Delhi High Court quashes Union Bank decision to classify Anil Ambani’s son’s company account as ‘fraud’

The Delhi High Court on Friday set aside Union Bank of India’s decision to declare the bank account of a company owned by industrialist Anil Ambani’s son, Jai Anmol Ambani, fraudulent [Anmol Ambani v Union Bank of India]. 

Justice Jyoti Singh passed the order on a plea moved by Jai Ambani, who argued the bank took the decision without issuing any show cause notice or hearing him thereby, violating natural justice. 

Ambani said that the move went against the Supreme Court’s decision in State Bank of India v Rajesh Agarwal in which it was held that borrowers must be given prior notice and an opportunity to respond before declaring the account as fraud. 

Senior Advocate Rajiv Nayar, appearing for Ambani, stated that Union Bank of India’s affidavit revealed the show cause notice was served on an address which the company had already vacated in September 2020.

The Court opined that it would mean no show cause notice was served on Ambani before declaring his account as fraudulent.

“This Court is of the view that indeed a show cause notice was never served before making the declaration as fraud. Accordingly in light of the judgment…., the impugned classification and declaration are quashed,” the Court ordered.

However, it added that the court decision will not preclude the bank from issuing a fresh show cause notice to Ambani and proceeding in the matter.

Justice Singh added that the bank must furnish all material and documents to Ambani with the fresh notice to enable him to file a response and once he replies, a fresh order can be passed.

The CBI has filed cases against Anil Ambani group companies on allegations of fraud amounting to nearly ₹14,853 crores. 

The agency’s case against Jai Anmol Ambani is that he cheated the Union Bank of India and caused the public sector bank a loss of nearly ₹228 crore. 

According to reports, the CBI has said that Reliance Home Finance Ltd (RHFL), where Jai Anmol Ambani was a director, borrowed substantial funds but failed to meet repayment obligations. A forensic audit allegedly found that loan proceeds were diverted and misused rather than used for their sanctioned purposes, resulting in the account slipping into non-performing asset (NPA) status. 

Union Bank claimed a wrongful loss of approximately ₹228.06 crore and after classifying the account as fraudulent, lodged a complaint with the CBI alleging criminal conspiracy, cheating and misconduct. 

Senior Advocate Rajiv Nayar argued Anmol Ambani's case.

The petition was filed through advocate Rishi Agrawala and Tejasvi Chaudhry of Agarwal Law Associates.