Bank's Bona Fide Clarifications To Counter Media Campaign Not Retaliatory Defamation: Bombay High Court Refuses to Gag HDFC Bank, Imposes ₹5L Costs On Lilavati Trust

Refusing to grant what was effectively a gag order against the bank, the Court held that the balance of convenience overwhelmingly favoured HDFC Bank and that restraining the bank from responding to public allegations would be contrary to the constitutional principle of truthful free speech.

The Court imposed costs of Rs. 5 lakh on the plaintiffs, observing that the injunction application was one more in a long chain of proceedings aimed at derailing recovery despite the rule of law working its course.

Justice Somasekhar Sundaresan observed, “The Subject Statements are based on strong material; they represent a bona fide measure to clarify the factual position when faced with a media campaign against HDFC Bank; and it was in public interest that HDFC Bank clarifies the factual position considering that banks hold a greater intensity of promise to society and have to be held to a higher standard. In short, the tests laid down and canvassed on the basis of the law declared in Shree Maheshwar, when applied leads to no intervention against HDFC Bank being warranted…The Subject Statements do not lend themselves to be regarded as retaliatory defamation for the defamation perceived to have been suffered by HDFC Bank and Jagdishan at the hands of the Plaintiffs”.

“…Gagging HDFC Bank would expose them to the risk of being unable to respond to continued attacks by the Plaintiffs. Gagging both sides would be contrary to the constitutional default position of free speech that is truthful, because it would gag HDFC Bank through the backdoor with a token gagging of the Plaintiffs…”, the Bench further observed.

Senior Advocate Devadatt Kamat appeared for the plaintiffs and Senior Advocates Kevic Setalvad, Dr. Virag Tulzapurkar appeared for the defendants.

Lilavati Trust and Prashant Mehta filed a suit claiming Rs. 1,000 crores in damages for defamation against HDFC Bank, its MD and CEO Sashidhar Jagdishan, and other officials, along with X Corp. and Meta Platforms as social media defendants.

The plaintiffs alleged that three statements published by HDFC Bank in June 2025, an email to the Free Press Journal, a statement on HDFC Bank's website and a press release, defamed them by asserting that Prashant and his family owed substantial amounts to HDFC Bank that were never repaid, that recovery proceedings had been pursued for two decades, and that vexatious legal actions had been launched at every stage.

The plaintiffs contended that neither Lilavati Trust nor Prashant had personally borrowed from HDFC Bank and that Prashant's liability, if any, was only as legal heir of his late father Kishor Mehta to the extent of inherited estate, a nuance the bank had deliberately suppressed to create a false impression of personal default.

HDFC Bank contended that the statements were factually accurate, a DRT recovery certificate had been issued against Prashant as legal heir of Kishor on July 5, 2024, 23 proceedings had been initiated by the Mehta family to frustrate recovery, and a Division Bench of the Bombay High Court had itself returned a judicial finding of vexatious proceedings when quashing proceedings before the Maharashtra State Minority Commission.

The Court applied the Indian standard on interim injunctions in defamation, as laid down in Shree Maheshwar Hydel Power Corporation v. Chitroopa Patil & Anr. (2024) 1 Mah. LJ 382, which requires the defendant not merely to plead justification but also to show that statements were bona fide, in public interest and based on material whose veracity can be tested. The Court found all three elements satisfied on the facts.

“Banks have a far higher intensity of promise and assurance owed to not just its stakeholders but also the society at large. If a bank is pursuing recovery attempts and has been frustrated from success for 20 years, and in the course of the conflict, serious allegations are levelled against the bank, stating this element is not at all defamatory at least for this prima facie stage of assessment. No case for an injunction is made out in this regard”, the Bench observed.

On the statement, that Prashant and family owed substantial amounts, the Court held that issuance of a recovery certificate by the DRT is an indication of monies being owed and challenges to it had failed. The argument that final adjudication was a precondition to characterising the debt as owed was held to be untenable.

“The balance of convenience lies in HDFC Bank’s favour. The judicial and quasi-judicial findings bear out the contents of the Subject Statements. What is already in the public domain about the Plaintiffs would only point to it being convenient not to interfere with HDFC Bank’s ability to state the factual position in the public domain. In the event the prima facie view formed now were to undergo a change upon trial of the Suit, the permanent injunction can always be issued in disposal of the Suit”, the Bench further observed.

“By a broad assessment of reasonable costs going by the number of Advocates that have had to be engaged and the number of hearings, in my assessment it would be reasonable to direct that costs be paid by the Plaintiffs to HDFC Bank in the sum of Rs. 5,00,000, within a period of six weeks from the upload of this judgement on the website of this Court”, the Bench concluded.

Cause Title: Lilavati Kirtilal Mehta Trust V. HDFC Bank Limited And Ors. Interim Application No.3095 Of 2025

Appearances:

Petitioner: Devadatt Kamat, Senior Advocate.

Respondents: Kevic Setalvad, Dr. Virag Tulzapurkar, Senior Advocates.

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