The Court noted that free expression and market transparency would be stifled by such an interim restraining order on a listed bank. Additionally, it noted that HDFC's remarks did not seem to be derogatory.

On Tuesday, the Bombay High Court declined to issue an interim order prohibiting HDFC Bank and its senior officials from making remarks that the Lilavati Kirtilal Mehta Trust said were defamatory [Lilavati Kirtilal Mehta Trust v. HDFC Bank].

A ₹1,000-crore defamation lawsuit has been brought against the bank by the Lilavati Trust and trustee Prashant Mehta. It had also asked the court to issue an interim order prohibiting HDFC from making allegedly defamatory remarks against the trust as part of this lawsuit.

However, the Trust's interim application, which sought broad temporary constraints on HDFC Bank, its MD and CEO Sashidhar Jagdishan, and others, was dismissed today by Justice Somasekhar Sundaresan.

"If an intervention is made in favor of the Trust, who have an established track record of running a media campaign against HDFC Bank and its officials, the bank would suffer grave and irreparable harm," the judgment noted.

The Court also concluded that there was insufficient evidence to support a prima facie conclusion that HDFC's remarks about the Trust were defamatory.

In order to conclude that the Subject Statements were defamatory in nature, the Plaintiffs have not established a compelling case against HDFC Bank. The Court ruled that HDFC Bank has the advantage in terms of convenience.

HDFC was accused by the Lilavati Trust of releasing statements in the media that misrepresented trustee Prashant Mehta and his family as vexatious litigants and willful defaulters.

By an interim plea, the Trust had requested the Court to prohibit HDFC and its personnel from making any additional defamatory statements, to direct the removal of earlier press releases from the bank’s website and social media, and to direct the bank to issue a public apology.

Such relief was denied by Justice Sundaresan. In addition to rejecting the trust's interim application, it mandated that the Trust reimburse HDFC Bank ₹5 lakh in fees within six weeks.

The Court also chastised Prashant Mehta for initiating a series of pointless legal actions to thwart the bank's loan collection efforts.

It is evident that courts have rejected every attempt to sabotage the recovery, but despite the rule of law operating as intended, there has essentially been no recovery at all. The Court said, "This IA is just one more in this lengthy chain of proceedings."

The media comments and press releases in which HDFC bank claimed that Mehta and his family owed significant sums that were never paid were among the allegedly defamatory materials that the plaintiffs (Lilavati Trust and Mehta) noticed.

It also purportedly contained allegations that Mehta and his family had filed multiple pointless lawsuits over a twenty-year period.

Mehta refuted the bank's claims, arguing that he had never personally borrowed from HDFC and that, at most, his liability as the late father Kishor Mehta's legal heir was restricted to an inherited estate.

But according to Justice Sundaresan, the history of recovery proceedings began with a 2004 order from the Debt Recovery Tribunal (DRT), followed by recovery certificates, attachment, arrest orders, and several unsuccessful writ petitions.

Based on this information, the Court determined that the bank's three main claims—that (i) large amounts were owed, (ii) recovery operations had been ongoing for around 20 years, and (iii) numerous vexatious proceedings had been initiated—were factually correct and supported by the court documents.

Therefore, HDFC's argument that its remarks were a good-faith reaction to an ongoing media campaign against bank officials by or through the Lilavati Trust was accepted by Justice Sundaresan.

The Court further stated that it was in the public interest for a bank to clarify its position in such situations given its increased obligation of transparency to depositors and markets.

The Court also placed the disagreement within a broader framework of free speech.

As part of a media and legal campaign against the bank and its CEO, the judge observed that the Lilavati Trust, despite not being a borrower, had entered the fray using its letterhead, social media accounts, and even filed a criminal complaint accusing the bank's officials of culpable homicide amounting to murder.

The judge determined that it was unreasonable to expect the bank to keep quiet in light of this.

The Court stated that "gagging HDFC Bank would expose them to the risk of being unable to respond to continued attacks by the Trust."

The Court further stated that a permanent injunction may still be issued in the end if, during the trial, it determines that the remarks that the Trust had detected are in fact defamatory.

Devadatt Kamat, a senior attorney, represented Lilavati Trust alongside Dakshesh Vyas, Abhishekh Prabhu, Utsav Trivedi, Tarun Mehra, Jyoti Ghag, Shailesh Prajapati, Ankit Singhal, and Harsh Pandey.

HDFC Bank and its representatives were represented by senior attorneys Kevic Setalvad and Virag Tulzapurkar, along with attorneys Chitra Rentala, Khyati Mehrotra, and Anjali Sharma, who were briefed by Trilegal.