Three Banks File Appeal Against Bombay HC's Interim Relief to Anil Ambani
Three banks moved the Bombay High Court on Monday, challenging the interim relief granted to industrialist Anil Ambani last month. A single-judge bench had earlier restrained these lenders from taking any action against Ambani's accounts based on a forensic audit report from 2020.
Banks Warn of Disastrous Consequences
Solicitor General Tushar Mehta, representing one of the banks, presented arguments before a division bench comprising Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad. Mehta warned that unless the court stays the previous order, it would lead to disastrous consequences for the banking system.
Mehta argued that Justice Milind Jadhav's findings were not based on facts presented in Ambani's original suit or during court hearings. He emphasized that the forensic audit report contained serious findings about fund misuse and siphoning, which Ambani never challenged on their merits.
RBI Master Directions at Center of Dispute
The core of this legal battle revolves around conflicting interpretations of Reserve Bank of India regulations. In December, the High Court agreed with Ambani's contention that the 2020 forensic audit report essentially flouts RBI's 2024 master direction on fraud risk management in commercial banks.
However, the banks maintain that the audit was conducted under the 2016 RBI circular, which they fully complied with. Mehta specifically argued that giving retrospective effect to the 2024 master direction is patently impermissible under law.
Conflicting Legal Interpretations
Ambani's legal team previously argued that the 2024 RBI master directions mandatorily supersede the earlier 2016 directions. They contend these new regulations require forensic audits to be conducted by auditors registered under the Companies Act.
The banks counter that the external auditor who prepared the 2020 report was appropriately appointed under the existing rules at that time. They assert that applying newer regulations to older audits creates legal uncertainty and undermines established banking procedures.
This appeal hearing represents a significant development in the ongoing legal tussle between the prominent industrialist and his lenders. The division bench's decision could set important precedents for how banks handle forensic audits and apply RBI regulations across India's financial sector.
