The Supreme Court on Thursday refused to entertain industrialist Anil Dhirubhai Ambani’s challenge to classify loan accounts of Reliance Communications group companies as “fraud”, underscoring serious allegations of misappropriation and diversion of “thousands of crores” of public money and asked him to pursue remedies before the civil court as a related case is still pending.
Ambani also told the court that he was willing to explore a settlement with the banks, a submission the court recorded while clarifying that it had not expressed an opinion on the proposal.
The bench led by Chief Justice of India Surya Kant, which also includes Justices Joymalia Bagchi and Vipul M Pancholi, said it was not inclined to intervene at this stage as the main dispute was yet to be finally decided. “It is a case of misappropriation of funds… We do not want to express any opinion at this stage. You have legal means available,” he said, referring to allegations related to fictitious entities and money transfer.
The court explained that Ambani’s attempt to challenge the fraud classification on what it called a “technical objection”, relating to the qualifications of the forensic auditor, could not be examined in isolation from the substantive issues that were already pending before a civil court. “Whether it can invalidate everything or not, you have to prove it in the lawsuit,” said senior lawyer Kapil Sibal, who represented Ambani.
Sibal said the audit report that forms the basis of the fraud classification is invalid because it was not prepared by a qualified chartered accountant and that such actions would lead to “civil death” by cutting off access to financing. He also urged the court to intervene, noting that the civil proceedings could take years to conclude.
However, the bench noted that the Division Bench of the Bombay High Court had already examined the case on merits in its February order and recorded findings on the diversion of funds, while also admitting “substantial compliance” with regulatory requirements in appointing the auditor. It rejected the request for a new judicial audit, stating that courts should not supersede banks’ judgment unless there is clear evidence of injustice.
Senior advocate Shyam Divan, appearing in a related matter, reiterated the challenge to the auditor’s qualifications, calling it a “fatal flaw”. But the court held that banks are best placed to determine who should conduct audits. “It was their money…they should know best about the audits,” the bench noted, while adding that Ambani could raise all these issues, including the eligibility of the auditor, before the civil court.
In another petition related to IDBI Bank, senior advocate Narender Hooda sought a post-decision hearing for Ambani, but the court rejected this contention, stating that principles of natural justice were followed, including a personal hearing before classifying the fraud. Solicitor General Tushar Mehta, who represents public sector banks, opposed these pleas.
While dismissing the petitions, the court made it clear that the observations of the Bombay HC would not affect the civil suit and that Ambani would be free to raise all available grounds before the trial court. He also urged the speedy disposition of the case.
The case arose from a forensic audit report issued in October 2020 which pointed to alleged irregularities around it $31,580 crore through Anil Dhirubhai Ambani Group (ADAG) entities. Accordingly, several banks initiated fraud classification procedures, eventually declaring Ambani a “fraudulent” borrower in September 2025.
The Supreme Court’s refusal to intervene comes amid intensifying criminal investigations into alleged widespread banking fraud involving ADAG companies. The Central Bureau of Investigation, in a case based on a complaint from Bank of Baroda, alleged that there was a loss exceeding $2,200 crore linked to loans taken by Reliance Communications, for allegedly diverting funds through fake transactions.
Separately, the Enforcement Directorate on Wednesday arrested two former group executives in a money laundering probe linked to Reliance Home Finance and Reliance Commercial Finance, for allegedly routing funds through shell entities.
In a public interest litigation, the Supreme Court is monitoring a broader investigation into alleged transgressions $40,000 crore involving ADAG entities, stressing the need for a fair, transparent and time-bound investigation.
