The Bombay High Court on Monday set aside an earlier interim order that had stopped three banks and audit firm BDO India LLP from taking action against businessman Anil Ambani under the RBI’s 2024 Master Directions on fraud classification, a report by Bar and Bench said.
A Division Bench set aside the December 2025 order passed by Justice Milind Jadhav. The Bench described the earlier ruling as legally flawed and improper. The detailed judgment is yet to be released.
The case reached the Division Bench after Bank of Baroda, IDBI Bank, Indian Overseas Bank and BDO India LLP challenged the single-judge order.
During the hearing, Ambani’s lawyer asked the court to pause its decision for four weeks. He argued that other pending cases based on the earlier order could be affected if the stay was removed. However, the court refused this request.
The judges said that since they had already found the previous order to be illegal, allowing it to continue even for a few more weeks would mean extending an unlawful decision, reported Bar and Bench.
What is the case and what are the charges against Anil Ambani?
The matter began after the State Bank of India issued a show cause notice to Ambani. Based on an audit report, his account was later marked as fraud. This classification has serious consequences, as it restricts a person’s ability to access bank loans and continue normal business operations.
Ambani challenged this action, arguing that the bank did not follow the principles of natural justice laid down by the Supreme Court. After earlier court rulings on similar issues, the Reserve Bank of India updated its Master Circular in 2024. The revised rules require banks to give a personal hearing before tagging an account as fraud.
What do the banks say?
Representing Bank of Baroda, IDBI Bank and Indian Overseas Bank, the Solicitor General argued that Ambani’s latest challenge was based on a technical objection. He said Ambani questioned the validity of the audit by claiming that BDO India LLP was not qualified under the RBI’s 2024 circular to conduct such an audit, according to Live Law.
The banks maintained that the circular does not require the auditor to be linked with any specific professional body. They said the fraud classification was based on the audit findings and followed due process.
Ambani’s defence
Ambani’s lawyer told the court that being labelled as fraud had severely damaged his client’s business life, making it almost impossible for him to raise funds or operate normally.
He argued that the audit report was incomplete and contained errors. According to him, the audit took place after Reliance Communications had already entered insolvency proceedings and was being managed by a resolution professional.
He also said the audit carried out by BDO was not a proper forensic audit but only a review of accounts. Another key argument was that transactions between different subsidiaries of Reliance Communications were wrongly described as diversion of funds, even though they belonged to the same overall business group.
Earlier, a single judge had questioned whether BDO met the legal requirements under company law to act as a forensic auditor, and observed that such non-compliance could have serious consequences.
The Division Bench has now set aside that interim protection, allowing the banks to proceed in line with the RBI’s 2024 guidelines.
(This is a developing story. More details to be added shortly.)