The Delhi High Court has asked Union Bank of India to clarify whether due process was followed before declaring an account linked to Anmol Ambani as fraudulent. The court stressed that issuing a show-cause notice is mandatory under principles of natural justice.
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NEW DELHI: The Delhi High Court has asked the Union Bank of India to clarify whether it followed due process before declaring a company linked to Jai Anmol Ambani, son of industrialist Anil Ambani, as a fraud account.
A Bench led by Justice Jyoti Singh directed the public sector bank to file a brief affidavit explaining whether a show-cause notice was issued to Ambani before the fraud classification. The Court emphasised that procedural fairness cannot be bypassed, even in serious financial matters.
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“I am not suggesting a clean chit, but there must be a show cause notice,”
the Court remarked.
Jai Anmol Ambani has moved the High Court alleging that Union Bank labelled the account as fraudulent without allowing him to respond, which he argues is a violation of natural justice.
His petition relies heavily on the Supreme Court’s landmark judgment in State Bank of India v. Rajesh Agarwal, where it was held that banks must issue prior notice and hear the borrower before declaring an account fraudulent.
Background
The dispute is unfolding against the backdrop of large-scale investigations by the Central Bureau of Investigation (CBI) into companies associated with the Anil Ambani Group, involving alleged fraud of nearly ₹14,853 crore.
In the present case, the CBI alleges that Jai Anmol Ambani caused a loss of about ₹228 crore to Union Bank of India. The agency claims that Reliance Home Finance Ltd (RHFL), where Ambani was a director, obtained substantial loans but failed to service them.
According to investigators, a forensic audit found that the borrowed funds were diverted from their approved purpose, leading to the account turning into a non-performing asset (NPA).
Union Bank subsequently classified the account as fraudulent and complained to the CBI, alleging cheating, criminal conspiracy, and abuse of official position.
The case will be taken up again on December 19.
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