‘Without merit’: Bombay HC rejects Anil Ambani’s plea against SBI order declaring account fraudulent

SBI issued the impugned order in June this year, following a Reserve Bank of India (RBI) master circular that allowed banks to classify any account as fraudulent and provided guidelines for the process. This decision by the RBI on fraud risk management in banks was undertaken under the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016. The RBI had further instructed banks to establish their own policies.

The RBI circular permitted banks to fully utilise the Central Fraud Registry for prompt identification, monitoring, reporting, control and mitigation of fraud-related risks. According to the circular, once an account is designated as fraudulent, the bank must report it to the Central Repository of Information on Large Credits platform to notify other banks. Furthermore, if a bank directly classifies or categorises an account as fraudulent, it is required to inform the RBI within 21 days and report the matter to an investigating agency.

SBI had alleged misappropriation of bank funds by Ambani by entering into transactions that violated the terms of the loans. The Central Bureau of Investigation (CBI) subsequently searched premises linked to RCom and Ambani’s residence. In August this year, the central agency lodged a case against Ambani for alleged bank fraud that caused a loss of over Rs 2,929 crore to SBI based on the complaint from the bank’s Mumbai branch.

Senior advocates Darius Khambata and Prateek Seksaria for Ambani argued that SBI issued the impugned order without following due process, and the same was arbitrary. However, senior advocate Aspi Chinoy for SBI instructed by Saraf and Partners Law Offices justified the order and sought dismissal of the plea.

Meanwhile, other nationalised banks had also issued similar orders against Ambani’s loan accounts related to RCom.

In February this year, the high court had raised concerns over “cut, copy, paste” orders issued in a “casual manner” by banks declaring accounts as “fraudulent” or “defaulter”, including the one issued by Union Bank of India that classified Ambani’s loan account as fraudulent.

In July, the high court was informed by Canara Bank that it had withdrawn its 2024 order that classified Ambani’s loan account related to RCom as fraudulent. Earlier this month, Ambani got temporary relief from the high court as it asked Bank of Baroda not to take any coercive steps against Ambani.

A spokesperson for Anil Ambani stated, “We are awaiting the order. Once we have reviewed it, we will evaluate the next course of action, as legally advised.”

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