In a significant ruling on Friday, the Bombay High Court paused the classification of businessman Anil Ambani’s loan account as fraudulent by Canara Bank. The loan in question pertains to Ambani’s company, Reliance Communications, which is currently under insolvency proceedings.
The decision came as Justices Revati Mohite-Dere and Neela Gokhale heard a petition from Ambani challenging the bank’s November 8, 2024, declaration. Ambani argued that the bank had not provided him an opportunity to be heard before making the declaration, which he claimed was a critical procedural lapse.
Further complicating the matter, the High Court has called upon the Reserve Bank of India (RBI) to clarify what steps it intends to take against banks that fail to adhere to the Supreme Court’s directives, which mandate that borrowers must be heard before their accounts are declared illegal.
The justices emphasized the recurring nature of such issues and stated, “RBI needs to take some action against banks as this is repeatedly happening.” This remark reflects growing judicial scrutiny over banking practices, particularly in how financial institutions handle distressed accounts.
