MUMBAI: In a major legal setback for industrialist Anil Ambani, the Bombay High Court on Monday set aside an earlier interim order that had temporarily blocked banks from taking action against him under the Reserve Bank of India’s (RBI) fraud classification framework. The decision clears the way for lenders to proceed with fraud proceedings against Ambani and his companies.
A division bench of Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad described the December 2025 interim order of a single judge as “illegal and perverse” and agreed with appeals filed by three public-sector banks and audit firm BDO India LLP.
The earlier order, passed by a single-judge bench led by Justice Milind Jadhav, had stayed all coercive action by Bank of Baroda, IDBI Bank and Indian Overseas Bank related to the fraud classification of accounts linked to Ambani and Reliance Communications Ltd. That ruling had been based on a prima facie view that the forensic audit report relied upon by the banks did not meet statutory audit requirements under the RBI’s 2024 Master Directions on fraud classification.
On appeal, the banks argued that Ambani’s challenge was technically flawed, time-barred and did not dispute the substantive findings of the forensic audit, which highlighted alleged diversion of funds, fictitious debtors and misuse of loan proceeds. The lenders also contended that the single judge’s order undermined the RBI’s framework, which seeks to empower banks to classify accounts as fraudulent and take necessary credit restrictions and recovery actions.
During the hearing, Ambani’s legal team requested that the High Court stay its own ruling for four weeks to allow them to approach the Supreme Court. However, the division bench declined this request, noting that sustaining the previous order would amount to perpetuating the illegality.
During the hearing, Ambani’s legal team requested that the High Court stay its own ruling for four weeks to allow them to approach the Supreme Court. However, the division bench declined this request, noting that sustaining the previous order would amount to perpetuating an illegal decision.
With the division bench’s ruling, the restraint on lenders stands lifted, enabling them to resume actions such as issuing show-cause notices or moving forward with fraud classification and related recovery steps in accordance with RBI norms.
Ambani has previously served as a non-executive director of Reliance Communications. The courts’ decisions in this case are significant because a fraud classification by lenders generally bars the borrower from raising funds or accessing credit for a period of five years, compelling deeper scrutiny of financial conduct and recovery mechanisms.
The detailed written judgment from the High Court is awaited, and it may outline the bench’s reasoning in greater depth. Meanwhile, the banks are expected to proceed in line with RBI’s 2024 Master Directions on fraud reporting and classification, marking a notable shift in the legal landscape around high-profile financial disputes and fraud proceedings in India.