The usually packed courtroom of the Bombay High Court on Wednesday saw a long and closely watched hearing involving industrialist Anil D. Ambani and three public sector banks. The dispute centres on whether banks can rely on a forensic audit conducted years ago to initiate fresh fraud proceedings, especially when the auditor’s qualifications themselves are under challenge. The matter was heard by Justice Milind N. Jadhav, who patiently sat through detailed arguments that stretched well into the afternoon.
Background
Ambani has approached the court through separate suits against Indian Overseas Bank, IDBI Bank Ltd., and Bank of Baroda. All three banks issued show-cause notices proposing to classify him as “fraud” under the Reserve Bank’s 2024 fraud management framework.
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These notices rely heavily on a forensic audit report prepared in October 2020 in connection with Reliance Communications and related group entities. Ambani’s counsel argued that the report was dusted off after nearly four years and used as the sole basis for initiating proceedings, without giving him complete access to documents or a meaningful opportunity to respond.
A central plank of the challenge was that the audit firm and its signatory were not registered chartered accountants, which, according to Ambani, makes the entire process legally flawed under the newer RBI directions.
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Court’s Observations
The court was told that the 2024 RBI Master Directions expressly require an external forensic audit to be conducted by an auditor qualified under relevant statutes. Senior counsel for Ambani argued that this was not a minor technical lapse but a “jurisdictional defect” that goes to the root of the proceedings.
“The bench observed that the question is not merely about procedure, but whether the foundation of the show-cause notices is legally sustainable at all,” a remark that drew quiet nods from lawyers present in court. The judge also noted concerns about delayed disclosure of annexures and supporting material relied upon by the banks.
On the other hand, the banks maintained that the audit was commissioned under the earlier 2016 RBI framework, which did not specify such qualifications, and that the 2024 directions cannot be applied retrospectively. They also argued that Ambani had been aware of the audit since 2020 and was raising the issue too late in the day.
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Decision
After hearing all sides, the court reserved its consideration on interim relief but made it clear that the challenge raised serious questions about reliance on old forensic audits and compliance with current regulatory norms. For now, the matter stands at the stage of interim applications, with the court to decide whether the banks can proceed further on the basis of the disputed forensic report or must pause pending a fuller examination of the legal issues involved.
Case Title: Anil D. Ambani v. Indian Overseas Bank & Ors.
Case No.: Suit (L) No. 35923 of 2025 with Interim Applications (L) Nos. 35924 & 35925 of 2025
Case Type: Civil Suit – Interim Applications challenging bank fraud show-cause notices
Decision Date: 24 December 2025
