Bombay HC refuses to gag HDFC Bank in ₹1,000-crore Lilavati Trust defamation suit

The Bombay High Court on Tuesday refused to restrain HDFC Bank from making public statements relating to Lilavati Kirtilal Mehta Trust and its trustee Prashant Mehta, holding that the lender's comments were prima facie based on facts and supported by judicial records.

Justice Somasekhar Sundaresan dismissed an interim application filed by Lilavati Trust and Prashant Mehta in their ₹1,000-crore defamation suit against HDFC Bank, Managing Director and Chief Executive Officer Sashidhar Jagdishan and other bank officials. The court also directed the plaintiffs to pay ₹5 lakh as costs to HDFC Bank within six weeks.

"The Plaintiffs have not made out a strong prima facie case against HDFC Bank to hold that the Subject Statements were defamatory in character," the court said.

The trust had sought an injunction directing HDFC Bank to remove and refrain from publishing statements alleging that Prashant Mehta and his family owed substantial sums to the lender and had engaged in numerous vexatious legal proceedings.

Court finds statements backed by record

Rejecting the plea, the court held that HDFC Bank's statements were supported by recovery certificates issued by the Debt Recovery Tribunal (DRT), previous judicial orders and the long-running recovery proceedings involving members of the Mehta family.

"The issuance of a Recovery Certificate is an indication of monies being owed," Justice Sundaresan observed.

The court noted that recovery and enforcement proceedings initiated by HDFC Bank had remained unresolved for nearly two decades and that challenges mounted against recovery certificates had either failed or did not comply with conditions imposed by courts.

"Therefore, prima facie, there is everything to support the view that the first element of the Subject Statements ... is borne out by the strong material on record," the order said.

Reliance on earlier findings of vexatious litigation

A key aspect of the ruling was the court's reliance on previous judicial findings concerning litigation initiated by members of the Mehta family.

Justice Sundaresan referred extensively to a September 2024 division bench judgment that quashed proceedings before the Maharashtra state minority commission and recorded findings that attempts had been made to frustrate HDFC Bank's recovery efforts.

"The statement that there has been a flurry of vexatious and frivolous proceedings is a matter of a judicial finding rendered," the court said.

The judgment records that multiple proceedings had been launched over the years and notes that HDFC Bank had identified at least 23 proceedings involving Prashant Mehta, family members and trustees associated with the trust.

The court also referred to criminal complaints alleging culpable homicide against HDFC Bank officials following the death of businessman Kishor Mehta, observing that such allegations were "intimidatory" and "vexatious".

Court backs bank's right to respond

The court also delivered a major ruling on free speech and corporate reputation management.

Justice Sundaresan noted that HDFC Bank's statements were issued after media organisations approached the lender for comment on allegations circulated by Lilavati Trust through letters, press conferences and communications to regulators.

"When a letter containing serious allegations against HDFC Bank was imminently to be published in the media, and an opportunity to get its side of the story was presented, the intention behind the response by HDFC cannot be faulted," the court said.

The judge held that the bank's response was bona fide, made in public interest and based on sufficient material capable of verification.

"Gagging both sides would be contrary to the constitutional default position of free speech that is truthful," the court observed.

Context of scrutiny around Jagdishan

The ruling comes at a sensitive time for HDFC Bank, with the lender facing heightened governance scrutiny following the resignation of former chairman Atanu Chakraborty in March. Chakraborty had cited concerns relating to "values and ethics", while subsequent reports pointed to differences over governance matters and the impending reappointment of MD and CEO Sashidhar Jagdishan. HDFC Bank's board is yet to take up Jagdishan's next term and is awaiting the findings of an external legal review commissioned after Chakraborty's departure.

The court noted that allegations against Jagdishan were amplified through press conferences, letters to regulators and social media campaigns before HDFC Bank issued the statements now challenged in the defamation suit.

Holding that no case for interim relief had been established, the court dismissed the application and ordered Lilavati Trust and Prashant Mehta to pay ₹5 lakh in costs.

"It is apparent that each and every measure to derail the recovery has been repelled by Courts and yet there has effectively been no recovery at all despite the rule of law working its course," the court said.

Calling the present application "one more in this long chain of proceedings", the court concluded that costs should follow the event and awarded ₹5 lakh to HDFC Bank.