Today, On 16th April, The Supreme Court dismissed Anil Ambani’s plea against the fraud classification of his loan accounts under RBI’s 2024 Master Directions. The CJI remarked, “Hard earned money has been siphoned. Did you make good losses of banks and financial institutions?”
The Supreme Court of India heard Anil Ambani’s challenge to the Bombay High Court order that had cancelled a Single Bench stay on the fraud classification process initiated against him by Bank of Baroda, Indian Overseas Bank and IDBI Bank.
The matter came before a Bench of CJI Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi.
During the hearing, Senior Advocate Kapil Sibal argued that,
“There is a question of law here that must be decided. Only an auditor can determine whether there has been siphoning or not. Banks cannot do it themselves. It will be civil death.”
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In response, the CJI remarked,
“Hard earned money has been siphoned. Did you make good losses of banks and financial institutions?”
In response, the CJI said that Kapil Sibal should raise these issues before the proper forum since show-cause notices had already been issued and remedies were available. He also indicated that, on the face of it, institutions appeared to have been misled.
Sibal submitted that the resolution professional is not capable of defending the company because he doesn’t even understand auditing.
The Bench, however, noted that the main proceedings are still pending and the Court cannot enter into every argument at this stage.
Sibal warned that his client being labelled fraudulent would destroy his ability to raise funds, saying,
“I’ve been declared a fraudulent account it’s like civil death. No one will lend to me anymore.”
The CJI again urged caution, noting that the matter involved allegations of siphoning of funds and that the Court did not want to make any remarks at this stage that could prejudice the pending case.
Sibal then argued that the interim order should not have been overturned so easily, especially when a clear question of jurisdiction was involved.
He maintained that such an order should not be interfered with unless it is completely perverse.
He clarified that he was not seeking a stay on the investigation and that it could continue, but emphasised that only an auditor could determine whether there was any siphoning of funds. He added that all the records were with the company and he did not have access to them.
The CJI then asked Sibal to clarify the specific allegation against the company.
Sibal responded that any such allegation must rest on a proper audit of the accounts and that the issue was fundamentally about jurisdiction. He pointed to the communication from BDO to support his contention and questioned why the Single Judge’s order had been overturned despite this position.
The CJI noted that there are claims of huge losses,
“There are allegations that thousands of crores of taxpayers’ hard-earned money have been siphoned off.”
Sibal then highlighted the central issue, arguing that the proceedings could not legitimately continue when the report being relied upon had been prepared without any actual audit being conducted by the concerned professiona
Solicitor General Tushar Mehta countered that BDO was a respected professional, saying,
“He is a recognized, internationally reputed auditor.”
Sibal strongly contested the credibility of the report, arguing that the individual in question was neither an auditor nor a chartered accountant and had himself admitted the same.
Justice Bagchi noted that there was already a finding indicating diversion of funds.
In response, Sibal clarified that the observation was only preliminary in nature, with no final conclusion of fraud or definitive finding, and emphasised that the issue merely required further examination.
He reiterated that in the absence of a qualified auditor, no final determination could be made.
The Bench pointed out certain inconsistencies, with the CJI observing that Sibal had not raised the issue of prejudice earlier in the proceedings.
Sibal maintained that the argument had indeed been raised and that the Single Judge had accepted it.
Justice Bagchi noted that the Single Judge had not questioned the competence of the appointed entity and appeared to have given more weight to procedural aspects than to substantive issues. Sibal further referred to the regulatory position, highlighting that the RBI had clarified in 2024 that a forensic expert should not be appointed in such matters.
The CJI repeated the Court’s reluctance to undermine the ongoing process, saying,
“We won’t undermine the efforts made by this entity to uncover the facts. Any observations from us at this stage could create complications.”
Justice Bagchi then said that Ambani can always seek an independent, fresh enquiry in the pending suit.
Senior Advocate Shyam Divan, appearing for Ambani, relied on the RBI’s directions and argued that only a proper financial audit is legally permissible in such situations. He pointed out that the RBI’s Master Directions clearly indicate that the requirement here is a financial audit, and under the statutory framework, such an audit can only be conducted by a chartered accountant.
Given the possibility of serious civil and criminal consequences, he stressed that any forensic audit must also be carried out by a duly qualified and accountable professional.
The CJI questioned whether nationalised banks themselves were not best placed to decide which experts should be appointed, while Justice Bagchi sought clarity on whether there was any disagreement within the consortium of lenders.
Divan maintained that the RBI’s 2024 clarification made it clear that experience alone was not enough and raised concerns about the lack of professional accountability of the appointed entity.
The Bench responded that nationalised banks are competent to choose their own auditors since they are the ones who believe their money has been siphoned and therefore would know whom to trust.
The SG supported this position and stated that BDO had been selected through a proper tender process. Divan nevertheless urged the Court to maintain a balanced approach.
The CJI suggested that if the RBI circular was central to Ambani’s case, he could implead the RBI in the pending suit so that the regulator could clarify its stance. Senior Advocate Narender Hooda added that if an external auditor was appointed instead of an internal team, the appointment had to strictly conform to statutory norms.
After hearing all parties, the Supreme Court concluded that there was no reason to interfere with the High Court’s judgment and clarified that the Division Bench’s observations would not affect the pending suit. The Court also requested the High Court to expedite the matter.
As the hearing ended, Sibal expressed his willingness to discuss a settlement with the bank, but the SG objected to recording such a statement, noting that it could be used strategically at a later stage.
Case Title: ANIL D AMBANI Vs BANK OF BARODA, SLP(C) No. 12943-12944/2026 and connected cases.
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