The Bombay High Court on 23 February 2026 has set aside an earlier interim order that had restrained three public sector banks (PSBs) from proceeding with fraud classification actions against industrialist Anil Ambani.
In December 2025, a single-judge bench of the Bombay High Court granted interim relief to Ambani, staying all coercive action by Bank of Baroda, IDBI Bank and Indian Overseas Bank after finding
prima facie defects in a forensic audit relied upon by the lenders. The interim stay, reported by
Moneylife (
Read: Bombay High Court Stays Bank Action against Anil Ambani), had halted attempts by the banks to declare Ambani and Reliance Communications Ltd.accounts as 'fraudulent', on grounds that the forensic audit report lacked the necessary qualifications as required under the Reserve Bank of India’s (RBI's) 2024 Master Directions on fraud and, therefore, could not form a legal basis for punitive banking action.
At the time, justice Milind N Jadhav said the audit report BDO LLP could not be treated as valid because it was not signed by a duly qualified chartered accountant, an apparent violation of RBI’s updated norms. This ruling, detailed in the Moneylife article, emphasised that banks must adhere to statutory requirements and timelines before initiating draconian actions like fraud classification which could lead to severe reputational and financial consequences for borrowers.
However, on 23 February 2026, a division bench comprising chief justice Shree Chandrashekhar and justice Gautam Ankhad allowed appeals filed by the three banks challenging that single judge’s order. The bench effectively lifted the interim restraint, agreeing with the banks that the earlier order was unsustainable. The banks had argued that Ambani never challenged the underlying forensic audit report on merits for several years, only raising technical grounds, and that RBI’s Master Directions did not expressly mandate that auditors be members of the Institute of Chartered Accountants of India.
Solicitor general Tushar Mehta, appearing for the banks, told the Court that Ambani’s account had been classified as ‘fraud’ long ago based on the 2020 audit, and procedural missteps should not justify halting the classification process. Conversely, counsel for Mr Ambani warned that the fraud proceedings had effectively resulted in his client’s 'civil death' by restricting access to financial markets and credit until the matter is conclusively resolved.
The legal battle over fraud classification is the latest chapter in a prolonged period of financial distress and regulatory scrutiny for Anil Ambani and his erstwhile flagship company Reliance Communications Ltd (RCom). Once a prominent figure in India’s telecom and infrastructure sectors, Mr Ambani has seen his business empire contract dramatically over the past decade amid financial losses, loan defaults and corporate restructuring.
The controversy traces back to actions by several PSBs in 2025. In June that year, the State Bank of India declared RCom’s loan account, and by extension Ambani’s name as a former director, as 'fraudulent' under RBI guidelines. The classification carries significant regulatory consequences, including mandatory reporting to RBI and potential investigation by enforcement agencies. Subsequently, other lenders including Bank of India and Bank of Baroda also classified accounts linked to RCom as fraud, citing alleged diversion of loan proceeds and non-compliance with lending terms, reportedly involving thousands of crores in outstanding dues.
The matter escalated further when the Central Bureau of Investigation registered a case in connection with SBI’s complaint and conducted searches, underscoring the seriousness of the allegations. Mr Ambani has denied wrongdoing and maintained that he was selectively targeted, arguing that his operational role in RCom had diminished following the company’s insolvency proceedings under the Insolvency and Bankruptcy Code. The detailed written judgement from the division bench is awaited.
Suddenly Ambani's chief liasioner in Delhi, Angarai Sethuraman is missing from action after his name cropped up 4 months back on alleged attempts to influence the probe. Has Sethuraman be able to liason a way out for Anil Ambani, will be tested on Thursday.