HC quashes FIR against HDFC Bank CEO over Lilavati trust fraud

While striking down the criminal proceedings, a division bench of justices MS Karnik and NR Borkar said that the complaint lodged by LKMM trustee Prashant K Mehta, based on which the FIR was registered, was nothing but an abuse of the process of law

MUMBAI: The Bombay High Court on Tuesday quashed the first information report (FIR) lodged against HDFC Bank managing director and chief executive officer (CEO) Sashidhar Jagdishan, asset reconstruction firm Phoenix ARC Pvt Ltd and two of its senior executives, Keki Elavia and Venkattu Srinivasan, for allegedly defrauding the Lilavati Kirtilal Mehta Medical (LKMM) Trust, which manages the Lilavati Hospital in Bandra.

HC quashes FIR against HDFC Bank CEO over Lilavati trust fraud

While striking down the criminal proceedings, a division bench of justices MS Karnik and NR Borkar said that the complaint lodged by LKMM trustee Prashant K Mehta, based on which the FIR was registered, was nothing but an abuse of the process of law.

“We are more than satisfied that the filing of the complaint by respondent Nos.3 (Prashant Mehta) and 4 (Charu Mehta) is a fallout of the recovery proceedings initiated by the financial institutions,” the bench said.

In his complaint, Prashant Mehta claimed that after he and other new trustees took over the LKMM Trust following orders passed by the Supreme Court on August 18, 2023 and by the Assistant Charity Commissioner on December 14, 2023, they found that the earlier trustees had misappropriated trust funds and destroyed the record. The new trustees also found a photocopy of the old cash register, which clearly demonstrated misuse of trust funds and large payments made by erstwhile trustees to the HDFC Bank CEO and Phoenix ARC executives, Mehta said in his complaint, seeking their prosecution for cheating, criminal breach of trust and other offences.

Acting on Mehta’s complaint, a metropolitan magistrate court in Bandra on May 29, 2025 issued an order, pursuant to which the Bandra police registered the FIR against Jagdishan, Phoenix ARC and its senior executives, prompting all of them to approach the high court for its quashing.

On Tuesday, the court allowed their petition after concluding that it was nothing but an abuse of the process of law.

“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 (Debt Recovery Tribunal) and this court,” the bench said. “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 the IPC (Indian Penal Code).”

As regards Prashant Mehta’s allegation that his father, Kishore Mehta, died due to the pressure exerted by HDFC Bank and Phoenix ARC despite settling their dues, the court said the demise of his father undoubtedly was unfortunate.

“But the petitioners cannot be blamed for this,” the bench said. “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 bench also rejected a separate petition filed by the LKMM Trust seeking transfer of the probe to the Central Bureau of Investigation (CBI), stating that the material on record did not at all justify an investigation into the claims made by the complainant regarding orders passed by the Debt Recovery Tribunal and courts against the Mehtas during the course of recovery proceedings.