Mumbai, Feb 23 (PTI) In a setback to industrialist Anil Ambani, the Bombay High Court on Monday quashed a single bench interim order that stayed proceedings initiated against him and Reliance Communications Ltd to classify their bank accounts as fraud.

A division bench of Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad allowed the appeals filed by three public sector banks and auditor firm BDO India LLP against the December 2025 interim order passed by a single bench of the HC.

The division bench, while quashing the single bench order, termed it "illegal and perverse".

Ambani's counsels sought the HC to stay its order so that they could approach the Supreme Court, but the request was declined.

The banks last month challenged a December 2025 single-bench order granting interim relief to Ambani and his company. The order had cited violations of mandatory RBI rules and a classic case of banks "waking up from deep slumber" after years.

The single bench order stayed all present and future action by Indian Overseas Bank, IDBI Bank and Bank of Baroda, noting that the action was based on a legally flawed forensic audit and violated the Reserve Bank of India's (RBI) mandatory guidelines.

The three banks in their appeal said the forensic audit, which led to accounts being classified as "fraud", was legally valid and based on serious findings of fund siphoning and misutilisation.

This was recorded in the report submitted by the audit firm BDO LLP, they contended.

The banks, in their plea, also said Ambani had raised a technical challenge to the forensic audit before the single bench.

They sought the division bench to quash the single bench's interim order, claiming it was "perverse".

Ambani had challenged before the single bench show-cause notices issued by the Indian Overseas Bank, IDBI and Bank of Baroda, seeking to declare his and Reliance Communications' accounts as fraud accounts.

As an interim relief, he sought a stay of the notices and an injunction against any coercive action on the ground that BDO LLP was not qualified to conduct the forensic audit as its signatory was not a chartered accountant.

BDO LLP was an accounting consultant firm and not an audit firm, Ambani claimed.

The single bench had agreed with Ambani and stayed the action by the banks. PTI SP GK

Forensic audit validity confirmed, enabling banks to proceed with fraud account classification after a higher court quashed a prior interim stay. Division bench overturned a single-judge interim stay that had restrained banks from classifying certain accounts as fraud, finding the stay illegal and perverse. The banks and an audit firm had appealed, asserting the forensic audit was legally valid and disclosed serious fund siphoning and misutilisation; the prior stay rested on challenges to the audit's compliance with RBI guidelines and the auditor's qualifications, which the division bench rejected.