MC EXPLAINER Lilavati Medical Trust versus HDFC Bank: What the dispute is all about

HDFC Bank

As the tussle between the Mehta family-run Lilavati Kirtilal Mehta Medical Trust and HDFC Bank intensifies, the Supreme Court declined last week to hear a petition by HDFC Bank’s CEO and MD, Sashidhar Jagdishan, seeking to quash an FIR against him.

The bench of Justices PS Narasimha and R Mahadevan observed that it was improper on the part of the Supreme Court to intervene when Jagdishan's petition was listed before the Bombay High Court on July 14.

If you’re looking to understand how and when this dispute began, here’s an explainer.

According to an HDFC Bank release on June 8, Splendour Gems Ltd is a company owned by the Mehta family, which defaulted on loan facilities granted by HDFC Bank along with other consortium banks in 1995.

The outstanding dues towards HDFC Bank, including interest, amount to approximately Rs 65.22 crore as on May 31, 2025.

Even after a recovery certificate was issued by the Debt Recovery Tribunal in 2004 and subsequent enforcement actions, the dues remain unpaid.

Splendour Gems Ltd has also been borrowing from other banks/institutions, HDFC Bank said in a statement.

In response to ongoing recovery proceedings, members of the Mehta family have initiated multiple legal actions and complaints against HDFC Bank and its senior officials, the bank’s release added.

The Trust has accused the bank’s CEO, Jagdishan, and eight others of fraud and misappropriation of the Trust’s funds.

The Trust has accused Jagdishan of accepting a bribe of Rs 2.05 crore to help a group consisting of one Chetan Mehta and other erstwhile trustees to retain illegal control over the Trust. The Trust claimed that the payment was documented in a handwritten cash diary, which had been seized.

Further, the Trust accused Jagdishan of facilitating an illegal deposit of Rs 25 crore of the Trust’s funds into an HDFC Bank account without any board resolution, trustee approval or proper oversight, as per media reports. According to the Trust, these financial actions reflect a serious breach of governance norms and raise concerns about complicity at the bank.

In another allegation, the Trust claimed that Rs 1.5 crore was disbursed to hospital staff under the pretext of CSR donations from HDFC Bank, but alleged it was a bribe to suppress information leaks and internal conflict over the wrongdoing, according to media reports.

Following the magistrate’s order on the Trust’s complaint on May 29, the Bandra police registered offences punishable under sections 406, 409 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code (IPC) and had directed the police to probe the matter as per section 175 (3) of the Bharatiya Nagrik Suraksha Sanhita (BNSS).

The Bandra police station lodged an FIR on May 31.

HDFC Bank, on June 8, in a release, said that the bank once again unequivocally rejects and strongly condemns the malicious and baseless allegations levelled and maintains that these allegations are completely false, outrageous, and constitute a gross misuse of the legal process.

“The Bank firmly believes that these actions are a deliberate attempt to obstruct and undermine legitimate recovery proceedings related to substantial long-outstanding dues owed by Splendour Gems Limited,” HDFC Bank said in a release.

According to the media reports, the Trust had filed a petition in the Bombay High Court seeking the transfer of the investigation of the bribery case to the Central Bureau of Investigation (CBI).

According to a LiveLaw report last month, at least three judges of the Bombay High Court have recused from hearing the petition filed by Sashidhar Jagdishan, the CEO of HDFC Bank, who has sought to quash an FIR lodged against him at the behest of Lilavati Kirtilal Mehta Medical Trust.

Further, on July 9, a media report said that a fourth judge from the Bombay High Court recused himself from hearing the plea filed by Jagdishan.

On July 3, HDFC Bank’s CEO had approached the Supreme Court seeking to quash the FIR registered by Lilavati Medical Trust.

This came after three judges in the Bombay High Court recused from hearing the matter.

However, the Supreme Court on July 4 declined to hear HDFC Bank CEO’s petition against the FIR filed by the Lilavati Medical Trust, according to a LiveLaw report.

The report added that a bench of Justices PS Narasimha and R Mahadevan observed that it was improper on the part of the Supreme Court to intervene when Jagdishan's petition was listed before the Bombay High Court on July 14. The HDFC Bank CEO approached the Supreme Court, saying that three Bombay High Court judges recused from hearing the matter, causing a delay in the hearing.