In a significant legal development, the Bombay High Court has granted interim relief to industrialist Anil Ambani, putting a halt to actions by three public sector banks that had classified accounts linked to the insolvent Reliance Communications (RCom) as fraudulent. The court, in a sharp observation, stated the banks had "woken up from their deep slumber" and acted against prescribed timelines.
Court Stays Actions Based on Forensic Report
The order, passed on Wednesday, December 24, 2025, by a single-judge bench of Justice Milind N Jadhav, stays all present and future actions against Ambani by the Bank of Baroda (BoB), IDBI Bank, and the Indian Overseas Bank (IOB). These actions were based on a Forensic Audit Report (FAR) prepared by BDO India LLP for the audit periods of 2013 and 2017. The court restrained the banks from proceeding further on show-cause notices and the fraud-classification order until the final disposal of the suit.
Justice Jadhav observed that the forensic report "cannot be relied upon" as it was not signed by a duly qualified chartered accountant, a stipulation under the Reserve Bank of India's (RBI) master circular on fraud classification. The court also rejected a plea by the banks and BDO LLP to stay the effect of its judgment for six weeks.
Banks Accused of Ignoring RBI Timelines
The court strongly criticized the banks for their delay in initiating the forensic audit. It noted that the audit for the 2013-2017 period was conducted only in 2019, without adhering to the timelines prescribed under the RBI's 2016 Master Directions. "If Banks themselves do not follow the Rule of Law and timelines... it will affect the broader economy of the country," the bench remarked.
Ambani had challenged the banks' actions, arguing that the decision to tag the accounts as fraudulent was based on an illegal report. The banks, however, opposed his plea, stating that RCom's account was classified as fraudulent in December 2020 and that Ambani had participated in correspondences and personal hearings without previously challenging BDO LLP's competence.
"Drastic Consequences" of Fraud Tag
Highlighting the severe implications of a fraud classification, Justice Jadhav noted that it leads to "virtually drastic and disastrous consequences," including being blacklisted, barred from new loans, criminal FIRs, reputational damage, and a impact on the fundamental right to financial access, which he termed a "civil death."
The court concluded that Ambani had made out a "reasonably strong case for trial" and that the balance of convenience was in his favour due to the "frailty of the FAR and qualification of the Auditor." The interim relief was granted in multiple suits filed against a consortium of banks, with the State Bank of India (SBI) as the lead lender, and BDO India LLP.
