Bombay High Court upholds SBI’s decision to classify loan accounts of Anil Ambani’s Reliance Communications as ‘Fraud’

In a major setback to industrialist Anil Ambani, the Bombay High Court on Friday rejected a plea against SBI’s decision to declare his loan account as “fraud”.

A bench of Justices Revati Mohite Dere and Neela Gokhale dismissed Anil Ambani’s plea of procedural unfairness and upheld the State Bank of India’s action.

Earlier, SBI had classified the account of Reliance Communications as ‘Fraud’. SBI has over ₹3,000 crore at stake with RCom. SBI has provided following credit facilities to Reliance Communications:

• Non-fund based exposure (like Bank Guarantees): ₹786.52 crore
• Fund-based loan (main loan amount): ₹2,227.64 crore (including interest and other costs since August 26, 2016)

The court noted that SBI had followed the RBI’s July 2024 Master Directions on fraud classification. The bank tagged the loan accounts of Reliance Communications (RCom) and its promoter, Anil Ambani, as fraudulent in June 2025.

The bank said that there was diversion of funds, breach of covenants and related-party transactions.

Anil Ambani had challenged the decision on the grounds that he was only a non-executive director and had been selectively singled out. He also argued that adequate opportunity to present his defence was not provided by the bank.

Reliance Communications is currently going through a Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC), 2016. A resolution plan (a proposal to repay creditors) has already been approved by RCom’s Committee of Creditors and was filed with the National Company Law Tribunal (NCLT), Mumbai on March 6, 2020. However, the NCLT’s final approval is still pending.

SBI has also started a Personal Insolvency Resolution Process against Anil D. Ambani under the IBC, and this case is currently being heard by the NCLT in Mumbai.

Interestingly, this is not the first time SBI classified RCom and Anil Ambani as fraudulent. The bank had earlier done so on November 10, 2020 and a complaint was filed with the CBI on January 5, 2021. However, that complaint was returned because the Delhi High Court issued a “status quo” order on January 6, 2021, which temporarily stopped further action.

Later, on March 27, 2023, the Supreme Court ruled in the case State Bank of India & Others Vs Rajesh Agarwal & Others that borrowers must be given a chance to explain their side before being labelled as fraud. As a result, SBI reversed the fraud classification on September 2, 2023 to follow the proper legal procedure.

After complying with the Supreme Court’s decision and following the updated RBI circular dated July 15, 2024, SBI re-initiated the fraud classification process. This time, after giving RCom and Anil Ambani a chance to be heard, the bank again classified the account as ‘fraud’ on June 13, 2025, ensuring that all legal procedures were properly followed.