Bombay HC sets aside ‘perverse’ and ‘illegal’ interim order staying actions by 3 banks against Anil Ambani over ‘fraudulent’ accounts

In December 2025, while the case against Ambani was still under consideration, a single-judge bench of Justice Milind N Jadhav issued temporary relief to Ambani. The order stayed all actions taken by the three banks and prevented them from proceeding further on show-cause notices and fraud-classification orders, prompting them to appeal before a two-judge bench.

According to the Reserve Bank of India (RBI) guidelines on fraud classification and reporting by commercial banks and certain financial institutions, banks can classify an account as fraudulent and are provided with procedures for doing so. RBI also instructed banks to create their own policies regarding such classifications.

The interim order was passed by Justice Jadhav in a batch of suits filed by Ambani against a consortium of banks, with the State Bank of India (SBI) as the lead lender and BDO India LLP as the auditor. Ambani argued that the banks’ decision to classify his accounts related to R Com, which is under insolvency, as fraudulent was based on an “illegal” forensic report.

The division bench observed that RBI’s Master Directions- 2024, “cannot be interpreted in a different manner so as to cause prejudice to the lender banks and harm their interest. Every violation of the Master Directions shall not be amenable to judicial scrutiny.”

The Court also observed that there was “no prima facie reason to grant an interim injunction” in favour of the respondent (Ambani).

“The consequences of the Forensic Report to the respondent are continuing ever since his account was red-flagged by the State Bank of India. There are criminal investigations going on which shall be directly affected by the order of injunction granted by the Court… The Court was required to keep in mind the consequence that might follow on passing of the interim injunction order in favour of the respondent,” the HC observed, adding that the impugned order suffered from “procedural irregularity and impropriety, and is illegal.”

During the hearing on appeal, Solicitor General Tushar Mehta, representing the banks, stated that the single-judge order reversed the banks’ actions and restored the situation to what it was before, which he called a “status quo ante” and claimed had a “disastrous” impact on the banks’ efforts. Mehta noted that BoB had already classified an account as fraudulent, which is now stayed, and the other two banks had issued show-cause notices, which have been halted.

The banks also argued that Ambani’s suit was “hopelessly time-barred” and that Justice Jadhav did not consider the decision of another bench that had dismissed Ambani’s challenge to the SBI’s order to classify his account as fraudulent.

In addition, Mehta contended that Ambani had not challenged the forensic report on its merits and that the RBI master circular did not require the auditor to be a member of the Institute of Chartered Accountants of India (ICAI).

Ambani’s lawyers, however, contended that Justice Jadhav’s order was justified and sought the dismissal of the banks’ appeal.