The case concerning the declaration of Anil Ambani's Reliance Communications (RCom) loan account as 'fraud' has taken a new turn. During a hearing in the Bombay High Court on Thursday, Canara Bank itself informed the court that it had removed the 'fraud' tag from the account. Consequently, the court dismissed Ambani's petition, stating that no dispute remained.
Court Orders Information to RBI
The bench of Justices Revati Mohite Dere and Neela Gokhale also directed that the Reserve Bank of India (RBI) be informed of this change. It is noteworthy that under the RBI's master circular, banks must follow specific procedures before declaring any account as fraud.
Questions Arise After RCom's Insolvency
The entire matter is related to the insolvency proceedings of Reliance Communications. The company voluntarily initiated insolvency proceedings in 2019. However, a few years later, on November 8, 2024, Canara Bank declared its loan account of ₹1,050 crore as 'fraud'. The bank alleged that the company had transferred this loan taken in 2017 to one of its group companies, and the money was used to repay old debts, which was against the rules.
SBI Also Claimed Fraud
Not only Canara Bank, but the State Bank of India (SBI) had also declared RCom's loan account as fraud. In a letter sent to the company, SBI stated that it had considered the responses received from the Ambani group, but they could not satisfy the bank. The bank also clearly stated that the loan terms were not followed and several irregularities were found in the account.
Anil Ambani Challenged in Court
In February 2025, Anil Ambani approached the Bombay High Court in this entire matter. He stated that Canara Bank did not give him any notice before declaring his account as fraud nor was he given an opportunity to respond. He argued that this was a violation of both the Supreme Court and RBI guidelines. The court also questioned whether the bank was acting in accordance with the rules.
Court Had Stayed the Decision in February
The court had then put an interim stay on Canara Bank's decision. The court clarified that the borrower should be given the right to a hearing before such a major action as declaring fraud. This stance of the court was considered a relief for RCom.
Why Did Canara Bank Change its Decision Now?
When the bank itself informed the court on Thursday that it had removed the 'fraud' tag from RCom's loan account, the case took a completely different direction. The bank, backtracking from its earlier stance, said that it had decided to remove this tag and would now inform the RBI as well.
Will This Affect Other Cases?
Although the court's decision in this case came because the petition was technically closed, it is being observed that the validity of such steps taken by other banks in the future will also be examined in the court in a similar manner. Especially when a company or individual is declared a fraud without following the proper procedure.
Some Key Figures Related to the Case
- Loan Amount: Approximately ₹1050 crore
- Date of Loan: 2017
- Date of Fraud Tag: November 8, 2024
- Petition in Court: February 2025
- Notification of Fraud Tag Removal: July 2025
- Company Status: Under insolvency proceedings
This development has once again sparked a debate on the process and transparency of declaring fraud in the banking sector. While RCom may have received relief, it can set an example for other companies.
