Mumbai, Oct 3 : In a setback to industrialist Anil Ambani, the Bombay High Court on Friday rejected a plea against SBI's decision to declare his loan account as 'fraud'.

A bench of Justices Revati Mohite Dere and Neela Gokhale dismissed Anil Ambani's argument of procedural unfairness and upheld the State Bank of India's action.

The court did not find any force in the industrialist's allegation of arbitrariness in the bank's decision and noted that SBI had followed the RBI's July 2024 Master Directions on fraud classification.

The bank tagged the loan accounts of Reliance Communications (RCom) and its promoter, Anil Ambani, as fraudulent in June 2025.

The bank cited diversion of funds, breach of covenants and related-party transactions as the reasons behind its decision, approaching the Central Bureau of Investigation (CBI) for action.

Anil Ambani had challenged the decision on the grounds that he was only a non-executive director and had been selectively singled out. He also argued that adequate opportunity to present his defence was not provided by the bank.

Earlier this month, Bank of Baroda, in an exchange filing, declared that the loan accounts of Reliance Communications Ltd (RCom) and its erstwhile director Anil Ambani had been categorised as 'fraud'.

This classification pertained to loans taken before RCom entered the corporate insolvency resolution process (CIRP), the exchange filing said.

This development marked a crucial turn in the ongoing financial saga surrounding the once-prominent telecom company and its erstwhile director.

Rcom, which underwent the CIRP under the Insolvency and Bankruptcy Code (IBC), 2016, said that the loans in question are related to the period before its insolvency proceedings began. The company asserted that these loans must be resolved as part of a resolution plan or through liquidation under the IBC.

RCom is presently under the control of a resolution professional, Anish Niranjan Nanavaty. Anil Ambani is no longer a director of the company.

/IANS