Supreme Court denies relief to Anil Ambani in bank fraud classification case

The Supreme Court on Thursday denied relief to industrialist Anil Ambani in a case related to the fraud classification proceedings initiated against him by financial institutions including Bank of Baroda, IDBI Bank and Indian Overseas Bank. .The Court declined to entertain the plea filed by Ambani challenging a Bombay High Court order after noting that the matter is pending before a single-judge of the High Court. The Bench of Chief Justice of India (CJI ) Surya Kant, Justice Joymalya Bagchi and Justice Vipul M Pancholi rejected the objections raised by Ambani against the qualification of a firm that prepared a forensic report on the accounts of Reliance Communications and its group companies in 2020, leading to actions against Ambani."We will [not] be substituting the wisdom of the bank, it is their money... Knowing the background of this agency, it can't be said that they were handpicked only to get this report," CJI Kant remarked..Hence, it refused to interfere with an order of a Division Bench of the High Court which had lifted the stay imposed by a single-judge on bank action against Ambani. The main suit will now be heard by the single-judge."We see not ground to interfere to with the judgment of the high court. It is clarified that the observations of the Division Bench shall have no bearing in pending suit. High Court is requested to expedite the disposal of the suit," the Court said..Ambani told the Court he would like to settle the financial disputes with the banks. His counsel said that the top court should record his statement in this regard. However, Solicitor General Tushar Mehta sternly opposed the request. The Court recorded Ambani's statement but did not express any view on his submissions about proposed settlement..Ambani had moved the High Court in 2025 seeking a stay on all actions taken by the banks against him on the basis of the forensic report prepared by auditor BDO India LLP.A single-judge in 2025 granted relief to Ambani and restrained the three banks from taking action against him under the RBI’s 2024 Master Directions on fraud classification. It ruled 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). It was noted that the report in Ambani’s case was signed by a person not registered with ICAI. However, in February this year, a Division Bench of the High Court set aside the single‑judge’s interim order on an appeal by the Bank of Baroda, IDBI Bank, Indian Overseas Bank and BDO India LLP. It held that there was 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. Ambani then moved the top court..Senior Advocate Kapil Sibal, representing Ambani, today argued that only an auditor can determine whether there has been diversion of funds or not. "Banks cannot do it themselves. It will be civil death," Sibal said.However, CJI Kant at the outset questioned Ambani over the losses caused to the financial institutions. Sibal complained about the lack of right to represent against the process."We are stuck there. What do we do? We have no representation. Court says I rely on the 2014 circular," the senior counsel said..Solicitor General Tushar Mehta, appearing for the banks, said that said the findings against Ambani were not in question and that the forensic report was given by an internationally acclaimed public auditor.However, Sibal said that allegations must be substantiated through a purposeful audit. The Court remarked that pleadings in the writ petition did not call into question the forensic report. "If you have a problem with the forensic report, you can appeal to the bankers," it said .Sibal said that they had filed an RTI application and received a response revealing that the person who worked on the report was not an auditor. The data is incomplete, he added.However, the Court said that there was a finding of diversion of finds. Sibal said that it was a mere allegation.The Court then commented on the proceedings before the Bombay High Court and observed that though the single-judge had not disputed the competence of the agency that conducted the forensic report, he had put form over substance..Senior Advocate Shyam Divan, also appearing for Ambani, argued that a fraud tag has huge civil and criminal consequences and thus a forensic audit can only be done by a person with qualification."This is a field which is regulated. It is regulated by RBI. There are different typed of audit, we require a financial audit. When we see the scheme. A financial audit can be done only by a CA," Divan said.Divan also contended that if a person without a qualification issues a wrong report, he or she is subject to a disciplinary jurisdiction. "If a person is not CA, they cannot be subject to any consequence," he added.However, CJI Kant remarked that banks know who can do financial audits."Who knows better than banks on who can do a financial audit?," CJI Kant asked..Senior Advocate Narender Hooda also appeared for Ambani and said the external auditor has to be qualified as per the banking law."This traces back to Banking Regulation Act, 1949. If they have appointed an external auditor, the person has to be qualified according with this statute," Hooda said..The Court was not convinced with the submissions and declined to entertain the plea..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.