Industrialist Anil Ambani. File
| Photo Credit: PTI
The Bombay High Court has dismissed a petition by industrialist Anil D. Ambani challenging State Bank of India’s decision to classify Reliance Communications Ltd. (RCOM) as a ‘fraud’ account and report his name to the Reserve Bank of India (RBI).
A Division Bench of Justices Revati Mohite Dere and Dr. Neela Gokhale upheld SBI’s June 13 order, observed, “The impugned order is a reasoned order and as such, no infirmity can be found in the same.”
“Considering the aforesaid, there is no merit in the aforesaid petition. Petition is accordingly dismissed and disposed of,” the court observed.
The Bench rejected Mr. Ambani’s petition on October 3; the judgement of the order was made available on October 7.
Senior advocate Darius Khambata, for Mr. Ambani, argued that the show-cause notice issued on December 20, 2023, was invalid as it relied on superseded 2016 guidelines and that he was denied a personal hearing.
Mr. Ambani claimed that he was denied a personal hearing, breaching principles of natural justice, and said the notice lacked specific allegations or timelines, making it impossible to respond effectively. Emphasizing that he was a non-executive director and not involved in RCom’s day-to-day operations, Mr. Ambani contended he should not be held liable for the company’s alleged irregularities.
Senior advocate, Aspi Chinoy for SBI, countered that Mr. Ambani had no right to a personal hearing under RBI’s Master Directions or the Supreme Court’s ruling in Rajesh Agarwal. The bank argued that natural justice requires only an opportunity to make a written representation, which Mr. Ambani was given but failed to utilise. It maintained that the supersession of the 2016 guidelines by the 2024 directions did not invalidate the show-cause notice and said, “Issuance of Master Directions 2024 does not invalidate the SCN issued prior to the said Directions, the process initiated by SBI by issuing impugned SCN continues post 2024 Master Directions.”
SBI also stressed that promoters and directors in control of a company are liable when its account is declared fraudulent, “Once the Company’s account is classified or declared to be a fraud account, the promoters/directors who were in control of the Company are liable to penal measures and to be reported as fraud.”
Rejecting Mr. Ambani’s argument, the Bench noted, “We are not inclined to accept the arguments of Mr. Khambata that actions of the Bank pursuant to the SCN dated 20th December 2023 issued prior to the Master Directions 2024 are invalid.”
On the personal hearing issue, the Bench noted, “The right contemplated is one of representation, not necessarily of personal hearing. The principles of natural justice cannot be applied in a straitjacket formula; their application depends on the facts and circumstances of each case.”
The judges also underscored that promoters and directors in control of a company are automatically liable when the company’s account is declared fraudulent.
“Once the company’s account is classified or declared to be a fraud account, the promoters/directors who were in control of the Company are liable to penal measures and to be reported as fraud,” the court said.
The petition was dismissed with no order as to costs, “Considering the aforesaid, there is no merit in the aforesaid petition. Petition is accordingly dismissed and disposed of.”
Published – October 07, 2025 11:04 pm IST
