Mumbai, Jul 10 (PTI) – On Thursday, Canara Bank told the Bombay High Court it has reversed its decision to classify a loan account associated with industrialist Anil Ambani as "fraudulent".
This revelation led a bench comprising Justices Revati Mohite Dere and Neela Gokhale to dispose of Ambani's petition challenging the bank's order, stating there was nothing further to adjudicate. The bench instructed that the withdrawal of the order be communicated to the Reserve Bank of India (RBI).
The loan under scrutiny belonged to Reliance Communications, Ambani's firm, which is currently undergoing insolvency proceedings. The initial classification of the loan account as "fraud" on November 8, 2024, was due, in part, to a Rs 1,050 crore loan extended in 2017 being "routed" to a related group company for settling obligations to affiliated parties. This classification adhered to the guidelines set by the RBI's master circular on fraud accounts.
Earlier this year, the High Court had stayed the order pending the outcome of Ambani's plea. During the hearings, the court pondered whether the RBI would act against banks repeatedly violating its master circular and the Supreme Court edict, which requires borrowers be given an opportunity to defend themselves before their accounts are deemed "fraudulent".
Ambani's challenge against Canara Bank argued his loan account was classified without a prior hearing, contravening fair process. He highlighted that while the fraud classification was officially dated November 8, 2024, he was only informed on December 25, well after a similar classification had been paused by the court in a related proceeding. Moreover, Ambani accused Canara Bank of prematurely notifying the RBI about the classification decision as early as September 6, 2024, before the official order was issued.
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