Delhi High Court orders maintaining Status Quo on Anil Ambani's firms accounts

Delhi HC orders maintaining Status Quo on Anil Ambani's firms accounts

RComm, Reliance Telecom and Reliance Infratel had challenged RBI declaration of their bank accounts as fraudulent

The Delhi High Court has asked State Bank of India and the Reserve Bank of India (RBI) to maintain status quo with respect to accounts of Anil Ambani's firms, RComm, Reliance Telecom and Reliance Infratel, which had been declared by the bank as fraud accounts until 13 January 2021. Justice Prateek Jalan passed an order on a plea by erstwhile directors of the three companies challenging a 2016 RBI circular regarding the declaration of accounts as fraud.

The petition is similar in nature, the court described it with those which were filed before the court challenging the vires of RBI's Master Circular 1 July 2016 updated as on 3 July 2017. The circular had laid down guidelines and directions for the declaration of accounts fraudulent.

It was challenged for the alleged violation of principles natural justice as it allows a bank to arbitrary declare accounts as fraudulent without sending any notice to parties or beforehand communication with this regard.

The Delhi High Court had sought the Centre and SBI's reply to former RCom chairman Anil Ambani's plea to include Chinese banks, which have got a decree of $717 million against him from a court in the UK, in the proceedings here related to the recovery of ₹ 1,200 crore loan granted to two of his companies.

The counsels defended before the court and said that relief had been granted to the petitioners challenging the 'arbitrary powers' of the circular earlier.

Conferring to the plea, the court said that the respondents, including RBI and the three companies, were at liberty to file their replies to the petition by 11 January and listed the matter for hearing on 13 January.

The court further said that SBI and RBI were at liberty to take any steps in the nature of an investigation or filing of complaint proceedings against the former directors and the three companies independent of the impugned action of declaring the accounts of the three companies as fraud accounts.

The moratorium on recoveries from the sale of Ambani's assets, as provided under Section 96 of the Insolvency and Bankruptcy Code, would remain in operation for now, the High Court further clarified.