Bombay HC Directs Anil Ambani to Approach RBI in Loan Fraud Classification Case
Court directs Ambani to approach RBI, seeks Union Bank’s response on fraud tagging of loan account
Mumbai: The Bombay High Court on Friday issued a notice to the Union Bank of India and the Reserve Bank of India (RBI) in response to a petition filed by industrialist Anil Ambani challenging the classification of his loan account as fraud.
The Court expressed concerns over the "cut, copy, paste manner" in which banks pass orders declaring accounts as `defaulter' or `fraud' and asked industrialist Ambani to approach the RBI against the order of Union Bank of India declaring his loan account as `fraud'.
A division bench of Justices Revati Mohite-Dere and Neela Gokhale was hearing a petition filed by Ambani but declined to stay the order and instead directed him to approach the central bank with his grievance. The loan account is linked to the insolvency-bound Reliance Communications and was described as fraudulent under the RBI’s Master Circular in October last year.
Ambani claimed that he was not granted any hearing before the order was passed, challenging two show-cause notices issued by the bank. He had also asked for copies of the documents on which the bank had relied before passing the order, but no documents were furnished, his petition claimed.
“There cannot be such cut, copy and paste orders. There has to be some application of mind. Ultimately, this is public money. We cannot have such orders passed in such a casual manner. There has to be some mechanism put in place," the bench said.
The Court also directed the RBI to take action to ensure that banks comply with the Master Circular, which mandates that banks establish their own fraud classification policies.
The court also directed the Union Bank of India to file its affidavit in response to Ambani's petition, and posted the matter for further hearing on March 13.
