Anil Ambani moves Supreme Court against Bombay HC order upholding SBI fraud tag

Industrialist Anil Ambani has approached the Supreme Court challenging a Bombay High Court judgment that upheld State Bank of India’s (SBI) decision to classify the loan accounts of Reliance Communications Limited (RCOM) and its promoter as “fraud.” (Anil Ambani Vs State Bank of India)

Sources close to the development told Bar & Bench that the appeal was filed last week and is yet to be listed.

On October 3, a Division Bench of Justices Revati Mohite Dere and Neela Gokhale held that Ambani, as the “promoter” and “person in control” of RCOM, must face the consequences of SBI’s fraud classification.

Between 2012 and 2016, SBI sanctioned loans exceeding ₹3,600 crore to RCom, Reliance Telecom and Reliance Infratel. After defaults, RCOM’s account slipped into non-performing asset (NPA) status in August 2016.

A forensic audit by BDO India, examining 2013–2017, flagged multiple irregularities. SBI’s Fraud Identification Committee classified the account as fraud in November 2020. This classification was withdrawn following the Supreme Court’s judgment in State Bank of India v Rajesh Agarwal (2023), which held that borrowers must be given prior notice and an opportunity to respond.

SBI then issued a fresh show-cause notice on December 20, 2023 to RCOM and its directors, including Ambani.

In June 2025, SBI tagged the loan accounts of RCom and its promoter Anil Ambani as fraudulent, citing diversion of funds, breach of covenants and related-party transactions. The Bank subsequently informed the Reserve Bank of India (RBI) and initiated steps to approach the Central Bureau of Investigation (CBI).

Ambani challenged the decision, contending that he was only a non-executive director and had been selectively singled out. He also argued that adequate opportunity to present his defence was not provided.

The High Court, however, found that SBI had followed the RBI's July 2024 master directions on fraud classification.

Notably, the same Bench had earlier stayed a similar order issued by Canara Bank against Ambani, citing non-compliance with the RBI’s master circular. This circular requires banks to hear the borrower before classifying their account as fraudulent. However, in July 2025, the matter came to be disposed after Canara Bank informed the Court that it had withdrawn the fraud classification.

Ambani had also moved against Union Bank of India's fraud classification. However, the same Bench declined a stay and directed Ambani to approach RBI.

In its judgment, the Bombay High Court observed that when a company's loan account is classified as fraud by the bank, the promoters/ directors who were in control of the company will have to face penal consequences.

“It is well settled that once the company’s account is classified or declared to be a fraud account, the promoters/directors who were in control of the company are liable to penal measures and to be reported as fraud and debarred from raising funds or seeking credit facilities, as they were in control of the company and responsible for the acts/omissions of the company,” the Court said.