Delhi High Court quashes Union Bank’s ‘fraud’ tag on Jai Anmol Ambani-linked firm

The Delhi High Court on Friday, December 19, set aside Union Bank of India’s decision to classify the bank account of a company linked to Jai Anmol Ambani, son of industrialist Anil Ambani, as fraudulent, citing a violation of principles of natural justice, according to a report.

Justice Jyoti Singh passed the order while allowing a plea filed by Jai Ambani, who contended that the bank declared the account as fraud without issuing a show-cause notice or granting him an opportunity of being heard, according to a report on Bar and Bench.

Ambani argued that the bank’s action was contrary to the Supreme Court’s ruling in State Bank of India v Rajesh Agarwal, which mandates that borrowers must be given prior notice and a chance to respond before their accounts are classified as fraudulent, the report added.

Appearing for Ambani, Senior Advocate Rajiv Nayar submitted that Union Bank’s affidavit itself revealed that the show-cause notice was sent to an address vacated by the company in September 2020, rendering the service invalid.

Agreeing with the submission, the court observed that no show-cause notice had, in fact, been served before the declaration was made.

“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 judgment of the Supreme Court, the impugned classification and declaration are quashed,” the article quoted Justice Singh as saying.

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However, the court clarified that its decision would not prevent Union Bank from initiating fresh proceedings. The bank has been permitted to issue a new show-cause notice, along with all relevant material and documents, enabling Ambani to file a detailed response. A fresh order may then be passed after due consideration, the court said.

Separately, the Central Bureau of Investigation (CBI) has registered cases against Anil Ambani group companies, alleging fraud amounting to nearly ₹14,853 crore. The agency has accused Jai Anmol Ambani of cheating Union Bank of India and causing the public sector lender a loss of approximately ₹228 crore.

According to the CBI, Reliance Home Finance Ltd (RHFL)—where Jai Anmol Ambani served as a director—had availed substantial loans but failed to meet repayment obligations. A forensic audit allegedly found that the loan proceeds were diverted and misused instead of being deployed for sanctioned purposes, leading the account to slip into non-performing asset (NPA) status.

Union Bank has claimed a wrongful loss of about ₹228.06 crore and, after classifying the account as fraudulent, lodged a complaint with the CBI alleging criminal conspiracy, cheating and misconduct.

The petition was filed through advocates Rishi Agrawala and Tejasvi Chaudhry of Agarwal Law Associates.