Anil Ambani Moves SC to Challenge Bombay HC Ruling on SBI’s Fraud Tag

Industrialist Anil Ambani has approached the Supreme Court challenging a Bombay High Court decision that upheld the State Bank of India’s (SBI) move to classify the loan accounts of Reliance Communications Limited (RCOM) and its promoter as “fraud.” The appeal, filed last week, is expected to be listed shortly.

 

On October 3, a Division Bench of Justices Revati Mohite Dere and Neela Gokhale ruled that Ambani -- identified as the “promoter” and “person in control” of RCOM -- must face the implications of SBI’s fraud declaration.

 

Between 2012 and 2016, SBI sanctioned loans exceeding ₹3,600 crore to RCom, Reliance Telecom and Reliance Infratel. Following loan defaults, RCOM’s accounts were categorised as non-performing assets (NPAs) in August 2016. A BDO India forensic audit covering 2013–2017 highlighted significant irregularities, prompting SBI’s Fraud Identification Committee to classify the accounts as fraudulent in November 2020.

 

That classification was later set aside after the Supreme Court’s ruling in State Bank of India v Rajesh Agarwal (2023), which held that borrowers must receive prior notice and a chance to respond before such action is taken.

 

SBI subsequently issued a fresh show-cause notice on December 20, 2023. In June 2025, the bank again labelled the loan accounts of RCom and Ambani as fraudulent, citing diversion of funds, covenant breaches and related-party dealings. SBI later notified the Reserve Bank of India (RBI) and initiated steps to approach the Central Bureau of Investigation (CBI).

 

Ambani challenged the move, arguing that he served only as a non-executive director and had been unfairly targeted. He further claimed he had not been given adequate opportunity to state his defence. The High Court, however, held that SBI had adhered to the RBI’s July 2024 master directions on fraud classification.

Interestingly, the same Bench had previously stayed a similar fraud tag issued by Canara Bank, citing procedural lapses. Canara Bank eventually withdrew its classification, leading to disposal of that case in July 2025. Ambani also contested Union Bank of India’s fraud categorisation, but the Bench declined relief and asked him to approach the RBI.

 

In its judgment, the High Court reiterated that when a company’s loan account is classified as fraudulent, the promoters or directors in control at the time must bear penal consequences.

 

“It is well settled that once the company’s account is declared a fraud account, the promoters/directors who were in control of the company are liable to penal measures and to be reported as fraud and debarred from accessing credit facilities,” the Court observed.