The HC rejected requests to stay its order, restraining Bank of Baroda, IDBI Bank and Indian Overseas Bank from proceeding further on show-cause notices against Anil Ambani.
BY PC Bureau
December 24, 2025: The Bombay High Court on Wednesday stayed all coercive action initiated by Bank of Baroda, IDBI Bank and Indian Overseas Bank against industrialist Anil Ambani, holding that the banks could not rely on a 2020 forensic audit report that was allegedly not signed by a duly qualified chartered accountant, as mandated under the Reserve Bank of India’s latest fraud guidelines.
Justice Milind Jadhav restrained the banks from acting on show-cause notices and fraud-classification steps founded on a forensic audit conducted by BDO LLP into Reliance Communications Ltd (RCOM) and related group entities. The court took a strong prima facie view that the audit report lacked statutory validity under the RBI’s 2024 Master Directions on fraud, which superseded the earlier 2016 framework.
The judge observed that the 2024 Master Directions explicitly require external or forensic auditors appointed for fraud detection to possess statutory qualifications under relevant laws. A forensic audit report signed by a person who is not a chartered accountant, he held, cannot form the basis for punitive banking action.
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“If banks themselves do not follow the rule of law and timelines prescribed under the RBI Master Directions, which is prima facie evident in the present case, and initiate action at their convenience, it will affect the broader economy of the country,” Justice Jadhav remarked.
The court noted that the banks appeared to have “woken up from deep slumber”, commissioning a forensic audit in 2019 for transactions dating back to 2013–2017, without adhering to the timelines prescribed under the 2016 RBI Master Directions.
Calling the RBI’s directions binding and not ornamental, the judge said, “The Master Directions of RBI are not a mere paper tiger to enable banks to initiate action according to their convenience.”
Accordingly, Justice Jadhav stayed further proceedings arising from the show-cause notices and fraud-tagging measures against Ambani. A request by the banks and BDO LLP to stay the operation of the order was expressly rejected, with the court holding that its prima facie findings did not warrant keeping the relief in abeyance.
Ambani, the former non-executive director of RCOM, had approached the High Court challenging the fraud-classification proceedings initiated by a consortium of banks. He argued that BDO LLP functioned merely as an accounting consultancy and was not a firm of chartered accountants registered with the Institute of Chartered Accountants of India (ICAI).
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He further contended that the forensic audit report was signed by an individual who admittedly did not hold a certificate of practice as a chartered accountant, rendering the entire exercise without jurisdiction under the RBI’s 2024 Master Directions and the Companies Act, 2013. The petition also alleged violations of principles of natural justice, stating that the erstwhile management was not permitted to participate in the forensic audit process.
Ambani maintained that once the RBI consciously tied forensic audits for fraud detection to statutory qualifications in 2024, banks could not invoke the “draconian consequences” of fraud labelling based on reports prepared by unqualified persons.
The banks opposed interim relief, arguing limitation, waiver and estoppel. They contended that RCOM’s account had been classified as fraud in December 2020 and that Ambani had participated in multiple rounds of correspondence, hearings and litigation without questioning BDO LLP’s competence. They also argued that under the 2016 Master Directions, there was no requirement for a forensic auditor to be a chartered accountant, warning that a contrary interpretation could disrupt fraud actions across the banking system.
The court, however, held that once the RBI revised its regulatory framework in 2024, banks could not continue to rely on reports prepared and signed by entities or individuals who were not even members of ICAI to sustain fraud-related action.
Senior advocates Gaurav Joshi, Ashish Kamat and Mayur Khandeparker, along with advocates briefed by Naik Naik & Company, appeared for Anil Ambani. Senior advocates Zal Andhyarujina, Zarir Bharucha and Kevic Setalvad, with counsel briefed by MDP Legal, represented the banks. BDO LLP was represented by senior advocates Kunal Dwarkadas and Rahul Dwarkadas, among others.
