Anil Ambani not immune to enforcement actions in Reliance Communications case, say lawyers

Anil Ambani, former director of Reliance Communications

For ‘comeback’ businessman Anil Ambani, the provisions of the Insolvency and Bankruptcy Code may not be enough to shield him from prosecution or enforcement actions by regulators in the case of Reliance Communications (RCom), according to lawyers well versed in bankruptcy laws.

Late Tuesday night in a filing to the stock exchanges, RCom said it had received a letter from State Bank of India deciding to report the loan account of the company as fraud and also to report the name of Anil Ambani, the former director of the company, to the Reserve Bank of India.

Rcom is currently undergoing Corporate Insolvency Resolution Process (CIRP) and “Section 14 of the IBC provides a moratorium on recovery and legal actions against the corporate debtor. However, this protection does not extend to fraud investigations. Thus, SBI’s classification can co-exist with the CIRP and may impact the valuation and resolution process, though it doesn’t invalidate it,” said Akshat Khetan, founder of AU Corporate Advisory and Legal Services.

Khetan also pointed out that the moratorium under Section 14 applied strictly to the corporate debtor and “does not shield personal guarantors or promoters. As per the Supreme Court’s ruling in Lalit Kumar Jain v. Union of India, personal guarantors can be held liable and prosecuted separately. Hence, Anil Ambani does not enjoy any immunity under CIRP and may face proceedings independent of the insolvency process.”

A fraud classification under RBI guidelines can also trigger disqualification under Section 29A of the IBC, “thereby preventing the promoter from participating in the resolution or regaining control of the company,” he added.

A response from the Reliance Group is still awaited.

In its filing to exchanges, Rcom said that during the pendency of the bankruptcy process it is protected from the institution or continuation of any suits or proceedings against the company. It also said that the Code also granted protection to a corporate debtor against any liability for an offence committed by the corporate debtor prior to the commencement of the CIRP.

According to lawyers, reporting the loan account as fraud and reporting Ambani personally to the RBI marked a significant development in the treatment of high profile corporate defaults.

Published on July 2, 2025