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Journalism of Courage
The trust that runs Mumbai’s Lilavati Hospital has accused the head of HDFC Bank of accepting a bribe of more than Rs 2 crore to help a group of individuals retain illegal control over the trust.
The allegation has provoked litigation in magistrate courts and the Bombay High Court, and FIRs have been filed against HDFC Bank managing director and chief executive Sashidhar Jagdishan, a former Lilavati trustee named Chetan Mehta, and several others.
In April, the Lilavati Kirtilal Mehta Medical Trust (LKMM Trust), which oversees the hospital in Bandra (West), applied to the judicial magistrate first class (JMFC) asking for an investigation against Jagdishan.
The Trust claimed that in 2022, then trustee Chetan Mehta and six others including former office bearers of the Trust, had paid Jagdishan Rs 2.05 crore to harass Founder Permanent Trustee for Life Kishor Mehta, against whom the bank had initiated loan recovery proceedings.
Kishor Mehta, who passed away in 2024, was director of Splendour Gems Ltd, earlier known as Beautiful Diamonds Ltd. The company had been provided loans by a consortium of banks including HDFC Bank in 1995.
Recovery proceedings were initiated in 2002, and in 2004, the Debts Recovery Tribunal, Mumbai, allowed an application by HDFC and ordered the payment of Rs 14.74 crore along with interest at 16% per annum.
In its application filed through Permanent Trustee Prashant Mehta, the son of Kishor Mehta, the Trust alleged that the latter’s death last year was because of physical and mental harassment arising out of the loan recovery process.
According to the complaint, after assuming office, Prashant Mehta found a diary showing that between March and June 2022, sums adding up to Rs 2.05 crore were transferred to Jagdishan on the directions of Chetan Mehta, who was a trustee at the time.
On May 29, the court directed police to register offences punishable under sections 406, 409 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code, 1860 (IPC) and investigate the matter.
The “amount involved is high”, and the allegations constitute cognisable offences, and an investigation was necessary, the magistrate observed.
Two days later, Bandra Police registered an FIR against Jagdishan, Chetan Mehta, and six others. A separate FIR was registered against Chetan Mehta, M/s Phoenix ARC Private Ltd, and others for alleged embezzlement of Trust funds to the tune of Rs 2.25 crore.
What are the proceedings pending before the courts?
* Aggrieved by the police action, Jagdishan filed a petition before the Bombay High Court last week asking for the May 29 order to be set aside and for the FIR to be quashed. He sought a stay on the investigation during the pendency of the plea, and asked that there should be no coercive action against him.
* Separately, Phoenix ARC and accused Keki Elavia and Venkatu Srinivasan have moved the HC asking for the embezzlement FIR against them to be quashed.
* On its part, the Trust, through Prashant Mehta, has filed a defamation suit in the High Court against HDFC Bank, its spokesperson, and Jagdishan, accusing the bank of running a “deliberate and sustained smear campaign” against the Trust.
* Separately, it has filed a criminal defamation complaint before the magistrate court in Girgaon under sections 356(1) (defamation) and 357 (breach of contract) of the Bharatiya Nyaya Sanhita (BNS). The magistrate has issued notices to the bank, Jagdishan, and others, and will hear the matter on July 18.
* The Trust has also filed a plea in the HC seeking a transfer of the probe against the bank and Jagdishan to the Central Bureau of Investigation (CBI).
What have Jagdishan and HDFC Bank contended?
Jagdishan, who became MD and CEO in 2020, has told the HC that the FIR against him was a “retaliatory move” after the bank began recovery proceedings against Splendour Gems Ltd, a company owned by the Mehta family, which had defaulted on loans amounting to Rs 65.22 crore as of May 31.
It has been alleged that the complainant Prashant Mehta was misusing the “facade of Lilavati Trust” to target Jagdishan.
Jagdishan has submitted that the “sole reliance on a xerox copy of selective cash records renders the allegations highly suspect”, and the “diary’s inherent lack of credibility”, coupled with the complainant’s failure to produce other cogent evidence or witnesses, “strips the allegations of merit and credibility”.
The May 29 order of the magistrate court was “flawed, self contradictory and deplorable”, he has argued.
