Bombay High Court refuses to gag HDFC Bank in ₹1,000 crore defamation suit by Lilavati trust

The Bombay High Court on Tuesday refused to pass any interim order restraining HDFC Bank and its top executives from making statements alleged to be defamatory by the Lilavati Kirtilal Mehta Trust [Lilavati Kirtilal Mehta Trust v. HDFC Bank]..The Lilavati Trust and trustee Prashant Mehta have filed a ₹1,000‑crore defamation suit against against the bank. As part of this suit, it had also urged the Court to pass an interim order restraining HDFC from making allegedly defamatory statements against the trust However, Justice Somasekhar Sundaresan today dismissed the interim application filed by the Trust, which had sought wide interim restraints on HDFC Bank, its MD and CEO Sashidhar Jagdishan and others. “Grave and irreparable harm would be occasioned to the bank if an intervention is made in favour of the Trust, who have an established track record of running a media campaign against HDFC Bank and its officials,” the judge observed. The Court further found that there was nothing on record to arrive at a prima facie finding that HDFC's statements concerning the Trust were defamatory.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 balance of convenience lies in HDFC Bank’s favour," the Court held. .The Lilavati Trust had accused HDFC of publishing media statements that falsely portrayed trustee Prashant Mehta and his family as wilful defaulters and vexatious litigants.By an interim plea, the Trust had urged the Court to restrain HDFC and its officials from making any further defamatory statements, to direct the removal of past press releases from the bank’s website and social media, and to direct the bank to issue a public apology.Justice Sundaresan refused to grant such relief. While dismissing the trust's interim application, it also ordered the Trust to pay ₹5 lakh as costs to HDFC Bank within six weeks. The Court also criticised Prashant Mehta for filing a spree of frivolous proceedings to derail loan recovery by the bank.“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. (This) IA is one more in this long chain of proceedings,” the Court observed..The allegedly defamatory material flagged by the plaintiffs (Lilavati Trust and Mehta) included media statements and press releases in which HDFC bank said that Mehta and his family owed substantial amounts that were never repaid. It also allegedly included claims that Mehta and his family had launched numerous vexatious legal actions over two decades. Mehta countered that he had never personally borrowed from HDFC and that, at best, his liability as legal heir of his late father Kishor Mehta was limited to an inherited estate, making the bank’s assertions false or half‑truths.Justice Sundaresan, however, traced the history of recovery proceedings dating back to a 2004 Debt Recovery Tribunal (DRT) order, subsequent recovery certificates, attachment, arrest directions, and multiple failed writ petitions. Based on this material, the Court held that the bank’s three core assertions: (i) substantial sums were due, (ii) recovery efforts had continued for about 20 years, and (iii) numerous vexatious proceedings had been launched – were factually accurate and shown in the judicial filings. Justice Sundaresan, therefore, accepted HDFC’s case that its statements were a good‑faith response to an ongoing media offensive launched against bank officials by or through the Lilavati Trust. Given a bank’s heightened duty of transparency to depositors and markets, clarifying its position in such circumstances was in the public interest, the Court added..The Court also located the dispute in a larger free speech context. The judge noted that the Lilavati Trust, though not a borrower, had jumped into the fray using its letterhead, social media handles and even filed a criminal complaint accusing the bank's officials of culpable homicide to amounting to murder, as part of a media and legal offensive against the bank and its CEO.In that backdrop, the judge found it unreasonable to expect the bank to remain silent.“Gagging HDFC Bank would expose them to the risk of being unable to respond to continued attacks by the Trust,” the Court remarked.The Court added that if, after trial, it ultimately finds the statements flagged by the Trust to actually be defamatory, a permanent injunction can still be granted at the final stage..Senior advocate Devadatt Kamat with advocates Dakshesh Vyas, Abhishekh Prabhu, Utsav Trivedi, Tarun Mehra, Jyoti Ghag, Shailesh Prajapati, Ankit Singhal and Harsh Pandey appeared for Lilavati Trust.Senior advocates Kevic Setalvad and Virag Tulzapurkar with advocates Chitra Rentala, Khyati Mehrotra and Anjali Sharma, briefed by Trilegal, appeared for HDFC Bank and its officials. .[Read Order]