Bombay High Court dismisses Anil Ambanis petition in opposition to SBIs fraud classification of Reliance Communications

The Bombay High Court has dismissed a petition by industrialist Anil D. Ambani difficult State Bank of India’s determination to categorise Reliance Communications Ltd. (RCOM) as a ‘fraud’ account and report his title to the Reserve Bank of India (RBI). 

A Division Bench of Justices Revati Mohite Dere and Dr. Neela Gokhale upheld SBI’s June 13 order, noticed, “The impugned order is a reasoned order and as such, no infirmity could be present in the identical.”

“Considering the aforesaid, there isn’t a advantage within the aforesaid petition. Petition is accordingly dismissed and disposed of,” the courtroom noticed. 

The Bench rejected Mr. Ambani’s petition on October 3; the judgement of the order was made out there on October 7. 

Senior advocate Darius Khambata, for Mr. Ambani, argued that the show-cause discover issued on December 20, 2023, was invalid because it relied on outmoded 2016 tips and that he was denied a private listening to.  

Mr. Ambani claimed that he was denied a private listening to, breaching ideas of pure justice, and mentioned the discover lacked particular allegations or timelines, making it not possible to reply successfully. Emphasizing that he was a non-executive director and never concerned in RCom’s day-to-day operations, Mr. Ambani contended he shouldn’t be held accountable for the corporate’s alleged irregularities. 

Senior advocate, Aspi Chinoy for SBI, countered that Mr. Ambani had no proper to a private listening to below RBI’s Master Directions or the Supreme Court’s ruling in Rajesh Agarwal. The financial institution argued that pure justice requires solely a possibility to make a written illustration, which Mr. Ambani was given however didn’t utilise. It maintained that the supersession of the 2016 tips by the 2024 instructions didn’t invalidate the show-cause discover and mentioned, “Issuance of Master Directions 2024 doesn’t invalidate the SCN issued previous to the mentioned Directions, the method initiated by SBI by issuing impugned SCN continues submit 2024 Master Directions.” 

SBI additionally confused that promoters and administrators answerable for an organization are liable when its account is asserted fraudulent, “Once the Company’s account is assessed or declared to be a fraud account, the promoters/administrators who have been answerable for the Company are liable to penal measures and to be reported as fraud.” 

Rejecting Mr. Ambani’s argument, the Bench famous, “We should not inclined to just accept the arguments of Mr. Khambata that actions of the Bank pursuant to the SCN dated twentieth December 2023 issued previous to the Master Directions 2024 are invalid.” 

On the non-public listening to difficulty, the Bench famous, “The proper contemplated is considered one of illustration, not essentially of private listening to. The ideas of pure justice can’t be utilized in a straitjacket components; their utility will depend on the info and circumstances of every case.” 

The judges additionally underscored that promoters and administrators answerable for an organization are mechanically liable when the corporate’s account is asserted fraudulent. 

“Once the corporate’s account is assessed or declared to be a fraud account, the promoters/administrators who have been answerable for the Company are liable to penal measures and to be reported as fraud,” the courtroom mentioned.  

The petition was dismissed with no order as to prices, “Considering the aforesaid, there isn’t a advantage within the aforesaid petition. Petition is accordingly dismissed and disposed of.”