Big relief for troubled businessman, Anil Ambani!:Bombay HC puts loan fraud charges filed by banks against him on hold

In a major relief to the bewildered businessman, Anil Ambani, the Bombay High Court on Wednesday stayed all present and future actions by three banks seeking to declare the accounts of him and his company Reliance Communications Ltd as `fraud’.
On what basis did the Bombay HC stay actions against Ambani Jr? The judiciary noted that the banks violated provisions of the RBI’s Master Directions in the process of filing charges against the Ambani Junior in the loan fraud case. Three lenders – Indian Overseas Bank, IDBI and Bank of Baroda, seeking to declare Ambani’s and Reliance Communications accounts as fraud accounts on charges of non-repayment of loan taken had moved against them. But, citing a legal loophole in the process followed by the three lenders, the Bombay High Court stayed their actions on Wednesday. What the Judges said?
According to PTI, the action was based on a forensic audit report prepared by an external auditor, BDO LLP, noted Justice Milind Jadhav. But this report cannot be relied upon because it had not been signed by a duly qualified chartered accountant (CA) as required under the Reserve Bank of India s 2024 Master Directions on fraud, the judge said.

Not giving relief to Ambani will cause “irreparable loss”: Judges If interim relief was not given to Ambani and Reliance Communications, it would cause “grave and irreparable harm / loss”, said the order. “Principles of natural justice are based on the maxim `justice should not only be done but should manifestly be seen to be done, the HC said, adding that a forensic audit report prepared by an external auditor cannot be relied upon by the banks to issue a show-cause notice. “The RBI Master Directions are mandatory in nature and they operate within a binding statutory framework requiring banks to engage auditors strictly in accordance with applicable law,” said the court order. Drastic to call Ambani “fraud”: Bombay HC The consequences of allowing the banks to declare the accounts of Ambani and his company as fraud are “virtually drastic and lead to disastrous consequences like being blacklisted, barred from new bank loans / credit for years, criminal FIR filing, reputation damage, impacting fundamental rights to financial access and civil death,” said the high court. Banks have woken up from a deep slumber in this case: Judges The court also berated the banks for their belated action against Ambani and his company and said this was a “classic case where the banks have woken up from their deep slumber” seeking to conduct forensic audit for the period from 2013 to 2017 in 2019. Earlier, Ambani had challenged show-cause notices issued by the Indian Overseas Bank, IDBI and Bank of Baroda, seeking to declare his and Reliance Communications accounts as fraud accounts. ​