High Court Overturns Stay on Proceedings Against Anil Ambani in Classification of Bank Accounts as Fraudulent Transactions

Bombay High Court Quashes Interim Order in Reliance Communications Case

On February 23, a division bench of the Bombay High Court, comprising Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad, quashed a single bench interim order that stayed proceedings initiated against Anil Ambani and Reliance Communications Ltd to classify their bank accounts as fraud.

The division bench allowed the appeals filed by Indian Overseas Bank, IDBI Bank, and Bank of Baroda, along with auditor firm BDO India LLP, against the December 2025 interim order passed by a single bench of the HC. The division bench termed the single bench order as "illegal and perverse".

The case revolves around the classification of bank accounts as fraud, which was initiated by the three public sector banks. The single bench order had stayed all present and future action by the banks, citing violations of mandatory RBI rules and a classic case of banks "waking up from deep slumber" after years.

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The three banks challenged the single bench order, arguing that the forensic audit, which led to the accounts being classified as "fraud", was legally valid and based on serious findings of fund siphoning and misutilization. The audit was conducted by BDO LLP, which the banks claimed was qualified to conduct the forensic audit.

The banks also contended that Anil Ambani had raised a technical challenge to the forensic audit before the single bench. As an interim relief, the banks sought a stay of the show-cause notices issued by the banks, which were seeking to declare Anil Ambani's and Reliance Communications' accounts as fraud accounts.

However, the single bench agreed with Anil Ambani and stayed the action by the banks. The division bench's decision to quash the single bench order paves the way for the banks to proceed with their action against Anil Ambani and Reliance Communications Ltd.

Key Figures:

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• Anil Ambani: Industrialist and Chairman of Reliance Communications Ltd
• Shree Chandrashekhar: Chief Justice of the Bombay High Court
• Gautam Ankhad: Justice of the Bombay High Court
• Indian Overseas Bank: Public sector bank
• IDBI Bank: Public sector bank
• Bank of Baroda: Public sector bank
• BDO India LLP: Auditor firm
• Reliance Communications Ltd: Telecommunications company