The Delhi High Court on Monday questioned the logic behind Union Bank of India issuing a show-cause notice to Jai Anmol Ambani (son of industrialist Anil Ambani) alleging fraud in the accounts of Reliance Home Finance Limited (RHFL).
Justice Jasmeet Singh expressed surprise at the timing and basis of the notice, observing that the company had already undergone insolvency proceedings, and a resolution plan—approved by the lenders (including Union Bank) and upheld by the Supreme Court—was already in place.
"Notice Must Make Sense"
The show-cause notice, issued on December 22, 2025, accused Jai Anmol Ambani of fraudulent activity related to RHFL's accounts. However, the Single Judge Bench found this procedural step puzzling given the finalized insolvency process.
Justice Singh orally remarked to the Bank's counsel:
"Notice has to make sense, no? Why are you issuing a show-cause notice once the [resolution] plan has been approved? Where have you said that this was wrongly approved or that there was a fallacy in the resolution plan?"
Senior Advocate Rajiv Nayar, appearing for Ambani, argued that the notice was "inherently flawed." He pointed out that the allegations rely on a forensic audit from 2020, yet the notice was issued five years later, well after the debt resolution framework had been settled.
Despite questioning the notice's validity, the Court declined to stay the proceedings at this preliminary stage. Instead, it adopted a balanced approach:
- Right to Reply: Jai Anmol Ambani has been directed to file a reply to the show-cause notice.
- Personal Hearing: He (or his authorized representative) must be granted a personal hearing by the Bank.
- Speaking Order: The Bank is required to pass a "speaking order" (a detailed reasoned order) after the hearing.
- Judicial Review: This order will not be final; it must be placed before the High Court on the next date of hearing (February 27), and its effect will be subject to the outcome of the writ petition.
The dispute stems from allegations that RHFL, where Jai Anmol Ambani was a director, defaulted on substantial loans. A forensic audit allegedly indicated the diversion of funds, leading the account to be classified as a Non-Performing Asset (NPA) and subsequently "fraud."
- CBI Angle: The CBI has registered cases against Anil Ambani group companies alleging fraud amounting to nearly ₹14,853 crores. Specifically against Jai Anmol Ambani, the agency alleges cheating causing a loss of ₹228 crore to Union Bank.
- Previous Relief: Notably, the High Court had earlier quashed Union Bank's decision to classify the account as fraud because it was done without giving Ambani a prior show-cause notice—a violation of the Master Directions on fraud classification.