The Bombay High Court has upheld the State Bank of India’s (SBI) order classifying the loan accounts of industrialist Anil Ambani and Reliance Communications as “fraud,” observing that the order was reasoned, in accordance with law, and free of any infirmities.
A division bench of Justices Revati Mohite Dere and Neela Gokhale, in a judgment dated October 3 (made available on Tuesday), dismissed Ambani’s petition challenging SBI’s June 13, 2025 order.
Ambani had argued that the fraud classification order was null and void because he was not granted a personal hearing and was denied relevant documents. Rejecting this contention, the bench clarified that under the Reserve Bank of India’s Master Directions on Fraud Risk Management in Commercial Banks (including Regional Rural Banks) and All India Financial Institutions, the right available to a borrower is that of making a written representation—not of personal hearing.
“The right contemplated is one of representation, not necessarily of personal hearing,” the court observed.
The bench noted that SBI had issued a show-cause notice to Ambani last year, to which he had submitted a written response. When he failed to respond to the bank’s subsequent communication and continued to seek documents, the bank proceeded to classify the accounts as fraud.
Significantly, the court observed that Ambani had never formally requested a personal hearing.
The High Court rejected Ambani’s plea that the lack of personal hearing violated natural justice. It held that fairness requirements were met since he was given an adequate opportunity to file written objections.
“The principles of natural justice cannot be applied in a straitjacket formula. In the present case, Ambani was afforded an adequate opportunity to submit his objections in writing. Hence, the requirement of fairness and compliance with the principle of natural justice stood satisfied,” the court said.
Ambani also argued that he was not a whole-time director of Reliance Communications and that his personal account should not have been classified as fraud. The court rejected this, holding that once a company’s account is declared fraudulent, its promoters and directors in control are also liable for penal measures. It found that Ambani had exercised control over Reliance Communications.
SBI had accused Reliance Communications of misappropriating bank funds through transactions in breach of loan terms. Earlier this year, the bank filed a complaint with the Central Bureau of Investigation (CBI), alleging a loss of ₹2,929.05 crore due to the company’s and Ambani’s actions. The CBI subsequently searched premises linked to the company and Ambani’s residence.
