No Interim Relief: Anil Ambani Withdraws HC Plea, to Face IDBI Bank Fraud Hearing 'Under Protest'

In a strategic retreat, industrialist Anil Ambani has withdrawn his petition from the Bombay High Court after the vacation bench showed disinclination to grant ad-interim relief. The plea sought to defer a personal hearing with IDBI Bank in fraud classification proceedings, with Ambani now set to appear before the bank’s committee 'under protest'.

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MUMBAI – In a significant development in the ongoing dispute between industrialist Anil Ambani and IDBI Bank, the Bombay High Court on Tuesday witnessed the withdrawal of a petition filed by the former director of the now-insolvent Reliance Communications Ltd (RCOM). The petition aimed to restrain IDBI Bank from proceeding with a personal hearing related to a show-cause notice (SCN) issued under the Reserve Bank of India’s (RBI) master guidelines on fraud risk management.

The withdrawal came after the vacation bench, presided over by Justice Sandesh D Patil, indicated it was not inclined to grant any urgent ad-interim relief. Consequently, Mr. Ambani, through his counsel, opted to face the bank's fraud examination committee, scheduled for October 30, while reserving his rights by appearing "under protest."

The High Court permitted the withdrawal, crucially granting Mr. Ambani the liberty to raise all his legal and factual contentions before the bank. Furthermore, the court preserved his right to approach an appropriate forum should he be aggrieved by an adverse order from IDBI Bank. In its order, the bench clarified that it was not expressing any opinion on the merits of the case, leaving the core issues to be adjudicated at a later stage.

The Core of the Dispute: Natural Justice vs. Procedural Compliance

The legal battle stems from an SCN issued by IDBI Bank in May 2024 concerning a Rs 750 crore loan extended to RCOM. The proceedings were initiated under the RBI’s 2016 Master Directions on Fraud Classification and Reporting, a framework that empowers banks to classify accounts as fraudulent based on forensic audits that reveal evidence of fund diversion, misappropriation, or misrepresentation.

Mr. Ambani's writ petition, filed through advocates Ankit Lohia, Ameet Naik, and Abhishek Kale, was fundamentally premised on the principles of natural justice. The primary argument was that a meaningful and fair hearing was impossible without the prior disclosure of all documents and evidence relied upon by the bank. His counsel argued that proceeding with the hearing would cause "'grave prejudice' to his right to a fair hearing," effectively reducing the process to a "procedural formality."

The timeline of the dispute illustrates the core of Ambani's contention. After an initial response to the SCN in June 2024, IDBI Bank provided a copy of the Forensic Audit Report (FAR) a year later, in June 2025. The FAR reportedly alleged suspicious related-party transactions. Following this, Mr. Ambani’s legal team requested underlying and supporting documents cited in the FAR, specifically listing 17 such documents they deemed essential for a robust defense.

IDBI Bank, however, maintained that it had sufficiently complied with its obligations by sharing the FAR and its annexures. The bank denied the request for further 'underlying' documents, deeming them irrelevant to the SCN, which ultimately prompted Mr. Ambani to seek judicial intervention from the High Court.

Arguments Before the Court

Representing IDBI Bank, Senior Advocate Zarir Bharucha, assisted by advocates Rishi Thakur and Dhwani Gala, strongly opposed the plea. Mr. Bharucha contended that the petition was not maintainable and that the bank had provided Mr. Ambani with multiple opportunities for a personal hearing, which were repeatedly met with requests for adjournments. The bank’s stance was that it had shared the core document—the FAR—and had acted in full compliance with the RBI's regulatory framework. Delaying the hearing further, the bank argued, would only impede the conclusion of long-pending fraud classification proceedings.

On the other hand, Mr. Ambani’s counsel, led by Ankit Lohia, emphasized that the bank's refusal to provide the requested documents violated the audi alteram partem rule—the right to be heard. They contended that a fair hearing necessitates not just an opportunity to speak, but an opportunity to prepare and respond to all adverse material being considered.

The bench’s decision not to grant an ad-interim stay proved to be the pivotal moment. The refusal signaled that the court was not convinced, at this preliminary stage, to halt the ongoing regulatory process. Faced with this judicial stance, the withdrawal of the petition was a pragmatic choice, allowing Mr. Ambani to avoid a dismissal on merits and preserve his arguments for the bank's internal hearing and any subsequent legal challenges. The liberty granted by the court to "raise all contentions" before the bank and "approach an appropriate forum" if the outcome is adverse is a critical takeaway for his legal team.

Broader Context: Mounting Legal Challenges

This case does not exist in a vacuum. It is part of a series of legal and regulatory challenges confronting Mr. Ambani related to the financial collapse of RCOM. The source materials highlight a broader pattern of scrutiny from financial institutions and investigative agencies:

• State Bank of India (SBI): Earlier this month, the Bombay High Court dismissed a separate plea by Mr. Ambani against SBI’s decision to declare his loan accounts as 'fraud.' In June 2025, SBI had classified the accounts of RCOM and Mr. Ambani as fraudulent, citing fund diversion and related-party transactions.
• Central Bureau of Investigation (CBI): Following SBI's classification, the bank initiated steps to approach the CBI. This led to a First Information Report (FIR) being filed by the CBI in August 2025.
• Directorate of Enforcement (ED): Stemming from the CBI's FIR, the ED registered a money laundering case against Mr. Ambani and RCOM last month under the Prevention of Money Laundering Act (PMLA) in connection with an alleged Rs 2,929 crore fraud at SBI.

This multi-pronged pressure from lenders and agencies underscores the high stakes involved in the IDBI Bank proceedings. A 'fraud' classification by IDBI would not only have civil consequences but could also provide further material for the ongoing criminal investigations.

Legal Implications and Way Forward

The outcome of this hearing offers several insights for legal practitioners in banking and finance litigation:

1. High Threshold for Interim Relief: The court’s reluctance to grant interim relief underscores the judicial deference often shown to ongoing regulatory and quasi-judicial processes, particularly those governed by specialized frameworks like the RBI's master directions. Courts are typically hesitant to stall such proceedings at a nascent stage unless there is a clear and egregious violation of process.
2. Strategic Litigation: The decision to withdraw the plea "under protest" is a calculated legal strategy. It prevents a potentially adverse ruling on the merits of the petition while ensuring that the arguments regarding natural justice are not waived. These arguments can now be formally placed on record during the bank’s hearing, forming the basis for any future appeal or writ petition.
3. The Scope of 'Fair Hearing': The case continues to test the boundaries of what constitutes a fair hearing in the context of fraud classification. While banks argue that providing the FAR is sufficient, borrowers and directors contend that a deeper dive into the underlying evidence is necessary. The final decision by IDBI Bank, and any subsequent litigation, may provide further clarity on the documentary disclosure required under the RBI guidelines.

As Mr. Ambani prepares to appear before IDBI Bank’s committee, the focus will be on the detailed submissions made by his legal team. The bank’s final order will be keenly watched, as an adverse finding is almost certain to trigger a fresh round of litigation, where the very questions of procedural fairness and natural justice raised in the withdrawn petition will likely take center stage once again.