Classification of loan account as ‘fraudulent’: No Supreme Court relief for Anil Ambani

The court clarified that observations made by the division bench will not have any bearing on the merits of Anil Ambani’s pending civil suit challenging the classification of his loan account.

Anil Ambani’s request, opposition

Despite stiff opposition from Solicitor General Tushar Mehta, the bench also recorded in the order the request made on Ambani’s behalf by Senior Advocate Kapil Sibal that he wishes to settle the matter with the banks.

Sibal made the request after the court rejected his challenge to the Feb 23 order without giving any relief to Anil Ambani. “I would like to sit with the banks and settle the matter. Will Your Lordships give me that liberty?” he said.

CJI Kant said he should discuss it with the banks, and the court does not wish to comment.

Sibal urged the bench to “just record” his statement. When CJI told Sibal he should write to the banks, the senior counsel said he had already done so.

Mehta, appearing for the consortium of banks, said it will have “other ramifications” and the “statement will be used for purposes which we cannot conceive.”

Mehta opposed and said, “It would be used….I know what the repercussions are.”

As Mehta continued to oppose, Sibal said, “They have settled with so many accounts of people sitting abroad. Record our statement. Nothing more. You may not consider.”

Mehta said Anil Ambani was only trying to open a “new innings”. “I know where exactly it is going. “

Sibal said, “Just say he wishes to settle the matter. You should not be a stumbling block in the settlement… How can you say, ‘Don’t record my statement’? It’s a lender-borrower issue…Why would a solicitor oppose an innocuous statement like this?”

However, Mehta pointed out that “there are criminal proceedings going on” and added that any such statement “recorded in Your Lordships judgement will have its own sanctity before other courts, other proceedings which your lordships are not aware. I know where exactly it is going. “

Finally, the bench agreed to Sibal’s request and said in its order that he states “he would approach the banks for settlement”. “However, we do not express any opinion.”

‘Case of siphoning’

Sibal contended that classifying his accounts as “fraudulent” amounts to “civil death” for the Group.  “I have been called a fraud. This is a virtual civil death; nobody will lend money to him,” he submitted.

Sibal and Senior Advocate Shyan Divan questioned the qualifications of the external auditor who conducted the forensic audit, saying he was not qualified to conduct it under the RBI’s Master Directions 2024.

The bench, however, was not convinced.

CJI Kant said, “It’s a case of siphoning of… We can’t really express any opinion, as we don’t want to prejudice… If the hard-earned money… Thousands of crores of taxpayer hard-earned money alleged to be siphoned… Has the loss been made good?”

Justice Bagchi too pointed out that there is a “finding of diversion of funds” in the audit. But, Sibal said it only said “potential” diversion.

Mehta said the auditor was globally reputed and that there was no challenge to the findings.