal said according to Section 44A of the CPC, a decree of any superior court of reciprocating territory shall be executed in India as a decree passed by the Indian district court.
“A judgment from a court of reciprocating territory can be directly enforced in India by filing an execution application. While filing the execution application, the original certified copy of the decree, along with a certificate from the superior court stating the extent to which the decree has been satisfied or adjusted, has to be annexed to the application,” he said.
Other top lawyers said India and England were reciprocating countries, which means that judgments would be enforced in India in the manner of those by an Indian court.
“The Indian court will not reconsider the arguments but only execute the judgment. At that stage Ambani has a very limited number of arguments such as fraud, for instance, and it is unlikely that these will be given much credence unless there is some substance to the arguments,” said a Mumbaibased lawyer.
Besides, the lawyer said any court judgment had to be enforced as a decree. It may be enforced against any of Ambani’s assets outside India or against assets in India. In the latter case, an Indian court process has to be followed, he said.
The dispute between Rcom and the Chinese banks, led by Industrial and Commercial Bank of China (ICBC), started after the former defaulted on its loans.
The Chinese banks claim that Ambani had given a personal guarantee for a corporate loan taken by Rcom in 2012 for global refinancing.
ADA officials said ICBC and others made their claim based on an alleged guarantee that was never signed by Ambani and he had consistently denied having authorised anyone to execute any guarantee on his behalf.
The amount ordered to be paid will reduce substantially upon the imminent resolution of Rcom’s debt in accordance with the Insolvency & Bankruptcy Code, 2016.
The amount claimed under the alleged guarantee will reduce by up to 50 per cent in accordance with the Resolution Plan for the resolution of Rcom’s debt. The plan has been approved by 100 per cent of Rcom’s lenders and has been filed in the National Company Law Tribunal on March 6.