Canara Bank informed the Bombay High Court it has revoked its order declaring Anil Ambani’s loan account as “fraudulent.” The court closed the case, stating RBI must be informed.
Mumbai: Today, on July 10, in a major relief for industrialist Anil Ambani, Canara Bank has informed the Bombay High Court that it has officially withdrawn its earlier order which had declared a loan account of Ambani-linked firm Reliance Communications as “fraudulent.”
This development came during the hearing of a petition filed by Ambani challenging the bank’s decision to classify the loan account as fraud without giving him an opportunity to be heard.
Following this disclosure by the bank, a bench comprising Justices Revati Mohite Dere and Neela Gokhale disposed of Ambani’s petition, noting that the matter no longer required further hearing since the order was withdrawn.
The court stated that,
“the withdrawal order shall be informed to the Reserve Bank of India.”
The case relates to the loan account of Reliance Communications, a company associated with Anil Ambani, which is currently going through insolvency proceedings under the Insolvency and Bankruptcy Code (IBC).
Canara Bank had, on November 8, 2024, classified the account as “fraud,” alleging that a loan of ₹1,050 crore, which was granted to the company in 2017, had been diverted to a group company to repay other liabilities owed to related or connected parties.
The bank’s earlier decision was based on guidelines laid out in the Reserve Bank of India’s master circular related to fraudulent accounts.
The circular provides the process and criteria for banks to follow while classifying an account as fraud.
However, Anil Ambani strongly opposed this classification, arguing that Canara Bank violated the Supreme Court’s judgment and RBI rules, which clearly state that borrowers must be given a personal hearing before such a serious label is applied to their loan accounts.
In February 2025, the Bombay High Court had already stayed Canara Bank’s fraud classification order, pending further hearings.
During that earlier hearing, the High Court had raised a serious question:
“whether the RBI would take action against banks that have repeatedly defied its master circular and the Supreme Court’s ruling, which mandates that borrowers must be given a hearing before their accounts are declared ‘fraudulent.’”
Ambani’s legal team had submitted that the bank’s order was passed on November 8, 2024, but surprisingly, it was only communicated to him much later, on December 25, 2024.
By that time, the High Court had already stayed a similar fraud declaration in a related case.
Ambani also pointed out that Canara Bank had already informed the RBI about the fraud classification on September 6, 2024 — much before the order was formally issued.
Ambani’s primary argument was that he was denied a fundamental opportunity to be heard. He said that this procedural lapse directly violated established legal principles laid down by the apex court and the RBI.
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The High Court accepted the bank’s withdrawal and made it clear that it should be communicated to the RBI. With this, the petition filed by Anil Ambani stood resolved, giving him temporary relief in the ongoing insolvency crisis surrounding Reliance Communications.
This legal episode highlights the growing importance of procedural fairness and transparency in the banking sector, especially when borrowers face serious consequences due to actions taken by financial institutions without due process.
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