HDFC Bank-LKMM Trust row escalates amid claims over loan irregularities

As LKMM Trust questions the existence of a loan and cites missing documentation, HDFC Bank calls the allegations false and prepares for legal action to protect its interests

A legal and financial dispute between HDFC Bank and the Lilavati Kirtilal Mehta Medical Trust (LKMM Trust), which runs Mumbai’s Lilavati Hospital, appears to be gaining steam. The Trust has alleged inconsistencies in the bank’s stated loan amounts and the absence of supporting documentation in court. HDFC Bank has strongly denied all claims.

 

In a public statement on Wednesday, LKMM Trust and its permanent trustee, Prashant Mehta, alleged that HDFC Bank had not presented any official loan ledger or agreement in court to establish the existence of a loan. The Trust pointed to multiple figures cited in various legal filings — Rs 4.8 crore, Rs 65.22 crore, and Rs 450 crore — as evidence of inconsistencies in the bank’s position.

 

“The Trust maintains that no such borrowing ever took place,” said Mehta. “If there is a loan, the bank should be able to produce a definitive loan agreement and ledger.”

 

In its response to Business Standard, HDFC Bank strongly denied all allegations, calling them “false, malicious and defamatory”. A spokesperson for the bank said: “We reiterate our unequivocal, categorical and unambiguous denial and condemnation of these egregiously malicious, false and defamatory allegations and insinuations.”

 

HDFC Bank further stated that neither the bank nor its chief executive officer had engaged in any activity that was illegal, unethical or improper. “We follow the highest standards of governance and ethics and remain fully compliant with the laws of the land,” the spokesperson added.

 

The bank has also revealed that it is on the verge of taking legal action against the trustees. “We are concerned about all our stakeholders and are on the verge of taking strong legal actions as per expert advice, against those who are initiating these baseless allegations with malafide and ulterior motives or involved in propagating the same,” the spokesperson said.

 

The bank believes the content, timing, and manner of the allegations demonstrate an attempt to prevent it from carrying out legitimate recovery and enforcement efforts. “We have commenced legal action permissible under law to vindicate our position and reserve all rights to pursue appropriate legal remedies including recovery, enforcement, and defamation proceedings against the erring parties,” the statement read. 

 

The bank added that it did not see the necessity to respond on a daily basis to what it described as a “baseless, frivolous and malicious campaign” initiated by the Mehta family.

 

When the allegations first came to light, HDFC Bank issued a statement saying that the personal allegations made against its chief executive officer and managing director, Sashidhar Jagdishan, were baseless and malicious. It alleged that LKMM Trust was abusing the legal process to prevent the recovery of a long-pending loan owed to the bank by defaulting borrowers.

 

The bank stated that legal action had been ongoing for over two decades and that its CEO was being personally targeted to obstruct enforcement efforts.

 

The bank alleges that the trustee and his family members owe substantial amounts to the bank and that it has acted within legal provisions to recover its dues. It believes the personal allegations appear intended to delay or derail the recovery process.

 

The case escalated after the Bandra Metropolitan Magistrate’s Court on 30 May directed the police to register an FIR (No. 818/2025) against Jagdishan and seven others, based on a complaint by the Trust. The Trust alleges that a payment of Rs 2.05 crore in unaccounted cash was made during an earlier period by former trustees, purportedly recorded in a handwritten diary. It has also alleged that key documentation may have been destroyed.

 

The FIR, now under investigation by the Bandra police, includes sections of the Indian Penal Code related to criminal breach of trust, conspiracy, and evidence tampering.

 

The Trust has also called on regulatory bodies — including the Reserve Bank of India, the Securities and Exchange Board of India, and the Ministry of Finance — to initiate an independent audit and consider interim restrictions on the bank’s top leadership until inquiries are complete.

 

The LKMM Trust has seen internal leadership disputes in recent years between descendants, with allegations of financial misconduct, fund diversion, and internal irregularities. A forensic audit was commissioned by the current board earlier this year, and further investigations are ongoing.