Bombay HC rejects Anil Ambani’s plea against SBI fraud classification

The Bombay High Court on Friday dismissed a petition filed by industrialist Anil Ambani, challenging the State Bank of India’s (SBI) decision to categorise his and Reliance Communications’ loan accounts as “fraud”.

A division bench of Justices Revati Mohite Dere and Neela Gokhale said there was “no merit” in Ambani’s plea, though the detailed judgment is expected to be made available later.

SBI had, in 2023, classified the accounts of Ambani and his now-bankrupt telecom company Reliance Communications (RCom) as fraudulent. The bank alleged that funds were misappropriated through a series of transactions that violated the conditions attached to loans granted to the company.

Ambani approached the high court claiming that the classification order had been passed in violation of the principles of natural justice. According to him, SBI had not given him a proper hearing before branding the accounts fraudulent. His petition also said the bank had withheld crucial documents, only sharing them six months after issuing the order.

The court, however, was not convinced by these arguments.

Earlier this year, SBI lodged a formal complaint with the Central Bureau of Investigation (CBI), alleging that Reliance Communications and Ambani had misappropriated funds to the tune of Rs 2,929.05 crore. Based on the complaint, CBI teams conducted searches at multiple premises linked to RCom as well as at Ambani’s residence in Mumbai.

The CBI’s preliminary findings suggest that funds borrowed for business purposes may have been diverted or used in a manner inconsistent with loan agreements. The agency has said it is still investigating the full extent of the alleged irregularities.

Once a flagship in the Reliance Anil Dhirubhai Ambani Group (ADAG), Reliance Communications was among India’s leading telecom providers before it was forced to shut down operations in 2017 amid mounting losses and fierce competition, particularly after the entry of Mukesh Ambani’s Reliance Jio.

By 2019, RCom was admitted to insolvency proceedings under the National Company Law Tribunal (NCLT). Its outstanding debt was pegged at over Rs 45,000 crore, owed to a consortium of domestic and foreign lenders. SBI, the lead creditor, has been at the forefront of legal proceedings against the company and Ambani personally.

In 2020, Anil Ambani was summoned by the Enforcement Directorate (ED) in connection with another money laundering case involving Yes Bank founder Rana Kapoor. Around the same time, he told a UK court that his “net worth is zero” while defending a case filed by Chinese banks over unpaid loans worth more than $700 million.

The Bombay High Court’s dismissal of Ambani’s petition is seen as a significant setback for the businessman, who has long attempted to distance himself personally from the debts and liabilities of his collapsed telecom empire. For SBI and other lenders, the ruling strengthens their position as they pursue recovery through insolvency and criminal proceedings.

The outcome also underscores growing judicial backing for Indian banks in their crackdown on alleged fraud cases involving major industrialists, particularly in the aftermath of high-profile financial scandals such as those linked to Vijay Mallya and Nirav Modi.

Ambani now faces not only the ongoing CBI investigation but also the prospect of further legal action as lenders push for accountability in one of India’s largest corporate debt failures.

With PTI inputs