The Bombay High Court has ruled that Anil Ambani was not entitled to a personal hearing before the SBI classified Reliance Communications as a fraud account. The court found that SBI’s process met legal requirements, impacting Ambani and other company directors.
The Bombay High Court ruled that industrialist Anil Ambani was not entitled to a personal hearing before the State Bank of India (SBI) classified Reliance Communications Ltd (RCom) as a fraud account, upholding the bank’s order. It held that the bank had complied with the principles of natural justice by allowing written representation.
In a detailed order made available on Tuesday, a bench of Justices Revati Mohite Dere and Dr Neela Gokhale, while dismissing Ambani’s petition, said, “The principles of natural justice demand that the borrowers must be served a notice, furnished with the
forensic audit report and allowed to submit their representation before their account is classified as fraud.”
“The right contemplated is one of representation, not necessarily of personal hearing. In fact, the right of representation is not read specifically as meaning a right to personal hearing,” the bench said.
The court observed that the audi alteram partem principle (right to be heard) does not automatically mean an oral hearing unless expressly provided by law.
“Grant of a personal hearing is not a matter of right in every case. As long as the petitioner was afforded an adequate opportunity to submit his objections in writing, the requirement of fairness and compliance with the principles of natural justice stood satisfied,” the bench said.
The bench reviewed the timeline showing that SBI had issued a show-cause notice in December 2023 after a forensic audit of RCom, followed by multiple letters seeking Ambani’s response. Despite being furnished with the full forensic audit report in September 2024, the court noted that Ambani “did not respond within the extended timelines, nor requested a personal hearing”.
Concluding that the SBI’s action was lawful, the court said, “The impugned order is a reasoned one, and no infirmity can be found in the same.”
The court also concluded that when proceedings were initiated against the company or a corporate body, with a view to classifying the account of that firm as a fraud account, and it was declared as one, the promoter/directors who were in control of the company’s affairs would automatically be liable to penal measures.
