BANK OF BARODA v. ANIL D AMBANI
Prospective Application of RBI Master Directions 2024 and Validity of Forensic Audits Conducted by Non-Chartered Accountant Experts under 2016 Framework.
Court: Bombay High Court
Citation: 2026:BHC-OS:4982-DB
Decision Date: 23-02-2026
List of Laws
The Banking Regulation Act, 1949; RBI Master Directions on Fraud Risk Management, 2024; RBI Master Directions on Frauds, 2016; The Companies Act, 2013; Code of Civil Procedure, 1908 (Order XXXIX Rules 1 and 2); General Clauses Act, 1897
- Facts: The respondent, Anil D. Ambani, filed civil suits seeking damages and the quashing of "fraud" classifications and show-cause notices issued by several banks, including Bank of Baroda, IDBI Bank, and Indian Overseas Bank. The banks' actions were based on a Forensic Audit Report (FAR) dated October 15, 2020, prepared by BDO India LLP concerning Reliance Communications Limited (RCOM). The respondent challenged the FAR on the grounds that BDO was not a registered audit firm under the ICAI and that the signatory was not a qualified Chartered Accountant, allegedly violating the RBI Master Directions 2024 and the Companies Act, 2013. A Single Judge of the High Court granted an interim injunction staying all actions by the banks, holding that the FAR was prima facie invalid due to the auditor's lack of qualification and independence.
- Procedural Posture: The appellant-banks and BDO India LLP filed a batch of commercial appeals before the Division Bench of the Bombay High Court, challenging the common interim order dated December 24, 2025, passed by the learned Single Judge.
- Issue: Whether the interim injunction staying bank proceedings and "fraud" classifications was legally sustainable, particularly regarding the retrospective application of the 2024 RBI Master Directions to an audit conducted under the 2016 Directions.
- Holding: No, the interim injunction was not sustainable. The Division Bench set aside the Single Judge's order and dismissed the respondent's interim applications.
- Reasoning: The Court reasoned that the 2024 RBI Master Directions operate prospectively and do not invalidate actions taken under the 2016 Directions. Under Clause 8.8.2 of the 2016 Directions, banks were permitted to use "external auditors" or "forensic experts", a term not restricted solely to Chartered Accountants or firms registered with the ICAI. The Court found that the Single Judge erred by applying Footnote-14 of the 2024 Directions retrospectively. Furthermore, the Court held that the respondent's challenge was grossly delayed, as he had possession of the FAR since 2021 but only raised the "qualification" issue in 2025 after failing in previous writ proceedings. The Court observed that the Single Judge exceeded jurisdiction by considering materials not in the pleadings and by misconstruing standard "disclaimer" clauses in the audit report as evidence of the report's inconclusiveness. The balance of convenience favored the banks in protecting public money and the banking system.
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