Bank of Baroda, IDBI Bank, Indian Overseas Bank and audit firm BDO India LLP have moved the Bombay High Court to challenge an interim order given to businessman Anil Ambani last month, according to a Bar and Bench report. Earlier, a single-judge bench had stopped the lenders from acting against Ambani’s bank accounts based on a forensic audit report prepared in 2020. The banks and the audit firm have now appealed against that order.
The case will continue to be heard by a division bench led by Chief Justice Chandrashekhar, along with Justice Gautam Ankhad, on January 14.
Can banks act on a forensic audit signed by a non-ICAI auditor? Bombay HC to decide
According to the Bar and Bench report, a single-judge bench led by Justice Milind Jadhav had earlier ruled that under the 2024 Master Directions, banks can label an account as fraudulent only if the forensic audit report is prepared by a statutory auditor registered with the Institute of Chartered Accountants of India (ICAI).
In Anil Ambani’s case, the judge noted that the forensic audit report was signed by a person who was not registered with the ICAI. Based on this, the court formed an initial view that the banks could not take action against Ambani using that report.
As a result, the judge put a hold on all coercive steps by Bank of Baroda, IDBI Bank and Indian Overseas Bank against Anil Ambani. These actions were linked to a forensic audit report from October 2020 related to Reliance Communications and other group companies.
The banks and the audit firm involved, BDO India LLP, have now challenged this stay order before a Division Bench of the Bombay High Court.
Case based on RTI filing
Arguing for the banks, Solicitor General Tushar Mehta told the court that the case filed by Anil Ambani was “hopelessly time-barred” and was based only on an RTI request made by a third party to check BDO’s registration details.
He said the entire case depended on that RTI application and the reply given by the institute.
Mehta also pointed out that Ambani knew about the forensic audit report as early as 2021 and had never challenged its findings. These findings included allegations of diversion of funds, fake debtors and misuse of bank loans.
According to Mehta, Ambani’s only argument was that the auditor was not a member of the Institute of Chartered Accountants of India. “It is as simple and as absurd as that,” he told the court.
He argued that accepting this claim would weaken the RBI’s Master Directions, which bar people declared as fraud from raising money or getting loans for five years. Mehta warned that the stay order could lead to a flood of similar cases and raise questions over earlier fraud decisions.
He also said that BDO is a forensic auditor approved by SEBI and should not be treated lightly. “It is not just a nobody picked from the street,” Mehta said, while asking the Division Bench to put a hold on the interim order passed by the single judge.
Fianncial Express has reached out to Reliance for a comment.