SBI Order Classifying Anil Ambani, Reliance Communications Accounts As Fraud Has No Infirmity: HC

The Bombay High Court has upheld a decision by the State Bank of India (SBI) to classify accounts of industrialist Anil Ambani and his company, Reliance Communications (RCom), as "fraudulent" noting that there was no legal flaw in it.

A division bench of Justices Revati Mohite Dere and Neela Gokhale on October 3 dismissed a petition filed by Ambani, challenging the SBI order.

In the judgement made public on Tuesday, the court ruled that the SBI's order of June 13, 2025, was "a reasoned order" with "no infirmity".

The court found "no merit" in Ambani's plea, asserting there was no "infirmity" in the bank's action.

The industrialist's primary contention was that the SBI order was void because he was denied a personal hearing and was not allowed to access the relevant documents.

The bench said that Ambani had never requested a personal hearing in the first place, thus validating the SBI's adherence to regulatory requirements.

The court explicitly backed the procedure followed by the SBI, noting that the Reserve Bank of India's (RBI) Master Directions only provide the right to make a representation, not a right to a personal hearing, before such a classification is made.

In the order, the court said the principles of natural justice cannot be applied in a straitjacket formula and in the present case Ambani was afforded an adequate opportunity to submit his objections in writing.

"Hence, the requirement of fairness and compliance with the principle of natural justice, stood satisfied," the court held.

Ambani had submitted his response to the show-cause notice issued by the SBI last year, and only when there was no response to the last communication, the bank passed the order classifying the account as fraud, the court said.

"Hence, the requirement of fairness and compliance with the principle of natural justice, stood satisfied," the court held.

Ambani had challenged the June order of the SBI classifying the account of Reliance Communications and his own account as fraud in terms of the 'Master Directions on Fraud Risk Management in Commercial Banks (including Regional Rural Banks) and All India Financial Institutions.' The high court noted that the bank had issued a show-cause notice to Ambani last year. But he failed to reply to the notice and continued to seek documents, leading to SBI finally passing the order.

Ambani in his plea also claimed he was not a whole-time director of the company, and hence his account should not have been classified as fraud.

But the high court said that once a company's account is declared to be a fraud account, the promoters/ directors who were in control of the company are also liable for penal measures. It could be seen that Anil Ambani exercised control over Reliance Communications, the HC said.

SBI claimed before the high court that as per the RBI's Master Directions circular, no personal hearing was required to be given.

The bench, after going through the circular and earlier Supreme Court judgments, said 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," HC said.

SBI had accused Reliance Communications of misappropriation of bank funds by entering into transactions that violated the terms of its loans.

The bank also lodged a complaint earlier this year with the Central Bureau of Investigation (CBI) which searched premises linked to Reliance Communications and Ambani's residence.

The central agency registered a complaint after the SBI claimed a loss of Rs 2,929.05 crore, resulting from alleged misappropriation by Reliance Communications and Anil Ambani.