Bombay HC stays Canara Bank order declaring Anil Ambani’s loan account as fraudulent

The tribunal sought to cognize from the RBI what actions it projected to instrumentality against the banks for issuing orders declaring indebtedness accounts arsenic fraudulent without proceeding the parties oregon borrowers, defying the maestro circular and Supreme Court rulings.

The RBI determination connected fraud hazard absorption successful banks was taken nether the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions of 2016. The RBI had besides directed the banks to devise their ain policies. However, Ambani’s lawyer pointed retired that Canara Bank had not yet formed its interior policy.

The RBI circular allowed banks to marque afloat usage of the Central Fraud Registry for timely identification, control, reporting and mitigation of risks associated with the fraud. As per the circular, erstwhile the slope classifies an relationship arsenic fraudulent, it has to study the aforesaid to the Central Repository of Information connected Large Credits level to alert different banks. Moreover, if a slope decides to classify the relationship arsenic fraudulent straightaway, it has to study the fraud to RBI wrong 21 days and study the substance to immoderate probe agency.

A seat of Justices Revati Mohite-Dere and Neela K Gokhale connected Friday was proceeding Ambani’s plea against Canara Bank that said that helium was informed astir the impugned bid implicit a period aft it was issued and that helium was not fixed an accidental of a proceeding earlier the bank.

The precocious tribunal was informed that the Supreme Court successful 2023 had considered the contented portion deciding an entreaty against a Telangana High Court bid and had upheld the precocious tribunal bid that acceptable speech the RBI decision.

The Supreme Court had held that “principles of earthy justness request that the borrowers indispensable beryllium served a notice, fixed an accidental to explicate the conclusions of the forensic audit report, and beryllium allowed to correspond by the banks earlier their relationship is classified arsenic fraud nether the Master Directions connected Frauds”. It besides held that the “decision classifying the borrower’s relationship arsenic fraudulent indispensable beryllium made by a reasoned order” to prevention directions from the “vice of arbitrariness”.

Ambani’s counsel said that the full enactment was taken connected the crushed that though a forensic information study was furnished to the petitioner and definite different documents were called for, determination was implicit soundlessness connected the portion of the slope and nary further proceeding was either scheduled oregon fixed by Canara Bank.

However, Canara Bank justified its determination stating that owed process was followed earlier taking the impugned decision.

The seat relied connected the December 2024 bid passed by different precocious tribunal seat that stayed the effect of Canara Bank classifying the indebtedness relationship of Reliance Communications autarkic manager Manjari A Kacker arsenic fraudulent.

“Don’t they (banks) person immoderate accountability? Are they not work bound to spell done the orders passed by the Supreme Court from clip to time?” the precocious tribunal questioned.

The seat past stayed the Canara Bank bid till further orders and sought the bank’s reply by February 28. It posted further proceeding to March 6. It besides asked the petitioner to marque the RBI a responsive and sought a effect arsenic to what actions were projected against banks not pursuing the mandate nether the circular.

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