Bombay High Court Clears Banks to Classify Anil Ambani Accounts as Fraud

The Bombay High Court has lifted a stay that had restrained three public sector banks from classifying industrialist Anil Ambani’s and Reliance Communications Ltd’s accounts as “fraud” under the Reserve Bank of India’s (RBI) Master Directions. A division bench led by Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad quashed a December 2025 interim order by a single bench, terming it “perverse and illegal” and marked by procedural impropriety. The court emphasized that the RBI’s directions are meant to safeguard public money and enable early detection and mitigation of fraud risks in the banking system.

Allowing appeals by Indian Overseas Bank, IDBI Bank, Bank of Baroda, and auditing firm BDO India LLP, the bench held that not every alleged violation of the RBI’s Master Directions is subject to judicial scrutiny. It observed that continuing proceedings against Ambani would not cause “irreparable injury,” especially since criminal investigations related to the matter are ongoing. The court also stated that granting an interim stay in a case of such public importance was “patently illegal,” as it could adversely affect investigations and financial stability.

Rejecting objections to the forensic audit, the court affirmed that banks are entitled to engage external auditors or forensic experts and that a mandatory forensic report is not a prerequisite under the 2016 Master Directions. It ruled that the earlier finding questioning BDO India LLP’s credentials was flawed, noting the firm’s empanelment with the Indian Banks Association and SEBI for forensic audits. Ambani’s request to stay the new order to approach the Supreme Court was declined, clearing the way for banks to proceed with fraud classification actions based on alleged fund siphoning and misutilisation.

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