The Bombay High Court on Tuesday refused to grant interim relief sought by the Lilavati Kirtilal Mehta Trust and its trustee Prashant Mehta in a Rs 1,000 crore defamation suit filed against HDFC Bank, its Managing Director and Chief Executive Officer Sashidhar Jagdishan, and other officials.
The single-judge Bench of Justice Somasekhar Sundaresan dismissed the Trust’s interim application, which sought to restrain HDFC Bank and its officials from making any further allegedly defamatory statements against the Trust and its trustees. The plaintiffs further sought directions for the removal of earlier press releases and statements from the bank’s website and social media platforms, along with a direction to issue a public apology.
The Court held that the plaintiffs had failed to establish a strong prima facie case for grant of interim relief. It observed that there was no material on record at this stage to indicate that the statements made by HDFC Bank were defamatory in nature. The Court further found that the balance of convenience lay in favour of the bank and that any interim restraint could cause serious prejudice to a listed financial institution.
While rejecting the plea, the Court observed that restraining HDFC Bank from responding publicly to allegations made against it could adversely affect principles of transparency and free speech, particularly in the context of a regulated banking institution that owes duties to its depositors, shareholders and the market.
The Court noted that the Lilavati Trust and Prashant Mehta had alleged that HDFC Bank falsely portrayed them as wilful defaulters and vexatious litigants through various media statements and press releases. According to the plaintiffs, the bank’s public communications created a misleading impression that substantial financial liabilities remained unpaid and that repeated legal proceedings had been initiated by the Mehta family to obstruct recovery efforts.
Prashant Mehta had argued that he was never a direct borrower from HDFC Bank and that any liability attributable to him could only arise in his capacity as a legal heir of his late father, Kishor Mehta, and would be restricted to the inherited estate. On this basis, it was contended that the bank’s statements were either false or materially misleading.
However, after examining the record, the Court traced the history of recovery proceedings arising from a Debt Recovery Tribunal order passed in 2004, subsequent recovery certificates, attachment proceedings, arrest directions and multiple challenges mounted before various judicial forums.
Based on the material placed before it, the Court found that HDFC Bank’s principal assertions regarding outstanding dues, prolonged recovery efforts spanning nearly two decades and repeated legal proceedings initiated in connection with the dispute were supported by judicial records and documents forming part of the proceedings.
The Court accepted the bank’s contention that the statements in question constituted a bona fide response to a continuing public campaign allegedly directed against the bank and its senior officials. It observed that the bank was entitled to clarify its position in the public domain, particularly when allegations were being circulated against it through legal proceedings, social media platforms and public statements.
Justice Sundaresan also took note of the broader factual background, observing that the Lilavati Trust, despite not being the borrower entity, had actively participated in the dispute through public communications, legal proceedings and complaints directed against HDFC Bank and its officials. The Court referred to various actions taken against the bank, including the filing of criminal complaints containing serious allegations against senior officials.
In these circumstances, the Court held that it would be unreasonable to expect HDFC Bank to remain silent and refrain from responding to allegations affecting its reputation and functioning.
The Court further observed that the present interim application appeared to be part of a long chain of proceedings initiated in connection with recovery efforts that had repeatedly been challenged before different forums. It noted that despite various judicial orders favouring recovery measures, the recovery process itself had remained substantially stalled.
Accordingly, the Court dismissed the interim application and directed the Lilavati Trust to pay costs of Rs 5 lakh to HDFC Bank within six weeks.
At the same time, the Court clarified that dismissal of the interim application would not affect the merits of the main defamation suit. It observed that if, after a full-fledged trial and evaluation of evidence, the statements are ultimately found to be defamatory, appropriate final relief, including a permanent injunction, could still be granted at the conclusion of the proceedings.
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