In a significant legal development, the Bombay High Court has issued a stay on the actions initiated by three banks against industrialist Anil Ambani and his beleaguered telecom company, Reliance Communications (RCom). The court, in its order, observed that the banks' moves were based on a forensic audit report but were in violation of the directions issued by the Reserve Bank of India (RBI).
Court's Intervention and Key Observations
Justice Milind Jadhav presided over the hearing and granted the interim relief to Anil Ambani and RCom. The court noted that the action pursued by the consortium of banks was premised on a forensic audit report prepared by an external auditor, BDO LLP. However, Justice Jadhav pointed out that the procedural steps taken by the financial institutions contravened the guidelines and directives established by the country's central banking authority, the RBI.
The order effectively puts a hold on any recovery or legal proceedings that the banks were undertaking against the promoter and the company based on the said audit. This intervention provides a temporary reprieve to Ambani and RCom, allowing them legal recourse to challenge the banks' actions. The case highlights the critical intersection of corporate debt, banking regulations, and judicial oversight.
The Role of the Forensic Audit
At the heart of the dispute lies the forensic audit conducted by BDO LLP. Banks often commission such audits to investigate potential financial irregularities, fraud, or mismanagement in companies that have defaulted on large loans. The findings of such reports can lead to aggressive recovery actions, including declaring promoters as wilful defaulters or initiating criminal proceedings.
In this instance, the banks had proceeded against Anil Ambani and RCom based on the conclusions of the BDO audit. However, the High Court's stay order suggests that the manner of implementation may have bypassed due process as mandated by the RBI. The central bank has a detailed framework for resolving stressed assets, and lenders are expected to adhere to these protocols to ensure fairness and transparency.
Implications and Next Steps
The court's decision underscores the importance of regulatory compliance even in the pursuit of recovering bad debts. For the banking sector, it serves as a reminder that their actions must align with the broader regulatory framework set by the RBI to withstand judicial scrutiny. For Anil Ambani and RCom, which have been entangled in a protracted debt resolution process, this order offers a chance to legally contest the allegations.
The stay is an interim measure, and the final outcome will depend on further hearings where both parties will present their arguments in detail. The court will ultimately have to decide on the validity of the banks' actions vis-à-vis the RBI's master directions on fraud classification and reporting. The case, with its mix of high-profile names, significant debt, and regulatory nuances, is being closely watched by the corporate and legal communities.
The next hearing date is awaited, which will determine the future course of this legal battle. The order was pronounced on 24 December 2025, marking a key pre-holiday development in one of India's most prominent corporate insolvency sagas.
