SBI fraud tag stands: Bombay High Court pins liability on Anil Ambani as ‘promoter in control’ of RCOM

Industrialist Anil Ambani, as the promoter and person in control of Reliance Communications Limited (RCOM), is liable to face consequences for the classification of company's loan account as fraud, the Bombay High Court held [Anil Ambani Vs State Bank of India]..A Division Bench of Justices Revati Mohite Dere and Neela Gokhale observed that when a company's loan account is classified as fraud by the bank, the promoters/ directors who were in control of the company will have to face penal consequences. “It is well settled that once the company’s account is classified or declared to be a fraud account, the promoters/directors who were in control of the company are liable to penal measures and to be reported as fraud and debarred from raising funds or seeking credit facilities, as they were in control of the company and responsible for the acts/omissions of the company,” the Court said.The Court made the observations while dismissing the plea filed by Anil Ambani against State Bank of India’s (SBI) decision declaring his loan accounts as “fraud.” The Court rejected Ambani’s arguments of procedural unfairness and upheld SBI’s action.The judgment was pronounced on October 3 but a copy of the same was made available on High Court website only on Tuesday..Between 2012 and 2016, SBI sanctioned loans worth more than ₹3,600 crore to RCOM, Reliance Telecom and Reliance Infratel. After repayment defaults, RCOM’s account was declared a non-performing asset in August 2016.A forensic audit by accounting firm BDO India covering 2013–2017 pointed to irregularities. This prompted SBI’s Fraud Identification Committee to classify the account as “fraud” in November 2020.That decision was later withdrawn following the Supreme Court’s 2023 ruling in State Bank of India v. Rajesh Agarwal which held that borrowers must be given notice and a chance to respond. SBI then issued a fresh show-cause notice to RCOM and its directors including Ambani on December 20, 2023..Ambani responded to the same in January 2024 but SBI proceeded to declare RCOM’s account and Ambani's account as fraud under the RBI’s 2024 Master Directions.Ambani filed the writ petition to challenge SBI’s order dated June 13, 2025, which classified the account as fraud.Ambani claimed he could not properly defend himself as the company was under insolvency resolution and he lacked access to documents. He argued that the notice contained no specific allegations against him, that he was only a non-executive director not responsible for daily operations, and that he was denied both a complete forensic audit report and a personal hearing.His case was that the show-cause notice was invalid once the 2016 RBI Master Directions were superseded by the 2024 Directions, and that SBI’s process fell foul of principles of natural justice.However, the Court ruled that the RBI’s 2024 Master Directions, though expressly superseding the 2016 Directions, did not nullify notices already issued under the earlier framework. A show-cause notice, once issued, remained valid until adjudicated upon. “Mere conveying by way of a covering letter that the Master Directions 2024 supersede the Master Directions 2016 will not render the SCN already issued by SBI invalid,” the Court said..The Court clarified that the Rajesh Agarwal judgment was limited to ensuring a fair opportunity to be heard and did not mandate a personal hearing in every case. It stressed that written submissions sufficed. “As long as the petitioner was afforded an adequate opportunity to submit his objections in writing, the requirement of fairness and compliance with the principle of natural justice stood satisfied,” the Bench recorded..The Bench also distinguished Ambani from other directors who were exonerated. “The role of the other directors, who were exonerated, was different and distinct from that of the present Petitioner, inasmuch as they were non-executive directors and were not responsible for the day-to-day functioning of RCOM,” it said.The Court relied on RCOM’s annual reports to reject Ambani’s claim of limited responsibility. “It is seen that the petitioner had control over RCOM and that the Annual Reports of RCOM for the relevant years refers to the Petitioner as being the ‘Promoter’ and ‘person having control’ of RCOM.” This corporate disclosure carried significant evidentiary weight, the Court opined..Anil Ambani was represented by Senior Advocates Darius Khambata and Prateek Seksaria with advocates DJ Kakalia, Bhavna Jaipuria, Kartik Hede, Ayaan Zariwalla and Bhakti Chandan from Mulla & Mulla & CBC..State Bank of India was represented by Senior Advocate Aspi Chinoy with advocates Sudeshna Roy, Abhiraj Arora, Treenok Guha and Ayush Chaturvedi from Saraf & Partners..Reserve Bank of India was represented by Senior Advocate Zal Andhyarujina and advocates Pradeep Mane, Prasad Shenoy, Riddhi Badheka and Huzan Bhumgara from Desai & Diwanji..[Read Judgment]