Anil Ambani: Bombay HC quashes order staying proceedings against businessman to classify his bank accounts as fraud

The Bombay High Court on Monday (February 23, 2026) paved the way for three public sector banks to proceed with fraud classification proceedings against industrialist Anil Ambani, setting aside a single-judge order that had temporarily halted such action.

A division Bench comprising Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad allowed the appeals filed by Bank of Baroda, Indian Overseas Bank and IDBI Bank, which had challenged the earlier stay granted by Justice Milind Jadhav. The single-judge had, in his order, restrained the banks from classifying Mr. Ambani as a fraud after prima facie observing “serious defects” in the forensic audit report that formed the basis of the proposed action.

While the Bench pronounced the judgment, the detailed reasoning is awaited as the official copy of the order is yet to be uploaded.

During the hearing, Solicitor General Tushar Mehta, representing the three banks, argued that the forensic audit report dated October 15, 2020—the very document relied upon to categorise Mr. Ambani as a ‘fraud’—had remained unchallenged by him for nearly five years. The senior law officer submitted that even in the present suit where the stay was obtained, the industrialist had questioned the report only on “technical” grounds rather than its substantive findings.

The court was informed that Mr. Ambani was initially served a show-cause notice by the State Bank of India and subsequently classified as a ‘fraud’ based on the same audit report. That classification was earlier challenged on the ground that the lender had not followed principles of natural justice as mandated by the Supreme Court of India. Pursuant to this, the Reserve Bank of India (RBI) issued a modified Master Circular in 2024, introducing the requirement of a personal hearing before any account could be classified as fraudulent.

Mr. Mehta pointed out that the sole ground raised by Ambani against the audit report in the current proceedings was that BDO LLP, the firm which conducted the audit, lacked competence under the 2024 Master Circular. The banks contended that the circular does not mandate that the auditor must necessarily be affiliated with the Institute of Chartered Accountants.

Opposing the appeals, Senior Advocate Gaurav Joshi, appearing for Mr. Ambani, submitted that the fraud proceedings initiated on the basis of the audit report had resulted in his client’s “civil death”, effectively barring him from accessing credit or conducting business operations. He characterised the audit report as “inconclusive, incomplete and error-ridden”, arguing that it failed to meet the standards expected of a forensic examination.

Mr. Joshi further highlighted that the audit was conducted after Mr. Ambani’s company had already undergone insolvency proceedings with a Resolution Professional appointed. He contended that the exercise carried out by BDO LLP amounted to an “accounts audit” rather than a forensic audit, as it did not adhere to established auditing standards.

The legal battle assumes significance given the implications of a ‘fraud tag’, which severely restricts an individual’s or entity’s ability to raise funds and conduct financial transactions under banking regulations.