Curious case of HDFC Bank Vs Lilavati Kirtilal Mehta Medical Trust

HDFC Bank Limited has issued a forceful rebuttal to recent allegations leveled by the trustees of Lilavati Kirtilal Mehta Medical Trust (LKMMT), unequivocally condemning them as “egregiously malicious, false and defamatory.” The bank asserts that these accusations are part of a calculated campaign to obstruct its legitimate efforts to recover a long-outstanding defaulted loan.

In a statement released on Wednesday, HDFC Bank declared that the allegations against both the institution and its MD & CEO, Sashidhar Jagdishan, are “devoid of any iota of truth whatsoever.” The bank affirmed its full compliance with all laws and adherence to the “highest standards of governance and ethics,” stating, “Neither the Bank nor its MD & CEO have engaged in any activity that is illegal, unethical or improper.”

The bank highlighted that the “content, timing and manner of allegations demonstrate the devious objective of preventing the Bank from carrying out its legal mandate of recovery and enforcement.” HDFC Bank further stated its intention to pursue all legal avenues, including recovery, enforcement, and defamation proceedings against the “erring parties.” It clarified that it would not respond to such “baseless, frivolous and malicious campaign[s]” on a daily basis, viewing them as solely aimed at “maligning the image/reputation of the Bank and its MD & CEO.” The bank is prepared to take “strong legal actions as per expert advice” against those initiating or propagating these allegations with “malafide and ulterior motives.”

The core of the dispute traces back to Splendour Gems Limited (formerly Beautiful Diamonds Limited), owned by the Mehta family, which defaulted on loan facilities granted in 1995 by an HDFC-led consortium. Despite a Debt Recovery Tribunal certificate issued in 2004 and subsequent enforcement actions, HDFC Bank states that approximately ₹65.22 crore, including interest, remained outstanding as of May 31, 2025.

HDFC Bank asserts that the Mehta family has consistently initiated legal actions—including criminal complaints, minority rights petitions, and regulatory representations—against the bank and its officials. These actions, the bank notes, have either been dismissed or are currently under challenge. The recent complaint from the Lilavati Trust, accusing CEO Sashidhar Jagdishan of accepting a sum to harass a trust member’s father and presenting handwritten diary entries as evidence, is seen by the bank as another “retaliatory move” with “mala fide intention” to evade repayment.

HDFC Bank views this escalation as a deliberate attempt to launch personal attacks against its CEO, designed to “malign reputation,” “intimidate” the bank, and create a “calculated distraction” from their liabilities after exhausting legal avenues. The bank reiterated its commitment to robust internal controls, compliance mechanisms, and a governance framework that upholds “transparency, accountability, and and ethical conduct” in all its operations.

Detail of the case

The core of the case revolves around a long-standing defaulted loan owed to HDFC Bank Limited by Splendour Gems Limited (formerly Beautiful Diamonds Limited), a company owned by the Mehta family.

Here are the key details:

• Origin of Default: Splendour Gems Limited defaulted on loan facilities initially granted in 1995 by an HDFC-led consortium. The default occurred in 2001.
• Outstanding Dues: As of May 31, 2025, approximately ₹65.22 crore, including interest, remained outstanding specifically towards HDFC Bank.
• Recovery Efforts: A Debt Recovery Tribunal certificate was issued in 2004, followed by various enforcement actions, but the dues are still substantially unpaid.
• Allegations by Mehta Family/Lilavati Trust: Members of the Mehta family, including through the Lilavati Kirtilal Medical Trust (LKMMT), have initiated multiple legal actions and complaints against HDFC Bank and its senior officials, including MD & CEO Sashidhar Jagdishan.
  • These actions include criminal complaints, minority rights petitions, regulatory representations, and a recent complaint accusing the CEO of accepting money to harass a trust member’s father, with handwritten diary entries as purported evidence.
  • They have sought punitive action, including suspension and prosecution, against the CEO.
• HDFC Bank’s Stance: HDFC Bank unequivocally denies all allegations, calling them “malicious, false and defamatory,” “baseless, frivolous and outrageous,” and a “gross misuse of the legal process.”
  • The bank asserts these actions are “retaliatory” and driven by a “mala fide intention” to evade repayment and obstruct legitimate recovery proceedings.
  • It views the personal attacks on its CEO as a “calculated distraction” and an attempt to “malign reputation” and “intimidate” the bank.
  • HDFC Bank maintains it is fully compliant with laws and upholds the highest standards of governance and ethics.
• Current Status: The legal actions initiated by the Mehta family have either been dismissed or are currently under legal challenge. HDFC Bank intends to pursue all lawful remedies for recovery and to defend its reputation and integrity.

Also See: Kingfisher brand was only one of many collaterals against loans, clarifies Vijay Mallya