Anil Ambani : Reliance Power shares continued to be in the news on Friday as the Bombay High Court awarded the chairman of the ADA Group temporary reprieve by halting coercive action taken by banks that wanted to label his firms’ accounts as “fraud.” Due to market closures on Thursday due to the Christmas holiday, the stock was trading at ₹37.90, down 0.68% from its previous close of ₹38.16 on Wednesday. Notably, after the High Court’s decision on December 24, the stock had increased by about 5%.

Based on a forensic audit report issued by BDO India LLP in October 2020, a single-judge panel led by Justice Milind Jadhav awarded the interim relief, halting the actions of Indian Overseas Bank, IDBI Bank, and Bank of Baroda. Because the report was not signed by a properly trained chartered accountant, as required by the Reserve Bank of India’s Master Directions, the court noted that it could not be trusted. The court accepted Ambani’s first arguments, ruling that convenience favored him and calling it “preposterous” to imply that an external auditor without chartered accountant credentials could be legitimately hired in accordance with RBI regulations.

The court also pointed out that permitting banks to label Ambani and the directors of his businesses as “fraud” would have severe and catastrophic repercussions, such as blacklisting, years-long bank credit denial, and the start of criminal proceedings, which would essentially result in civil death and affect fundamental rights to financial access. According to the forensic investigation, Ambani was given show-cause warnings for labeling the loan accounts of Reliance Communications, Reliance Telecom, and Reliance Infratel as “fraud.”

A stay on any coercive action was sought by Ambani, a former non-executive director of Reliance Communications, in three different cases contesting notifications sent between January and December 2024. Despite receiving ₹65 lakh in professional fees, he said that BDO India LLP, which was chosen by the SBI-led group of lenders, lacked the authority to carry out the audit as the signatory was not a chartered accountant registered with the Institute of Chartered Accountants of India.

The High Court rejected the banks’ arguments and pointed out significant procedural errors, pointing out that the auditor was hired in 2019 to review the accounts for the years 2013–2017, but it took 17 months to submit the report—much longer than the three months required by RBI guidelines. The court warned that banks’ disregard for early warning signals and deadlines might have wider economic repercussions and declared that the RBI Master Directions were more than just paper tigers. Additionally, it noted that the auditor’s independence seemed to have been undermined since BDO had previously claimed that no fraud or criminal breach of trust had been discovered during the audit and had taken part in a joint lenders’ meeting.