The Bombay High Court has cleared the way for banks to move ahead with fraud proceedings against industrialist Anil Ambani in connection with loans taken by Reliance Communications (RCom), delivering a significant setback to the businessman.
In its ruling, the court rejected Ambani’s plea that sought to stop lenders from acting on the fraud classification of the loan account. The bench held that there was no valid reason to interfere at this stage and allowed the banks to continue their action in accordance with the law.
The case relates to loans extended to Reliance Communications, which later turned into non-performing assets. Banks had classified the account as “fraud” under the Reserve Bank of India’s guidelines and initiated steps against the company’s former director, Anil Ambani. Challenging this, Ambani had approached the High Court, arguing that the classification was unfair and that he was not given a proper opportunity to present his side.
However, the court observed that the principles of natural justice had been followed and that Ambani had already been granted opportunities for a hearing. It said the legal process could not be stalled merely on apprehensions and that the appropriate forum for raising detailed objections would be during the proceedings before the concerned authorities.
With the High Court refusing to grant relief, lenders are now free to continue with measures linked to the fraud tag, which could include further investigations and recovery actions as per regulatory norms.
The ruling is important because a fraud classification carries serious consequences, including restrictions on raising finance and potential legal action against the individuals involved.
Reliance Communications, once a major telecom player, has been undergoing insolvency proceedings after defaulting on massive debt. The latest court order adds another layer to the legal challenges faced by Anil Ambani, who has been contesting multiple claims from lenders over the past few years.