Bombay HC lifts stay on fraud classification proceedings against Anil Ambani

In a setback to industrialist Anil Ambani, the Bombay High Court on Monday set aside an interim order that had halted proceedings to classify his and Reliance Communications’ bank accounts as fraudulent.

A division bench comprising chief justice Shree Chandrashekhar and justice Gautam Ankhad allowed appeals filed by three public sector lenders — Indian Overseas Bank, IDBI Bank and Bank of Baroda — along with audit firm BDO India LLP. The appeals challenged a December 2025 interim ruling by a single judge that had stayed both current and future action against Ambani and his company.

The division bench described the earlier order as “illegal and perverse”, thereby reviving the banks’ move to designate the accounts as fraud.

Counsel for Ambani sought a stay on Monday’s ruling to enable an appeal before the Supreme Court of India, but the bench declined the request.

The controversy centres on a forensic audit conducted by BDO India LLP, which formed the basis of the banks’ decision to initiate fraud classification proceedings. The lenders have maintained that the audit was valid and highlighted serious irregularities, including alleged diversion and misuse of funds.

Before the single bench, Ambani had challenged show-cause notices issued by the three banks, arguing that the audit underpinning the action was flawed and did not comply with mandatory guidelines issued by the Reserve Bank of India.

He contended that BDO LLP was an accounting consultancy and not qualified to carry out a forensic audit, claiming that the signatory to the report was not a chartered accountant. On this basis, he sought a stay on the notices and protection from coercive measures.

The single bench had accepted these arguments, observing that the banks’ action appeared to violate regulatory norms and granting interim relief to Ambani and Reliance Communications.

In their appeals, the banks argued that the single judge’s order was legally unsustainable and based on a narrow technical objection. They insisted that the forensic audit was conducted in accordance with due process and that the findings justified the move to classify the accounts as fraudulent.

With the division bench now overturning the interim stay, the banks are free to proceed with their action under applicable banking and regulatory frameworks, unless the matter is taken up and stayed by the Supreme Court.

The ruling marks a significant development in the ongoing legal battle between Ambani and the consortium of lenders over the handling and classification of loan accounts.

With PTI inputs