The Bombay High Court has upheld the State Bank of India’s (SBI) order classifying the loan accounts of industrialist Anil Ambani and Reliance Communications as fraud, stating that the bank’s action was a reasoned decision without any legal flaw.

A bench comprising Justices Revati Mohite Dere and Neela Gokhale dismissed Ambani’s petition on October 3, which had challenged the SBI order dated June 13, 2025. The detailed judgment, made available on Tuesday, said there was no merit in Ambani’s plea as there was no “infirmity” in the bank’s decision.

No Right to Personal Hearing, Says High Court

The court rejected Ambani’s argument that the SBI’s order should be declared null and void because he was not granted a personal hearing or provided with relevant documents. The judges clarified that under the Reserve Bank of India’s (RBI) Master Directions, the right available to a borrower is that of making a written representation — not of personal hearing.

Ambani had submitted a response to the show-cause notice issued by SBI last year. “Only when there was no response to the last communication, the bank passed the order classifying the account as fraud,” the bench noted. The court further observed that Ambani never requested a personal hearing.

“The principles of natural justice cannot be applied in a straitjacket formula,” the court said, adding that in this case, Ambani was afforded adequate opportunity to submit his objections in writing. “Hence, the requirement of fairness and compliance with the principle of natural justice stood satisfied,” it held.

HC Notes Ambani Exercised Control Over Reliance Communications

Ambani had argued that he was not a whole-time director of Reliance Communications and therefore, his account should not have been classified as fraud. However, the high court stated that once a company’s account is declared a fraud, the promoters or directors in control of the company are also liable for penal measures.

“It could be seen that Anil Ambani exercised control over Reliance Communications,” the court noted. SBI told the court that under the RBI’s Master Directions, no personal hearing was required to be given before passing such an order.

After examining the circular and previous Supreme Court rulings, the bench reiterated that “the principles of natural justice demand that borrowers must be served a notice, furnished with all documents, and allowed to submit their representation. The right contemplated is one of representation, not necessarily of personal hearing.”

SBI’s Complaint Leads to CBI Probe

SBI had accused Reliance Communications of misappropriation of bank funds by entering into transactions that violated the loan terms. Earlier this year, the bank lodged a complaint with the Central Bureau of Investigation (CBI), which subsequently searched premises linked to Reliance Communications and Ambani’s residence.

The central agency registered the case after SBI claimed a loss of Rs 2,929.05 crore, allegedly caused by Reliance Communications and Anil Ambani through fund misappropriation.