In a significant legal development, the Supreme Court has dismissed a plea filed by Anil Ambani seeking to stay the classification of his loan accounts as “fraudulent,” marking a crucial moment in an ongoing dispute between the industrialist and a group of lending banks.
According to Live Law, a bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi refused to interfere with an earlier order of the Bombay High Court, which had allowed banks to proceed with the fraud classification process.
The Supreme Court said it found no reason to overturn the High Court’s decision, effectively declining to grant any interim protection to Ambani at this stage.
Importantly, the Court clarified that observations made by the High Court would not influence the final outcome of the case, which remains pending.
Anil Ambani Vs Bank of Baroda
The dispute relates to loan accounts linked to Anil Ambani that were classified as fraudulent by a group of banks, including Bank of Baroda, Indian Overseas Bank, and IDBI Bank, under the Reserve Bank of India’s regulatory framework.
Ambani challenged this classification, arguing that the process followed by the lenders was legally flawed.
Supreme Court on Anil Ambani Case
During the hearing, senior advocate Kapil Sibal, appearing for Ambani, argued that the fraud classification would have severe consequences, describing it in court as a “virtual civil death” because it could effectively restrict access to credit.
“I have been called a fraud. This is a virtual civil death, nobody will lend money to him,” Sibal said.
He contended that the classification was based on a forensic audit that did not meet statutory requirements and questioned the qualifications of the entity that conducted the audit.
The Court, however, was not persuaded to grant relief. It noted that it could not substitute its judgment for that of the lenders, who had appointed the auditor through a formal process.
“It’s a case of siphoning of…we can’t really express any opinion as we don’t want to prejudice…if the hard-earned money…1000s of crores of taxpayer hard-earned money alleged to be siphoned…Has the loss been made good?” CJI asked.
The bench also refrained from expressing any conclusive opinion on the allegations or the merits of the fraud classification itself.
Banks Defend Their Process
Opposing the plea, Solicitor General Tushar Mehta, representing the banks, defended the audit process and maintained that the findings were based on a credible and properly appointed auditor.
The Court appeared to accept that the lenders had exercised their judgment in selecting the auditor and conducting the process, declining to intervene at the interim stage.
Settlement Offer Recorded
A notable moment in the proceedings came after the order was dictated. Counsel for Anil Ambani informed the Court that his client was willing to explore a settlement with the banks.
Despite objections from the Solicitor General, the Supreme Court chose to record this statement, while clearly stating that it was not expressing any opinion on the proposed settlement.
The Court also directed that the trial in the underlying suit be expedited, subject to cooperation from all parties. It further clarified that Ambani remains free to pursue other legal remedies available under law.
Background Of The Dispute
The present appeal before the Supreme Court arose from a February 2026 decision of the Bombay High Court’s division bench, which had set aside an earlier interim relief granted to Anil Ambani by a single judge.
That earlier relief had temporarily restrained banks from proceeding with fraud classification, citing prima facie concerns about the forensic audit. However, the division bench later allowed the lenders to move ahead, prompting Anil Ambani to approach the Supreme Court.
Anil Ambani’s Top Executive Arrested
Amid the Supreme Court setback, enforcement action has intensified on another front. Amitabh Jhunjhunwala, a former close associate of Anil Ambani and ex vice chairperson of Reliance Capital, was arrested by the Enforcement Directorate on Wednesday in connection with the alleged money laundering case.
He has been remanded to five days of ED custody for further investigation. In court, Jhunjhunwala reportedly argued that the agency is adopting a “pick and choose” approach, urging it to identify the “actual beneficiary” behind the ₹11,500 crore in question.
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