In a major setback for business tycoon Anil Ambani, the Supreme Court of India on Thursday rejected his urgent request to stop banks like Bank of Baroda, Indian Overseas Bank Ltd, and IDBI Bank Ltd from declaring his loan accounts as fraudulent under the RBI’s 2024 rules.

Court Supports Bombay High Court Decision:

A bench led by Chief Justice of India (CJI) Surya Kant, along with Justice Joymalya Bagchi and Justice Vipul Pancholi, said there was no reason to interfere with the Bombay High Court’s Division Bench decision. That earlier decision had removed a stay granted by a Single Bench. The Supreme Court also clarified that anything it said would not affect the separate case Ambani has filed against the banks.

Settlement Request Sparks Debate:

After the ruling, Senior Advocate Kapil Sibal, appearing for Ambani, said his client wants to settle the matter with the banks and asked the court to record this.

Solicitor General Tushar Mehta, representing the banks, opposed this and said, “it will have other ramifications” and that the “statement will be used for purposes which we cannot conceive.”

Sibal responded, “Why would the Solicitor oppose an innocuous statement that I wish to settle the matter. Let the banks oppose the settlement, but what is the objection to recording my statement?”

Mehta replied, “I know where this is going,” warning it could affect criminal investigations.

Court Records Statement, Moves Case Forward:

In the end, the court recorded Sibal’s statement about trying to settle but made it clear it was not expressing any opinion. It also asked for the trial in the case to move faster, if both sides cooperate, and said Ambani can still use other legal options.

Background of the Case:

Ambani had approached the Supreme Court after the Bombay High Court’s Division Bench, on February 23, set aside a stay that had earlier protected him from being declared a fraud.

Arguing for Ambani, Sibal said removing this protection would cause a “virtual civil death,” adding, “I have been called a fraud. This is a virtual civil death, nobody will lend money to him.” He argued that this kind of interim relief should not be taken away unless it is clearly wrong.

Court Raises Serious Questions:

Chief Justice Surya Kant pointed out that there are also investigations by the Central Bureau of Investigation and the Enforcement Directorate into alleged fund diversion. He questioned whether the losses of “1000s of crores of taxpayer hard-earned money alleged to be siphoned” had been repaid.

Sibal also challenged the fraud tag, arguing that the audit by BDO LLP did not meet RBI standards. He said, “You cannot have a person who is a forensic service provider, who is not an auditor, and you cannot classify the account as fraud based on his report.”

Mehta defended BDO, calling it a respected global auditor chosen through a proper process.

Sibal replied, “Show where he is an auditor. He is not a CA! He is himself saying that I am not a CA/auditor,” and also raised issues under the Companies Act.

Court Rejects ‘Technicality’ Argument:

Justice Bagchi pointed to findings of fund diversion and rejected the claim that they were only “potential” issues. He also criticized the Single Bench for focusing too much on technicalities, saying, “We would have accepted your argument, but the single judge does not question the competence of the entity which went into the audit….that is why we said the single judge put form over substance, there was substantial compliance.”

Arguments on Audit Rules & Timeline:

Senior Advocate Shyam Divan, appearing for Ambani against Indian Overseas Bank, said strict legal rules must be followed in such audits. He argued, “When we see a scheme under our statutes, financial audit in our country can be done only by a CA. When you have enormous civil and criminal consequences, the particular forensic audit has to be by a person who holds the qualifications.”

Chief Justice Kant questioned whether the court should interfere with the banks’ choice of auditor, saying, “Nationalised banks have engaged the services. They know the best person, can we substitute their wisdom? it is their money, which according to them has been siphoned off.”

Senior Advocate Narender Hooda, representing IDBI Bank’s case, pointed out issues with the audit timeline and process. He said, “The report was gathering dust from 2020 to 2025, and it comes to me only in 2025 when a show-cause notice was issued.”

Case Details: ANIL D AMBANI Vs BANK OF BARODA | SLP(C) No. 12943-12944/2026 and connected cases.