Swati.Deshpande
Mumbai: Executive decisions and actions taken by three banks under RBI master directions of 2016 are not invalidated merely because the top bank brought in new master directions in 2024, the Bombay high court said while setting aside a single judge’s order of Dec last year that restrained banks from acting on a 2020 forensic audit report against Anil Ambani and his company, Reliance Communications, to classify his account as fraud.
The HC also clarified that “actions taken under the master directions of 2016 which are not repealed shall remain alive for all future purposes”.
RBI master directions are issued in the interest of banking policy and are intended to secure public money, provide a framework for early detection of frauds, and recovery of public money through timely identification, control, reporting and mitigation of fraud risk, observed Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad on Monday while allowing appeals filed by the banks to set aside a Dec 24, 2025, order of Justice Milind Jadhav who granted relief to Ambani against fraud classification.
The appeal bench also noted there was “no prima facie reason” to grant relief to Ambani who argued that the forensic audit report flouted the RBI master circular of 2024 in appointing BDO India LLP for the audit, while the firm argued that it was validly appointed under the applicable 2016 guidelines.
The CJ-led bench said Justice Jadhav misunderstood the RBI guidelines. The single judge’s order granting relief to Ambani was “perverse and illegal” and in breach of natural justice, and it suffered from “procedural irregularity and impropriety”, the appeal bench said in a 52-page ruling made available on Tuesday.
The banks and BDO India LLP had filed the appeals.The RBI directions provide guidelines to banks and financial institutions for effective investigation of fraud cases and reporting of fraud cases to the appropriate regulatory and law enforcement authorities, the appeal bench said. These directions cannot be interpreted in a manner that would prejudice lender banks and harm their interest, it said.
The 2024 master directions expanded the applicability of the directions issued by RBI and included several new banking entities and regional rural banks excluded under master directions 2016. It included foreign banks, local area banks, a small finance bank, Exim Bank, Nabard and National Housing Bank.
The appeal bench said, “Consequences of the forensic report to the respondent (Ambani) are continuing ever since his account was red-flagged by SBI. There are criminal investigations going on, which shall be directly affected by the order of injunction granted by the court…”
