A group of public sector banks has approached the Bombay High Court to challenge an interim order that restrained them from taking action against industrialist Anil Ambani in connection with alleged irregularities flagged through forensic audits. The appeal has been filed before a division bench of the high court, contesting a single-judge order passed late last month.
Bank of Baroda, IDBI Bank, Indian Overseas Bank, along with audit firm BDO India LLP, have jointly questioned the legal basis of the restraint, arguing that the order has wider implications for the interpretation and enforcement of banking fraud regulations issued by the Reserve Bank of India (RBI).
The matter stems from notices issued to Anil Ambani, a former non-executive director of Reliance Communications (RCom), following forensic audits conducted under RBI directions. Ambani had moved the high court seeking protection against coercive action by the banks, contending that the audits did not meet statutory audit standards.
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Background of the dispute
In December 2025, the high court granted interim relief to Ambani, restraining the banks and the audit firm from acting on the notices issued to him. The court accepted the argument that forensic audits initiated under RBI instructions must adhere to the same professional and statutory requirements applicable to formal statutory audits.
The order effectively put on hold any further action by the lenders pending detailed adjudication, prompting the banks to challenge the ruling before a higher bench.
IDBI Bank, which has taken the lead in filing the appeal, has argued that the ruling raises a narrow but significant question of law regarding the scope and interpretation of RBI’s Master Directions on fraud issued in 2016 and updated in 2024.
Banks flag regulatory implications
In its appeal, the bank has submitted that forensic audits commissioned by lenders are a supervisory and risk-assessment tool and are distinct from statutory audits conducted under company law. Treating forensic reviews as statutory audits, the lenders argue, could undermine the banking system’s ability to detect and report suspected fraud in a timely manner.
The banks have also pointed out that RBI directions mandate lenders to act on early warning signals and forensic findings to protect depositor funds and maintain financial discipline. Any restriction on acting upon such findings, they contend, could have a chilling effect on fraud detection and compliance mechanisms across the banking sector.
Ambani’s stand
Ambani, in his petitions before the high court, has maintained that the forensic audit process followed by the banks was flawed and did not conform to established legal and professional standards. He has argued that actions based on such audits could have serious reputational and legal consequences and therefore require strict adherence to statutory safeguards.
The interim relief was granted on the premise that these concerns warranted judicial scrutiny before lenders could proceed further.
Wider impact on banking oversight
Legal experts say the case is being closely watched by banks and regulators, as it touches upon the boundary between supervisory audits and statutory audit requirements. A ruling against the lenders could compel banks to revisit how forensic audits are commissioned and relied upon in fraud-related cases.
At the same time, a reversal of the interim order could reaffirm lenders’ authority to act on forensic findings under RBI guidelines without additional procedural hurdles.
What lies ahead
The division bench of the Bombay High Court is expected to examine whether the single-judge order exceeded the limited scope of interim relief by effectively restraining banks from exercising powers granted under regulatory directions. The court’s decision could clarify how RBI’s fraud framework is to be interpreted by lenders and courts alike.
For now, the matter remains sub judice, with the interim protection continuing until the appeal is heard. The outcome is likely to have implications beyond the immediate parties, shaping how banks balance regulatory compliance, borrower rights, and judicial oversight in fraud-related proceedings.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
