In a temporary relief for Anil Ambani, the Bombay High Court on Wednesday stopped Bank of Baroda from taking any action against him. This comes after the bank had declared Reliance Communications' loan accounts as "fraud" on September 4.A division bench of Justice Riyaz Chagla and Farhan Dubash asked the Bank not to take any action till further hearing in the matter, which is slated to take place on September 24.
This comes after Ambani petitioned the High Court challenging the order of the Bank by which his firm's loan accounts were categorised as 'fraud' citing mis-utilisation of borrowed funds, diversion of loan proceeds, unauthorised transactions, and improper use of inter-corporate deposits.Appearing for Ambani, senior advocate Navroz Seervai argued that the forensic report prepared by BDO was commissioned by State Bank of India (SBI) as the lead lender of a consortium of banks. He submitted that Bank of Baroda was not part of that consortium and therefore had no authority to initiate such proceedings, rendering its action illegal.
The bench observed that the Bank must be given an opportunity to present its case through an affidavit. While Seervai pressed for interim relief, counsel for Bank of Baroda pointed out that the Bank had already intimated the Reserve Bank of India (RBI) of its decision, in line with the Master Circular on fraud classification.The Bank further contended that SBI had already reported Ambani’s accounts as fraud to the Central Bureau of Investigation (CBI), and the agency had written to Bank of Baroda seeking details. “The petitioner fears we may approach the CBI, but SBI has already done so. I cannot be prevented from giving details to the CBI,” the Bank’s counsel submitted.