**Mumbai: Bombay High Court Dismisses Anil Ambani’s Plea Challenging SBI’s Fraudulent Loan Classification**
In a significant setback to industrialist Anil Ambani, the Bombay High Court on Friday dismissed his plea challenging the State Bank of India’s (SBI) decision to classify his loan account as “fraudulent.” The account in question pertains to his firm, Reliance Communications (RCom), which is already undergoing insolvency proceedings.
### Bench Statement
A bench comprising Justices Revati Mohite Dere and Neela K Gokhale rejected Ambani’s petition, stating, “There is no merit in the petition. Petition is dismissed.”
### SBI and RBI Guidelines
SBI had issued the order in June this year, following guidelines laid out in a Reserve Bank of India (RBI) master circular that authorizes banks to classify any account as fraudulent and specifies the procedures for doing so.
This decision was made under the RBI’s “Frauds Classification and Reporting by Commercial Banks and Select Financial Institutions Directions, 2016.” The RBI further instructed banks to establish their own fraud management policies as per these guidelines.
The RBI’s master circular allows banks to fully utilize the Central Fraud Registry for prompt identification, monitoring, reporting, controlling, and mitigating fraud-related risks. Once an account is designated as fraudulent, banks must report it to the Central Repository of Information on Large Credits (CRILC) platform to notify other banks.
Moreover, if a bank directly classifies an account as fraudulent, it is required to inform the RBI within 21 days and report the matter to an investigating agency.
### Allegations of Misappropriation
According to SBI, Ambani had misappropriated funds by entering into transactions that violated loan terms, causing a loss exceeding Rs 2,929 crore to the bank.
Following SBI’s complaint, the Central Bureau of Investigation (CBI) conducted searches at RCom premises as well as at Ambani’s residence. In August, the CBI registered a case against Ambani and his company for alleged bank fraud based on SBI’s complaint.
### Arguments and Representation
During the hearing, senior advocates Darius Khambata and Prateek Seksaria, representing Ambani, argued that the bank acted arbitrarily and did not follow due process in declaring his account fraudulent. They contended that this classification could severely impact Ambani’s ability to avail banking facilities going forward.
However, SBI’s counsel, senior advocate Aspi Chinoy, defended the bank’s decision, insisting it was in compliance with RBI directions.
### Actions by Other Banks
Other nationalised banks have also issued similar orders against Ambani’s loan accounts related to RCom.
In July, Canara Bank informed the High Court that it had withdrawn its earlier order classifying Ambani’s RCom account as fraudulent. Last month, the court granted Ambani temporary relief by restraining Bank of Baroda from taking coercive action against him.
### Ambani’s Response
A spokesperson for Anil Ambani stated, “We are awaiting the order. Once we have reviewed it, we will evaluate the next course of action, as legally advised.”
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https://www.freepressjournal.in/mumbai/bombay-hc-dismisses-anil-ambanis-plea-against-sbi-classifying-reliance-communications-loan-account-as-fraudulent
