Mumbai– The Bombay High Court has upheld the State Bank of India’s decision to classify the loan accounts of industrialist Anil Ambani and Reliance Communications as “fraud,” ruling that the bank’s action was legally valid and properly reasoned, according to the judgment released on Tuesday.
A division bench of Justices Revati Mohite Dere and Neela Gokhale, in an order dated October 3, dismissed Ambani’s petition challenging the SBI decision. The detailed judgment, made public on Tuesday, stated that the bank’s June 13 order contained no legal flaws and did not warrant judicial interference.
Ambani had argued that the bank’s move was invalid since he had not been granted a personal hearing or provided all relevant documents. The court rejected that claim, noting that under the Reserve Bank of India’s Master Directions — which regulate fraud classification proceedings — borrowers are entitled only to submit a written representation, not to a personal hearing.
“The petitioner’s challenge lacks merit,” the bench observed, affirming SBI’s classification of the accounts as fraudulent under the applicable regulatory framework.
The court further noted that SBI issued the fraud designation only after Ambani failed to respond to a show-cause notice sent last year. The bank had cited diversion of funds, breach of covenants, and related-party transactions as reasons for the classification, and subsequently referred the matter to the Central Bureau of Investigation (CBI).
Ambani contended that, as a non-executive director, he had been unfairly singled out and denied adequate opportunity to defend himself. However, the court found no procedural irregularities in the bank’s process.
Earlier, on June 13, SBI had formally tagged the accounts of Reliance Communications and its promoter as fraudulent. Around the same time, Bank of Baroda also declared the loan accounts of RCom and Ambani as “fraud,” stating that the classification pertained to borrowings made before the company entered the corporate insolvency resolution process (CIRP). (Source: IANS)
