Overview
- The interim order halts all present and future steps by Indian Overseas Bank, IDBI Bank and Bank of Baroda to classify the accounts as fraud.
- The court found prima facie that the BDO LLP report was not in consonance with RBI Master Directions and that the auditor’s appointment failed statutory qualification requirements.
- Judicial observations stressed that auditors engaged under the fraud framework must be duly qualified chartered accountants in line with applicable law.
- The banks’ show-cause notices relied on a 2020 BDO audit of 2013–2017 transactions commissioned by an SBI-led lender consortium, which the court said also raised independence concerns due to prior consultancy links.
- The bench noted the severe consequences of a fraud tag and granted interim relief to prevent irreparable harm, with the underlying dispute to proceed in court.