Delhi HC sets aside bank’s decision to declare account of Anmol Ambani’s firm fraudulent

The Delhi High Court on Friday set aside the decision of the Union Bank of India to declare as fraudulent the bank account of a company owned by industrialist Anil Ambani’s son Jai Anmol Ambani.

The high court noted that no show cause notice was served to petitioner Anmol Ambani, as it was sent on an address which the company had vacated in 2020 itself.

“This court is of the view that indeed, a show cause notice was never served before making the declaration as fraud. Accordingly, in light of the judgement..., the impugned classification and declaration are quashed,” Justice Jyoti Singh said. The court made clear that this order will not preclude the bank from issuing a fresh show cause notice to Anmol and proceeding in the matter. It said the bank must furnish all relevant documents to Anmol with the fresh notice to enable him to file a response and once he replies, a fresh order can be passed.

The court was hearing a plea by Anmol that the bank took the decision of declaring the account as fraudulent in October without issuing any show cause notice or according him any hearing, violating natural justice. The petitioner referred to a Supreme Court decision in which it was held that borrowers must be given prior notice and an opportunity to respond before declaring the account as fraud. Senior Advocate Rajiv Nayar, appearing for Anmol, contended that Union Bank of India’s affidavit revealed the show cause notice was served on an address which the company had already vacated in September 2020.

Taking note of the submissions, the court said it would mean no show-cause notice was served on Anmol before declaring the account as fraudulent. The CBI has booked Anmol and Reliance Home Finance Ltd (RHFL) in a case of alleged cheating in Union Bank of India that caused the public sector bank a loss of nearly Rs 228 crore.

The agency acted on a complaint from the bank (erstwhile Andhra Bank) against RHFL, Jai Anmol Ambani and Ravindra Sharad Sudhakar, both directors in RHFL. The company had availed credit limits to the tune of Rs 450 crore from the bank’s SCF branch in Mumbai for business needs, the complaint stated.

The company failed to pay the instalments to the bank and hence, the said account was classified as a non-performing asset (NPA) on September 30, 2019, the officials had said.