Canara Bank informed the division bench of the Bombay High Court on Thursday that it has decided to unconditionally withdraw the fraud classification of Anil Ambani in the Reliance Communications’ (RCom) matter. Canara Bank, a lead member of the consortium of lenders, including SBI and Union Bank, had designated the Reliance Communications account as fraudulent in November 2024. Anil Ambani had challenged the decision in the Bombay High Court.
The division bench comprising Justice Revati Mohite Dere and Justice Neela Gokhale disposed of Anil Ambani’s petition challenging the bank’s order, after the disclosure was filed in the Bombay High Court, saying that nothing survives in it. The court also directed that the withdrawal of the order also be informed to the banking regulator, the Reserve Bank of India
On February 8, 2024, the Bombay High Court stayed Canara Bank’s classification order, observing that the action appeared to violate the Reserve Bank of India’s master circular and a Supreme Court ruling mandating that borrowers must be granted a personal hearing before being classified as fraudulent.
Anil Ambani’s counsel had argued that Canara Bank did not uphold the principles of natural justice and that contrary to the Supreme Court’s directive he was neither given a personal hearing nor the critical documents used in the classification process were shared with him.
While granting a stay on Canara Bank’s order, the bench had also sought a response from the Reserve Bank of India (RBI), remarking that “RBI needs to take some action against banks as this is happening repeatedly.”
With Canara Bank’s decision to withdraw the fraud classification, the spotlight now shifts to SBI, which has also declared the RCom account as fraudulent. Legal experts say that SBI’s move could also face the same legal setbacks.
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Challenging the SBI move, the counsel for Anil Ambani contended that SBI’s order was issued ex-parte, without affording his client the opportunity to be heard—a violation of both natural justice and Supreme Court ruling.
Given the similarities between the two cases, legal analysts assume that SBI’s order may also meet the same fait accompli as Canara Bank’s.
