In a significant legal development, the Bombay High Court has issued contempt notices to Kishore Mehta, the founder trustee of Lilavati Hospital, and his son Rajesh Mehta. The notices were issued following allegations of breaching court undertakings and failing to deposit the required 25% of a substantial debt amount, as per proceedings initiated by HDFC Bank.
The legal battle traces back to 2002 when HDFC Bank initiated proceedings against Splendour Gems Ltd. (also known as Beautiful Diamonds Ltd.), seeking to recover outstanding dues of Rs 14.74 crore. Kishore K. Mehta, his son Rajesh K. Mehta, and Rajiv K. Mehta, acting as guarantors, became the focal point of this legal scrutiny.
The situation escalated when HDFC Bank discovered that the “defaulted guarantors,” now trustees, were involved in establishing Lilavati Hospital in Gift City, Gandhinagar, Gujarat. Consequently, on October 25, 2023, the Recovery Officer of the Tribunal issued arrest warrants against the Mehtas and ordered the attachment of their bank accounts, further granting the recovery of the due amount along with 16% interest.
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In response, the Mehtas approached the Bombay High Court, which, on November 8, 2023, granted them interim relief. The court directed them to deposit 25% of the current debt amount within two weeks, failing which their petition would stand dismissed. Additionally, their arrest was stayed until the next hearing, contingent upon the submission of an affidavit post-deposit.
However, the Mehtas’ subsequent actions led to the current legal predicament. They deposited Rs 3,68,63,000 by December 27, 2023, a sum falling short of the mandated 25%. This prompted HDFC to file a contempt petition against them in the High Court.
Senior Advocate Kevic Setalvad, representing HDFC, argued that the Mehtas merely created an illusion of compliance with the court’s order dated November 8, 2023, thus delaying the execution of the arrest warrants. On the other hand, Senior Advocate Anil Anturkar, representing the Mehtas, contended that the Court’s orders were not breached. He argued that the condition to deposit 25% of the debt amount was intended merely to enable the court to consider their writ petition, not as a directive for actual deposit.
Despite these arguments, the High Court concluded that a prima facie case for contempt had been established, as the deposited amount did not meet the required 25% threshold. Justices AS Chandurkar and Jitendra Jain noted that the pair managed to evade the execution of the arrest warrant and the automatic dismissal of their appeal by confirming the payment of the amount.
“The aforementioned grounds are deemed sufficient for the Court to proceed in line with Rule 1036 of the Contempt of Courts (Bombay High Court) Rules, 1994.”
The court highlighted that any breach of the undertaking would be regarded as contempt of court. It observed that the Mehtas appeared to have exploited the situation by seeking to defer the arrest warrant based on a partial deposit.
In light of these events, the High Court has given the Mehtas four weeks to respond, asking them to show cause why contempt action should not be initiated against them for the willful breach of undertakings.
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This legal tussle underscores the intricate relationship between corporate entities, legal obligations, and the healthcare sector’s governance. As the case unfolds, it will undoubtedly set a precedent for how legal undertakings are interpreted and enforced in the context of financial disputes and corporate governance.
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