Bombay High Court backs SBI decision declaring Reliance Communications fraud; denies Anil Ambani personal hearing
According to the Bombay High Court, Anil Ambani is not granted a personal hearing before the SBI declaring Reliance Communications as a fraudulent account. The judge determined that SBI's procedure complied with the law.
Aadrika Tayal 
New Delhi (India) October 9: The Bombay High Court supported the State Bank of India's (SBI) decision to classify Reliance Communications Ltd. (RCom) as a fraud account. They ruled that industrialist Anil Ambani was not entitled to a personal hearing. According to the ruling, the bank had complied with natural justice standards by providing written representation.
Bench of Justices Revati Mohite Dere and Neela Gokhale delivers verdict
Ambani's suit was dismissed by a bench of Justices Revati Mohite Dere and Dr. Neela Gokhale in a comprehensive ruling released on Tuesday.
The court said, "The principles of natural justice demand that the borrowers must be served a notice, furnished with the forensic audit report and allowed to submit their representation before their account is classified as fraud. The right contemplated is one of representation, not necessarily of personal hearing. In fact, the right of representation is not read specifically as meaning a right to personal hearing."
Court clarifies personal hearing not mandatory under natural justice
Justices Revati Mohite Dere and Neela Gokhale's division bench also rejected Ambani's argument that the SBI's ruling should be declared void. It was due to the fact that he was not granted a personal hearing and that the necessary paperwork was not provided to him in a timely manner. The court stated that the SBI used the privilege granted by the Reserve Bank of India's (RBI) Master Directions to issue its decision "is one of representation, not necessarily of personal hearing."
The Bench said, "Grant of a personal hearing is not a matter of right in every case. As long as the petitioner was afforded an adequate opportunity to submit his objections in writing, the requirement of fairness and compliance with the principles of natural justice stood satisfied."
Ambani’s plea rejected citing promoter’s responsibility
The bench said that SBI's reliance on RCom's annual reports "clearly revealed that the petitioner was the promoter and the person having control of the company."
Ambani declared that his account should not have been categorized as fraudulent because he was not a full-time director of RCom. However, the high court ruled that the promoters and directors in charge of the firm are equally subject to criminal penalties once the company's account is found to be fake.
Court says due legal process was followed by SBI
The high court further pointed out that Ambani had received a show-cause notice from SBI last year. But he had not responded and was still pursuing papers. The court stated that as a result of this, the bank ultimately issued an order in June 2024. They declared RCom's loan accounts as fraudulent. SBI had claimed that money had been misused through transactions that went outside the terms of the loan.
The Central Bureau of Investigation (CBI) searched locations connected to RCom and the businessman in Mumbai. This is a part of its investigation into the alleged bank loan fraud case. It was filed in response to SBI's complaint. Two months later, the high court rejected Ambani's motion.
