Bombay HC lifts stay on banks’ action against Anil Ambani in fraud case
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In a setback to businessman Anil Ambani, the Bombay High Court on Monday set aside an interim order that had stayed all present and future actions by three banks against him in connection with the classification of certain accounts linked to Reliance Communications (R Com) as fraudulent.
A Division Bench comprising Chief Justice Shree Chandrashekhar and Justice Gautam A Ankhad allowed petitions filed by Bank of Baroda, IDBI Bank, Indian Overseas Bank, and auditor BDO India LLP, overturning the earlier order of a single-judge bench.
The bench termed the December 24, 2025, interim order “perverse” and “illegal” and declined Ambani’s request to stay the operation of its ruling. “As we have already held that the interim judgment dated December 24, 2025, is illegal and suffers from procedural irregularity, the request to stay the operation of this order for the next few weeks shall amount to continuing the illegal order and perpetuating the illegality. Therefore, the request made on behalf of the respondent for staying the operation of this judgment is declined,” the court observed.
The interim relief had been granted in December 2025 by Justice Milind N Jadhav while Ambani’s suit was still under consideration. The order had stayed all actions by the three banks, including proceedings based on show-cause notices and fraud-classification decisions, prompting the lenders to challenge it before the Division Bench.
Under the guidelines issued by the Reserve Bank of India on fraud classification and reporting by commercial banks and financial institutions, lenders are authorised to classify accounts as fraudulent following prescribed procedures and are required to frame their own internal policies for such classifications.
Ambani had filed suits against a consortium of banks led by State Bank of India, with BDO India LLP acting as the forensic auditor. He contended that the decision to classify accounts linked to R Com — which is currently under insolvency proceedings — as fraudulent was based on what he described as an “illegal” forensic report.
During the appellate hearing, Solicitor General Tushar Mehta, appearing for the banks, argued that the single-judge order effectively restored the “status quo ante”, reversing actions already taken by the lenders and causing what he termed a “disastrous” impact. He pointed out that Bank of Baroda had already classified an account as fraudulent, a move that was stayed by the interim order, while IDBI Bank and Indian Overseas Bank had issued show-cause notices that were also halted.
The banks further submitted that Ambani’s suit was “hopelessly time-barred” and that the single-judge bench had failed to consider a prior decision dismissing Ambani’s challenge to the State Bank of India’s fraud-classification order.
Mehta also argued that Ambani had not challenged the forensic audit report on its merits and maintained that the RBI’s master circular did not mandate that the auditor be a member of the Institute of Chartered Accountants of India.
Ambani’s counsel, however, defended the interim order, asserting that Justice Jadhav’s decision was justified and urging the court to dismiss the banks’ appeals.
With the Division Bench now setting aside the interim relief, the banks are free to proceed with actions related to the fraud classification of the accounts in question.