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Informist, Tuesday, Apr. 28, 2026

 

NEW DELHI – The Supreme Court Tuesday recognised State Bank of India, Bank of India, UCO Bank, Canara Bank, Punjab National Bank and Indian Overseas Bank as financial creditors of debt-ridden Reliance Infratel Ltd. for the INR-36.29-billion dues. The apex court directed the resolution professional of Reliance Infratel to reconstitute the committee of creditors by including these banks and proceed with the corporate insolvency resolution process in accordance with law.

 

A bench of Justice P.S. Narasimha and Justice Alok Aradhe said that the corporate guarantees executed by Reliance Infratel in favour of these banks constitute "financial debt" within the meaning of the Insolvency and Bankruptcy Code, 2016. The banks are entitled to be recognised as financial creditors and the rejection of their claims by the Mumbai bench of the National Company Law Tribunal and National Company Law Appellate Tribunal are legally unsustainable, said the bench, adding that their orders suffered from perversity and warrant interference by the apex court.

 

Merely because the corporate guarantees were not filed along with form-C, a document for filing claims during insolvency process, the claim of the banks could not have been negated, said the top court. The National Company Law Tribunal and National Company Law Appellate Tribunal grossly erred in rejecting the claims raised by the consortium of lenders, said the apex court.

 

The apex court rejected another financial creditor Doha Bank Q.P.S.C's contention that the corporate guarantees were not duly stamped as stamp duty under the Maharashtra Stamp Duty Act, 1958 was not paid. The corporate guarantees were executed in the New Delhi office of Axis Trustee Services Ltd. and the stamp duty as per applicable rates in New Delhi has been paid, said the top court. The same were produced before the appellate tribunal, said the court. The production of corporate guarantees in a proceeding in New Delhi, does not attract the provisions of Maharashtra Stamp Duty Act, 1958, it added.

 

In 2010, a facility agreement was signed between Doha Bank and Reliance Infratel Ltd. for a loan of $250 million. SBI and others, as a member of consortium of banks, had extended a loan of INR 60.15 billion to Reliance Communications and INR 7.35 billion to Reliance Telecom. A security trustee agreement was also executed between the consortium of lenders and Axis Trustee Services, appointing the latter as a security trustee in respect of loan to Reliance Communications Ltd. and Reliance Telecom Ltd. In 2015, a deed of hypothecation was executed by Reliance Infratel, in the favour of Axis Trustee Services to secure the consortium lending pursuant to which a charge was created and duly registered.

 

In 2016, the accounts of Reliance Communications, Reliance Telecom, and Reliance Infratel were classified as non-performing assets indicating default in repayment obligations. In 2017, Reliance Infratel executed corporate guarantees in favour of SBI and other consortium lenders to secure loans extended to its group entities, namely Reliance Communications and Reliance Telecom. In 2018, the Mumbai bench of the National Company Law Tribunal had admitted a petition to start insolvency proceedings against Reliance Infratel. Other insolvency petitions against Reliance Communicatoins and Reliance Telecom were also admitted at the same time. Thereafter, Axis Trustee Services invoked the corporate guarantee executed by Reliance Infratel.

 

Doha Bank opposed the existence of guarantee and called upon Axis Trustee Services to withdraw the invocation. Thereafter, SBI and other banks filed its claims in the insolvency process of Reliance Infratel. Contesting this, Doha Bank sought a declaration that the corporate guarantees were preferential, undervalued and fraudulent as contemplated and requested the resolution professional to derecognise consortiums as financial creditors. 

 

In 2021, the Mumbai tribunal held that there was no material to show proof of claims with respect to corporate guarantees and the same were admitted without proper documents. The appellate tribunal in 2022 upheld the Mumbai tribunal order and said that these banks were not financial creditors and cannot be there in the committee of creditors.

 

In between, the Mumbai tribunal had in 2020 also approved Reliance Project & Property Management Services Ltd.'s resolution plan for Reliance Infratel Ltd. Reliance Project is a subsidiary of Reliance Jio Infocomm Ltd. Tuesday's Supreme Court order will not affect Reliance Project as the courts and law have said that reconstituted committee of creditors cannot reopen, reconsider or withdraw a resolution plan approved by the previous lenders panel. 

 

Tuesday, shares of State Bank of India ended 1.9% lower at INR 1,091.30 on the National Stock Exchange and those of Bank of India ended 2.2% lower at INR 144.25. Shares of UCO Bank ended 1.1% lower at INR 26.26 and those of Canara Bank ended 2.4% lower at INR 137.10. Shares of Punjab National Bank ended 2.2% lower at INR 111.39 on the NSE and shares of Indian Overseas Bank ended 1.0% lower at INR 34.97.  End

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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