HC Sets Aside Interim Injunction Against Banks’ Action Based on Forensic Audit

Case Details: Bank of Baroda vs. Anil D. Ambani - [2026] 183 taxmann.com 711 (HC-Bombay)

Judiciary and Counsel Details

• Shree Chandra Shekhar, CJ. & Gautam A. Ankhad, J.
• Tushar Mehta, Solicitor General, Aspi Chinoy, Kevic Setalvad, Zal Andhyarujina, Zarir Bharucha, Senior Counsels, Jehan Lalkaka, Nishit Dhruva, Ms Niyati Merchant, Yash Dhruva, Ms Rajlaxmi Pawar, Harsh Sheth, Babu Sivaprakasam, Ms Akansha Agarwal, Ms Nandita Bajpai, Ms Rahat Kalptri, Vijay Srinivasan, Bimal Rajasekhar, Yogesh Pirthani, Rishi Thakur & Dhwani Gala, Advs. for the Appellant.
• Mustafa Doctor, Mukul Rohatgi, Dr Birendra Saraf, Gaurav Joshi, Ashish Kamat, Senior Counsels, Kunal Dwarkadas, Rahul Dwarkadas, Ms Prachi Dhanani, Raushan Kumar, Aniket Kharote, Ameet Naik, Abhishekh Kale, Sanjeevi Seshadri, Dhruva Gandhi, Ronit Doshi, Anand Mohan, Devashish Jagirdar, Ronit Doshi & Mayur Khandeparkar, Advs. for the Respondent.

Facts of the Case

In the instant case, the respondent was a non-executive director of a telecom group company (RCOM) and its related entities, which were admitted to the Corporate Insolvency Resolution Process (CIRP).

The appellant Banks had extended loans to RCOM and its related entities. The Appellant Banks had engaged the BDO India LLP to conduct a forensic audit of the RCOM and its related entities.

The BDO had submitted a Forensic Audit Report dated 15 October 2020. Based on the said report, the appellant Banks had issued a show cause notice to the respondent.

The respondent had filed civil suits seeking damages and declaratory/mandatory reliefs, alleging that the BDO and its signatory were ineligible under the law, the report was incomplete and carried disclaimers, and that under the RBI Master Directions, 2024, the forensic audit had to be conducted and signed by an auditor qualified under the relevant statute.

The respondent had also moved interim applications to stay further action under or in reliance on the Forensic Audit Report and show cause notices. The Single Judge by the impugned order had granted interim relief restraining the appellant Banks from proceeding further.

It was noted that the actions taken under the Master Directions-2016, which were not repealed, would remain alive for all future purposes and executive decisions and actions taken by the appellant Banks under the Master Directions-2016 would not be invalidated on coming into force of the Master Directions-2024.

High Court Held

The High Court observed that, under Clause 8.8.2 of the Master Directions-2016, the appellant Banks were entitled to engage an external auditor, a forensic expert or an internal team for investigations.

Further, the High Court observed that the BDO report was prepared by the external auditors who were also forensic experts.

The High Court held that since the respondent was afforded sufficient opportunity before the Fraud Declaration Order was passed against him, there was no prima facie reason to grant an interim injunction in favour of the respondent.

Further, the High Court held that, since there was a host of legal issues that the Single Judge was required to keep in mind before granting an interim injunction in favour of the respondent, the impugned order of interim injunction was to be set aside.

List of Cases Reviewed

• Coal India Ltd. v. Saroj Kumar Mishra (2007) 9 SCC 625 (para 41) distinguished

List of Cases Referred to

• State Bank of India v. Rajesh Agarwal [2023] 148 taxmann.com 425 (SC) (para 5)
• Anil D. Ambani v. Bank of Baroda [Suit (L) No.37862 of 2025, dated 24-12-2025] (para 8)
• CIT (Central-I) v. Vatika Township Pvt. Ltd. (2015) 1 SCC 1 (para 15)
• Zile Singh v. State of Haryana (2004) 8 SCC 1 (para 15)
• Kashi Math Samsthan v. Shrimad Sudhindra Thirtha Swamy (2010) 1 SCC 689 (para 18)
• C. Bright v. The District Collector [2020] 121 taxmann.com 67 (SC)/[2021] 163 SCL 573 (SC) (para 21)
• Best Sellers Retail (India) Private Limited v. Aditya Birla Nuvo Limited (2012) 6 SCC 792 (para 21)
• Avantha Holdings Limited v. Union of India [WP (C) No. 274 of 2023] (para 21)
• Murphy v. Wyatt (2011) 1 WLR 2129 (para 21)
• Union of India v. Glaxo India Limited & Anr. (2011) 6 SCC 668 (para 22)
• P. Mahendran v. State of Karnataka (1990) 1 SCC 411 (para 23)
• Sri Vijayalakshmi Rice Mills, New Contractors Co. v. State of Andhra Pradesh (1976) 3 SCC 37 (para 23)
• A. A. Carlton v. Director of Education (1983) 3 SCC 33 (para 23)
• Wander Ltd. v. Antox India Pvt. Ltd. 1990 (Supp.) SC 727 (para 26)
• Banarsi v. Ram Phal (2003) 9 SCC 606 (para 27)
• Coal India Ltd. v. Saroj Kumar Mishra (2007) 9 SCC 625 (para 27)
• Kolhapur Canesugar Works Ltd. v. Union of India 2000 taxmann.com 1065 (SC) (para 28)
• State of Orissa v. Titaghur Paper Mills Co. Ltd. (1985) SCC (Supp.) 280 (para 28)
• Tarasingh v. State of Rajasthan (1975) 4 SCC 86 (para 29)
• Anil D. Ambani v. State Bank of India [2025] 179 taxmann.com 213 (Bombay)/[2025] 190 SCL 673 (Bom) (para 29)
• Uto Nederland B. V. v. Tilaknagar Industries 2025 SCC OnLine Bom 6140 (para 30)
• Philipps v. Philipps (1878) 4 QBD 127 (para 42) and Bruce v. Odhams Press Ltd. (1936) 1 KB 697 (para 43).