Mumbai: In a big setback for Anil Ambani, a division bench of the Bombay High Court, on Monday, set aside a single-judge’s interim order that had restrained three banks and auditor BDO India LLP from taking action against him under the RBI’s 2024 Master Directions on fraud classification.
The bench of Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad called the single judge’s judgment “perverse”, as reported by Bar and Bench.
The Court refused to grant a prayer by Ambani’s counsel for a stay of the decision for at least 4 weeks, claiming that other pending suits that relied on the report would be affected by the reversal of the stay.
Granting such a stay would amount to continuing an illegal order, the bench held.
“As we have already held that the order challenged is illegal and suffers from decisional irregularity and illegality, to sustain the operation of this order, shall amount to continuing the illegal order for the next 4 weeks and perpetuating the illegality. Thus, the request for stay on the operation of this judgment is declined,” the Court observed.
The division bench was hearing an appeal by the Bank of Baroda, IDBI Bank, Indian Overseas Bank and BDO India LLP, challenging an order passed by Justice Milind Jadhav in December 2025.
The single judge bench had restrained the banks from taking any coercive action against Anil Ambani on the strength of a forensic audit report into Reliance Communications and group entities.
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), and noted that the report in Ambani’s case was signed by a person not registered with ICAI, Justice Jadhav had held.
On that prima facie view, the single judge had stayed all coercive steps by the three banks that were founded on the October 2020 forensic audit report.
The banks had argued before the division bench that Ambani’s suit was “hopelessly time-barred” and rested entirely on an RTI application filed by a third party seeking BDO’s registration details.
Ambani never disputed the 2021 forensic report’s findings on alleged fund siphoning, fictitious debtors and misuse of bank loans, they claimed, and had challenged it only on the ground that the signatory was not a member of ICAI.
The single-judge order virtually nullified the RBI’s Master Directions, which debar persons classified as fraud from raising funds or seeking credit for five years, they argued.
Such reliefs could open the floodgates and cast doubt on past fraud classifications, they submitted. The audit firm also pointed out that it was a SEBI-approved forensic auditor.
