In a significant setback to industrialist Anil Ambani, the Bombay High Court on Monday quashed an interim order of a single judge that had stayed bank action to classify the loan accounts of Ambani and Reliance Communications Ltd as “fraud”.
A division bench comprising Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad allowed appeals filed by Indian Overseas Bank, IDBI Bank, Bank of Baroda and auditor BDO India LLP, holding that the earlier interim order was “illegal and perverse”. The court also refused Ambani’s request to stay its ruling to enable him to approach the Supreme Court.
Ambani had moved the High Court challenging show-cause notices issued by the three public sector banks proposing to classify his and Reliance Communications’ loan accounts as fraud. The notices were based on a forensic audit conducted by BDO India LLP.
Before the single bench, Ambani contended that the proposed action violated mandatory Reserve Bank of India guidelines and was founded on a legally flawed forensic audit. He also argued that BDO India LLP was merely an accounting consultancy and not competent to conduct a forensic audit, as the signatory to the report was not a chartered accountant.
In December 2025, the single judge granted interim relief, staying all present and future steps by the banks. The court had observed that the lenders appeared to have “woken up from deep slumber” after several years and that the audit suffered from legal infirmities.
Challenging the interim protection, the banks and BDO India LLP approached the division bench. They argued that the forensic audit was valid and had recorded serious findings of fund siphoning and misutilisation. According to them, Ambani’s objections were technical in nature and did not justify halting the fraud classification process.
The appellants sought quashing of the single bench order, describing it as perverse and contrary to law.
Allowing the appeals, the division bench set aside the interim stay and restored the banks’ proceedings to classify the accounts as fraud in accordance with law. In doing so, the court characterised the earlier order as “illegal and perverse”.
The bench also declined Ambani’s plea for a stay of its judgment, which would have allowed him time to move the Supreme Court.
With the interim protection vacated, the show-cause proceedings initiated by Indian Overseas Bank, IDBI Bank and Bank of Baroda against Ambani and Reliance Communications for fraud classification can now continue in accordance with applicable RBI norms.
