Bombay High Court quashed FIR against Sashidhar Jagdishan in complaint by Lilavati Kirtilal Mehta Medical Trust. Bench of Justice MS Karnik and Justice NR Borkar set aside magistrate’s order, refused CBI probe.
The Bombay High Court quashed a first information report (FIR) registered against Sashidhar Jagdishan, Managing Director and CEO of HDFC Bank, in a case arising out of a complaint filed by the Lilavati Kirtilal Mehta Medical Trust, which administers Lilavati Hospital in Mumbai.
A Division Bench comprising Justice MS Karnik and Justice NR Borkar allowed Jagdishan’s petition seeking quashing of the FIR and also set aside the Magistrate’s order dated May 29, which had directed the police to initiate an investigation. The Court, however, declined a request to transfer the probe to the Central Bureau of Investigation, observing that such a step would be premature at this stage. A detailed judgment is awaited.
The Court said,
We find that the impugned order amounts to a gross abuse of the criminal process, being founded on purely civil background and recovery proceedings that have already attained finality through orders of the DRT and this Court. The allegations, even if taken at face value, do not disclose any entrustment or dishonest inducement essential ingredients of Sections 406, 409 or 420 of IPC.
It further said,
In our view Section 175(3) of the BNSS confers no mechanical right to seek registration of an FIR where the allegations have already been examined and rejected. The Magistrate failed to appreciate the binding effect of prior judicial orders and the bar against multiplicity of proceedings on identical facts.
The Court noted that the complaint arises out of recovery proceedings initiated by financial institutions against the Lilavati Trust. It observed deep-rooted hostility and strained relations between former and current trustees. When new trustees assumed control, recovery actions were already underway, with dues exceeding Rs 65 crore still pending. The complainant attributed his father’s demise to pressure from these proceedings, holding the institutions responsible.
The court observed,
The demise of the complainant’s father undoubtedly is unfortunate. But the petitioners cannot be blamed for this. The complainant is holding the petitioners responsible. This impression of the complainant is personal to him but cannot be a justifiable reason to trigger a criminal prosecution on the specious plea that a photocopy of a diary is found by the complainant containing some entries of payments made to the petitioners.
The Court emphasised that recovery certificates were lawfully issued by the Debts Recovery Tribunal and that financial institutions are obligated to pursue recovery of public funds. Their actions were neither criticised nor found unlawful in prior proceedings. While the father’s death was unfortunate, attributing criminal liability to the institutions based on personal belief and unverified diary entries was held to be unjustified.
It said,
We have no hesitation even at such a nascent stage in concluding that this is not a bonafide complaint so far as the petitioners are concerned. To allow a prosecution of such a nature to continue in the present facts not only lacks bonafides but runs the risk of deterring recovery proceedings.
Although courts ordinarily exercise restraint at an early stage of investigation, the Bench found clear indications of personal vendetta underlying the complaint. It held that continuation of proceedings would amount to abuse of process, as the complaint lacked bona fides. Relying on principles from State of Haryana v. Bhajan Lal, the Court concluded that such prosecution could unjustly hinder legitimate recovery actions.
The dispute traces back to 1995 when a consortium of banks, including HDFC Bank, extended loan facilities to Splendour Gems Ltd. (formerly Beautiful Diamonds Ltd.), a company owned by the Mehta family. Personal guarantees were executed by Late Kishore Mehta and his sons. Following persistent defaults, recovery proceedings were initiated before the Debts Recovery Tribunal, which in 2004 directed repayment of Rs 14.74 crore with interest. Despite a recovery certificate, repayment was evaded through prolonged litigation, leading to coercive measures, including arrest warrants in 2020.
Subsequent challenges to the recovery proceedings were dismissed for delay and lack of merit. After Kishore Mehta’s demise in 2024, his legal heirs pursued multiple complaints against bank officials, all of which were found baseless or dismissed.
Despite this, fresh complaints were filed alleging financial irregularities, resulting in applications seeking FIR registration. Although police noted existing FIRs on similar allegations, a Magistrate ordered registration of new FIRs in May 2025. The Court observed that the dispute fundamentally arises from unpaid loan liabilities exceeding Rs 65 crore and continued attempts to obstruct recovery.
After considering the submissions, the High Court found merit in Jagdishan’s plea and proceeded to quash the FIR along with the Magistrate’s order directing investigation. While doing so, the Court declined to accede to the request for transferring the matter to the CBI, holding that such a direction would not be appropriate at this stage of the proceedings.
The ruling effectively brings an end, for now, to the criminal proceedings initiated against the HDFC Bank CEO in connection with the allegations arising from the recovery dispute. Further clarity on the Court’s reasoning is expected once the detailed order is made available.
On the other side, the Lilavati Kirtilal Mehta Medical Trust and the complainant were represented by Senior Advocates Devadatt Kamat and Abad Ponda, instructed by Dua Associates. Kamat also appeared on behalf of the complainant, Prashant Mehta.
Additionally, Phoenix ARC was represented by Senior Advocate Ravi Kadam, while Jagdishan was further represented by Senior Advocate DP Singh, with Trilegal acting as instructing counsel.
Case Title: Sashidhar Jagdishan v. State of Maharashtra & Ors.
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