Bombay High Court lifts stay on RBI circular on fraud, permits banks to resume action against Anil Ambani

A Division Bench of the Bombay High Court today set aside a single‑judge’s interim order that had restrained three banks and auditor BDO India LLP from taking action against Anil Ambani under the RBI’s 2024 Master Directions on fraud classification [Bank of Baroda v. Anil Ambani & Ors. and connected petitions]..The Bench of Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad called the single judge’s judgment “perverse."“The impugned judgment suffers from procedural irregularity and impropriety, and is illegal,” the bench held. .Ambani's counsel prayed for a stay of today's decision for at least 4 weeks, claiming that other pending suits that relied on the report would be affected by the reversal of the stay.However, the Division Bench refused to grant such a stay, holding that it would amount to continuing an illegal order. “As we have already held that the order challenged is illegal and suffers from decisional irregularity and illegality, to sustain the operation of this order, shall amount to continuing the illegal order for the next 4 weeks and perpetuating the illegality. Thus, the request for stay on the operation of this judgment is declined," the Division Bench held..The Division Bench passed the ruling on an appeal by the Bank of Baroda, IDBI Bank, Indian Overseas Bank and BDO India LLP, who had challenged an order passed by Justice Milind Jadhav in December 2025. .The single judge Bench order under challenge had restrained the banks from taking any coercive action against Anil Ambani on the strength of a forensic audit report into Reliance Communications and group entities. Justice Jadhav had held that under the 2024 Master Directions, a forensic report used for fraud classification must be prepared by a statutory auditor registered with the Institute of Chartered Accountants of India (ICAI), and noted that the report in Ambani’s case was signed by a person not registered with ICAI. On that prima facie view, the single judge had stayed all coercive steps by the three banks that were founded on the October 2020 forensic audit report..The Division Bench held that there is no prima facie reason to grant an interim injunction in Ambani’s favour, considering his conduct, which included an inconsistent approach and multiple legal challenges across forums. “He approached different Tribunals, different Forums and the writ Court. He prevaricated his stand from stage to stage and took a different stand in different proceedings,” the order notes. .The appellate bench noted that Ambani has been facing ongoing consequences of the Forensic Report, including banks red‑flagging his account and related criminal probes. “There are criminal investigations going on, which shall be directly affected by the order of injunction granted by the Court. Ambani cannot now contend that he would suffer irreparable loss if an order staying the implementation and operation of the forensic report and his classification as a fraud are not granted,” the order states. .Consequently, the single judge’s order was set aside, with directions that the pending suits proceed uninfluenced by the earlier findings..Solicitor General Tushar Mehta, senior advocates Aspi Chinoy and Kevic Setalvad with advocates Jehan Lalkaka, Nishit Dhruva, Niyati Merchant, Yash Dhruva, Rajlaxmi Pawar, Harsh Sheth briefed by MDP Legal appeared for Bank of Baroda. Mehta with senior advocate Zal Andhyarujina and advocates Babu Sivaprakasam, Akansha Agarwal, Nandita Bajpai, Rahat Kalptri and Vijay Srinivasan briefed by Yogesh Pirthani appeared for Indian Overseas Bank. Senior advocate Zarir Bharucha, Bimal Rajasekhar, Rishi Thakur and Dhwani Gala appeared for IDBI Bank Ltd. Senior advocate Mustafa Doctor with advocates Kunal Dwarkadas, Rahul Dwarkadas, Prachi Dhanani, Raushan Kumar and Aniket Kharote briefed by RJD and Partners appeared for BDO India LLP.Senior advocates Mukul Rohatgi, Birendra Saraf, Gaurav Joshi, Ashish Kamat and Mayur Khandeparkar with advocates Ameet Naik, Abhishekh Kale, Sanjeevi Seshadri, Dhruva Gandhi, Devashish Jagirdar and Ronit Doshi briefed by Naik Naik & Company appeared for Ambani.[Read judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.