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What is the story about?
Bavaguthu Raghuram Shetty, founder of NMC Healthcare and UAE Exchange, has approached the Bombay High Court seeking $15 billion in damages from Bank of Baroda and 25 other defendants, alleging that the lender played an active role in the fraud that led to the collapse of his business empire.
In the suit, the 84-year-old alleges that Bank of Baroda officers facilitated the alleged diversion of funds from his group companies, ignored money-laundering alerts and accepted forged personal guarantees. The suit follows the bank’s $600 million settlement with NMC’s joint administrators in June 2026, which was stated to be without admission of liability.
The plaint alleges that the bank was not merely a lender deceived by the group’s former management, but an instrument through which the alleged fraud was carried out. It claims that bank officers helped structure transactions to withstand scrutiny and continued extending credit despite compliance warnings and concerns over the movement of funds and borrowers’ financial positions.
Shetty has sought $5 billion in direct damages for the alleged fraud, another $5 billion in consequential damages, including loss of business opportunities, and $5 billion in compensation for reputational damage. He has also sought interest at 18% per annum on the first two claims from the date of institution of the suit until payment or realisation.
The allegations are claims made by the plaintiff and are yet to be adjudicated in the present suit. The plaint records that Bank of Baroda denied allegations in the separate proceedings brought by NMC’s administrators before the Abu Dhabi Global Market courts. The settlement in those proceedings was expressly stated to be without admission of liability.
$600 million settlement with NMC administrators at the centre of the suit
According to the plaint, NMC’s joint administrators had instituted proceedings against the bank before the Abu Dhabi Global Market courts. The claims, which reportedly ran into billions of US dollars, alleged fraud and wilful negligence by the bank in discharging its anti-money-laundering and know-your-customer obligations.
It further alleges that the bank had not made any provision for these claims or disclosed them as contingent liabilities in its annual report for FY26, published in May 2026. The bank had indicated to shareholders that it had a good case in the proceedings and that the possibility of an outflow was remote, according to the plaint.
However, within a few weeks, the bank agreed in June 2026 to pay about ₹5,700 crore, or $600 million, to settle the proceedings. The settlement was disclosed by the bank on July 2, 2026, under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The plaint emphasises that the settlement was made without admission of liability and that Shetty was not a party to it. He argues that the settlement does not satisfy or reduce his separate claims against the bank and the other defendants.
Shetty contends that the settlement, particularly in the context of the bank’s earlier disclosures, is relevant to the inference to be drawn regarding the bank’s alleged role in the fraud. He also argues that the amount paid to the administrators was many times the loss the bank had reported to its regulator as having been caused by its customer.
Alleged round-tripping through accounts of purported suppliers
The suit sets out a detailed account of how funds were allegedly moved through accounts maintained with Bank of Baroda’s Abu Dhabi branch.
Shetty alleges that the Manghat brothers — Prasanth Manghat and Promoth Manghat, who held senior executive positions in the group — controlled the group’s financial functions and payments after he relinquished control of the businesses from 2012 onwards.
According to the plaint, the brothers and their associates allegedly used accounts in Shetty’s name and accounts of purported suppliers to move funds between group entities, creating the impression of genuine commercial transactions and making it appear that Shetty was involved in the transfers.
The plaint names entities including Silverline General Trading FZE, Eurasian Continent General Trading LLC, Summit Global General Trading LLC and Delta Cape General Trading LLC. These entities were allegedly presented as independent suppliers to NMC, while their accounts were operated by NMC employees and used predominantly for transfers involving group companies.
The suit claims that Bank of Baroda held accounts on both sides of certain transactions, enabling funds to be routed from one group company through an intermediary account and then back into another group entity.
It also alleges that trade finance and reverse-factoring arrangements based on forged invoices were used to disguise bank debt as trade payables and inflate reported earnings.
The plaint cites the bank’s own 2015 audit, which it says recorded frequent transfers of large amounts involving NMC group companies in the account of Megafin General Trading LLC.
One example concerns Eurasian. The plaint states that the company had declared an annual turnover of AED 20 million, but approximately AED 79 million passed out of its account in the last three months of 2016 alone. According to Shetty, large payments out of the account repeatedly followed receipts from NMC entities within two days and in similar amounts.
The plaint alleges that the bank’s compliance department sought supporting documents, but the branch did not respond adequately. It further states that the bank’s chief compliance officer informed the branch that he could take no further steps because of the branch’s non-cooperation.
In February 2017, the bank allegedly filed a suspicious transaction report on Eurasian with the Central Bank of the UAE. Within a week, the plaint claims, almost the entire balance in the accounts of nine purported suppliers was transferred into a single NMC entity, leaving approximately AED 10,000 in each account.
The suit further alleges that three accounts that had been frozen were manually unfrozen for the transfers and frozen again on the same day. The plaint claims that the bank did not file similar reports on the other eight entities despite what it describes as comparable activity.
Another entity, Silverline, allegedly processed close to AED 100 million in January 2017 alone, far exceeding its declared turnover.
More than 100 money-laundering alerts allegedly closed
A central allegation in the suit is that the bank's own compliance systems repeatedly flagged transactions that should have prompted further scrutiny.
The plaint alleges that the bank closed more than 100 anti-money-laundering alerts without adequate investigation and disregarded warnings that its compliance function had raised years before the collapse of NMC.
It cites the account of Guide General Contracting and Maintenance, a company whose bank account was allegedly used to make large payments to NMC executives and finance personnel.
According to the plaint, Guide’s account-opening documents described it as a building and maintenance contractor with an annual turnover of approximately AED 20 million. However, between May 2018 and January 2019, the account allegedly made payments totalling around AED 42 million to Prasanth Manghat alone, including one payment of AED 20 million.
The suit also alleges that approximately AED 38 million was paid to the CFO of an unrelated hospital group. Other payments were allegedly described as employee incentives or annual bonuses to executives and finance personnel associated with NMC.
The plaint claims that Bank of Baroda officers verified these payments even as the bank’s compliance department repeatedly questioned why a contracting company was paying executives of other groups.
According to the suit, the compliance department wrote to the branch over a period of around four months, eventually marking an email “MOST URGENT”. The branch allegedly failed to provide satisfactory answers, while one of the bank’s officers informed an NMC employee that compliance had raised serious questions about the account.
The plaint further alleges that the branch subsequently relied on a one-page letter on Guide’s letterhead, referring to a one-time incentive arrangement under an investment advisory agreement that was never produced to the bank. The branch allegedly described Guide as part of the NMC group despite its account-opening documents not establishing such a connection.
Shetty claims that the alerts were closed on that basis and the payments continued.
The suit also refers to Bright Rise, another entity whose transactions allegedly generated more than 1,000 anti-money-laundering alerts. These were generally closed without investigation until March 2019, according to the plaint.
Forged guarantees and alleged misuse of Shetty’s personal accounts
The suit challenges the personal guarantees that Bank of Baroda allegedly holds against Shetty for loans and credit facilities extended to companies associated with the group.
Shetty maintains that he did not execute these guarantees and that his signatures were reproduced from an electronic template.
The plaint states that he had relinquished control of the group companies from 2012 onwards and formally stepped down as chief executive officer in March 2017. He alleges that he was cut off from the group’s financial records, cash flows and banking facilities, while the Manghat brothers and their associates controlled the finance and treasury functions.
According to the plaint, documents were routinely brought to him in bulk for signature, sometimes while he was travelling, and he would sign between 100 and 200 documents a day in the belief that they reflected matters discussed with him. The suit says he did not use computers or online banking and did not issue banking instructions by email.
It refers to an internal NMC working file titled “001 -- FUNDING TR LETTER”, which allegedly contained draft trust receipts for purported supplier entities alongside copied snippets of Shetty’s signature. The plaint claims that these signatures matched those appearing on actual trust receipts and facility documents.
The suit also relies on reports by a handwriting expert, Ahmad Obaid Al Bah of the Arab Laboratory for Technical Examination, dated July 24, 2023, and a supplementary report dated October 24, 2024. According to the plaint, the expert concluded that signatures on documents relating to accounts opened at National Bank of Fujairah were forged.
Shetty alleges that two accounts were opened in his name at that bank without his knowledge, using documents bearing forged signatures and authorities purportedly permitting other individuals to operate the accounts. The accounts were allegedly used to transfer money from group companies to the Manghat brothers and entities they controlled.
The plaint further claims that Bank of Baroda executed transfer instructions on his personal accounts that were submitted by NMC employees who were not authorised to operate them, and honoured forged cheques.
The suit identifies several facilities for which Bank of Baroda allegedly relies on his personal guarantees, including term loans to NMC and Neopharma, credit facilities to Neopharma, a supplemental term loan to UX Holdings, working-capital facilities to Unimoni Financial Services and bank-guarantee and overdraft facilities to UAE Exchange.
Shetty argues that these facilities were extended or renewed after he had relinquished control of the businesses, without meaningful security or adequate enquiry into the end use of the funds.
He has asked the court to require the bank to produce the original guarantees, facility documents and records showing whether and how his signatures were verified.
Alleged failure to disclose lending to auditors
Another major allegation concerns the bank’s handling of balance confirmations requested by auditors of NMC group companies.
The plaint alleges that Bank of Baroda helped keep lending to the group from its auditors, despite concerns about the group’s financial position.
According to the suit, when auditors questioned why only 11 of 15 balance confirmations had reached them, a letter bearing the allegedly forged signature of a bank officer was produced to explain the shortfall.
Shetty alleges that the bank did not report the forgery and instead quietly recovered its own exposure, despite the knowledge of senior management, including its managing director.
It also refers to concerns raised within the bank about the movement of funds between borrowing accounts and current or deposit accounts.
According to the plaint, in January 2016, the bank’s chief executive for GCC operations conveyed concerns from its Mumbai corporate centre about an NMC company maintaining a large credit balance in its current account while owing substantial sums to the bank.
The communication allegedly raised the possibility that funds had been moved out of borrowing accounts to inflate business figures before being returned shortly afterwards. The suit claims that the Abu Dhabi branch denied such transactions, even though more than AED 21 million was transferred out of the account on the first day of the new financial year to settle overdraft accounts.
Bank officers allegedly received gifts from NMC finance team
The plaint also alleges that senior Bank of Baroda officers handling NMC’s accounts received expensive gifts from the group’s finance function, despite the bank having a circular prohibiting employees from accepting gifts from customers.
Shetty claims that the alleged arrangements were made within the finance function controlled by Prasanth Manghat and that gifts were linked to the bank’s handling of the group’s banking relationship.
The suit alleges that the gifts were graded by the rank of the officers concerned and were intended, among other things, to resolve difficulties with the bank.
The plaintiff argues that these arrangements undermine the bank’s position that its employees were not involved in the alleged wrongdoing. He has sought production of the bank’s records of declared gifts.
Shetty alleges bank used him as a scapegoat after NMC’s collapse
According to the plaint, NMC’s financial problems became public after Muddy Waters Research published a report in late 2019 questioning the company’s reported cash, debt and assets. In early 2020, NMC announced suspected fraud and substantial undisclosed borrowings; trading in its shares was suspended, and administrators were appointed.
The plaint alleges that, within days of his complaint to the Federal Attorney General of the UAE seeking investigations into the alleged fraud, Bank of Baroda initiated multiple actions against him.
These included legal proceedings before the Dubai International Financial Centre courts, proceedings in Bengaluru seeking restrictions on his properties, a UAE travel ban and a Look Out Circular (LOC) in India.
The plaint says bank officers pressured him into signing a document presented as a non-binding comfort letter, representing that the bank would continue supporting the group companies. Shetty claims he signed it unread and that his signature was obtained through misrepresentation.
The plaint alleges that the bank subsequently relied on the document and disputed personal guarantees to pursue recovery proceedings.
It also claims that, at a November 20, 2020 meeting, bank officers indicated that the LOC would be withdrawn only if Shetty abandoned all proceedings against the bank.
The suit cites a February 9, 2024, Karnataka High Court judgment challenging the LOC. According to the plaint, the court held that banks could not issue LOCs solely to support civil recovery, recorded that Shetty had been prevented from leaving India for over three and a half years at the bank’s request without valid justification, and directed that he be permitted to travel.
Bank of Baroda's fraud monitoring returns questioned
The plaint also challenges the bank's Fraud Monitoring Returns, which, according to Shetty, named him in connection with the alleged fraud while exonerating the bank’s own officers.
It alleges that the bank’s internal records contradicted aspects of the returns, including the treatment of collateral, the timing of the discovery of the fraud, the extent of staff accountability reviews and the bank’s handling of anti-money-laundering alerts.
The suit claims that the bank’s compliance function had identified the relevant pattern of transactions more than four years before the fraud became public, but the returns did not disclose those earlier warnings.
It also alleges that the bank’s management committee directed in August 2020 that NMC accounts be examined from the perspective of fraud and that staff accountability be reviewed. In May 2021, the bank allegedly declared an NMC company’s account fraudulent but decided not to declare Shetty’s own account fraudulent, while still naming him in its returns.
Shetty argues that the returns were used to justify the LOC and resist his legal challenge, while failing to disclose information that, in his view, pointed to the bank’s own involvement.
₹28,053 cr net worth in 2016; Shetty says business empire destroyed
The plaint sets out the scale of the losses that Shetty says he suffered as a result of the alleged fraud and the subsequent actions taken against him.
According to a chartered accountant’s certificate dated April 18, 2017, cited in the suit, his net worth as of December 31, 2016, stood at approximately ₹28,053 crore, equivalent to around $4.1 billion at the prevailing exchange rate.
Shetty argues that the figure did not capture the subsequent increase in the value of his holdings up to December 2019, including the listing of Finablr on the London Stock Exchange in 2019.
The plaint claims that his wealth, business interests and reputation were subsequently destroyed, and that he is now insolvent and undergoing an insolvency resolution process.
The losses claimed include exposure under the disputed personal guarantees, money withdrawn from accounts in his name, restrictions imposed on his properties, the diminution in value of his shareholdings and investments, and the loss of opportunities to protect or rebuild his businesses.
He also claims that the proceedings and travel restrictions damaged a reputation built over more than four decades.
₹5,700 crore settlement versus the bank’s reported exposure
The plaint raises concerns about the implications of Bank of Baroda’s settlement with NMC’s administrators for the bank, its shareholders and the public exchequer. The suit further states that the bank’s lending to the group ran into thousands of crores of rupees, while the borrowers were in administration or liquidation, making the loans unrecoverable.
Shetty contends that the settlement and the losses associated with the lending have imposed a substantial cost on the public exchequer.
The plaint also notes that the bank had reported a significantly lower loss to its regulator as having been caused by its customer, compared with the amount subsequently paid to NMC’s administrators.
The suit, however, does not treat the settlement as a judicial finding of wrongdoing by Bank of Baroda. It acknowledges that the agreement was stated to be without admission of liability and seeks separate relief for the plaintiff’s own alleged losses.
In addition to $15 billion monetary compensation, the plaint seeks interim protection of assets in India allegedly connected with the Manghat brothers and their associates. This includes requests to restrain the relevant defendants from disposing of or transferring assets, and to attach or freeze assets, including shareholdings and advances involving Avitis Super Speciality Hospitals and SMARD Building Solutions.
The suit also seeks the appointment of a court commissioner to preserve electronic evidence relating to Shetty.
In the suit, the 84-year-old alleges that Bank of Baroda officers facilitated the alleged diversion of funds from his group companies, ignored money-laundering alerts and accepted forged personal guarantees. The suit follows the bank’s $600 million settlement with NMC’s joint administrators in June 2026, which was stated to be without admission of liability.
The plaint alleges that the bank was not merely a lender deceived by the group’s former management, but an instrument through which the alleged fraud was carried out. It claims that bank officers helped structure transactions to withstand scrutiny and continued extending credit despite compliance warnings and concerns over the movement of funds and borrowers’ financial positions.
Shetty has sought $5 billion in direct damages for the alleged fraud, another $5 billion in consequential damages, including loss of business opportunities, and $5 billion in compensation for reputational damage. He has also sought interest at 18% per annum on the first two claims from the date of institution of the suit until payment or realisation.
The allegations are claims made by the plaintiff and are yet to be adjudicated in the present suit. The plaint records that Bank of Baroda denied allegations in the separate proceedings brought by NMC’s administrators before the Abu Dhabi Global Market courts. The settlement in those proceedings was expressly stated to be without admission of liability.
$600 million settlement with NMC administrators at the centre of the suit
According to the plaint, NMC’s joint administrators had instituted proceedings against the bank before the Abu Dhabi Global Market courts. The claims, which reportedly ran into billions of US dollars, alleged fraud and wilful negligence by the bank in discharging its anti-money-laundering and know-your-customer obligations.
It further alleges that the bank had not made any provision for these claims or disclosed them as contingent liabilities in its annual report for FY26, published in May 2026. The bank had indicated to shareholders that it had a good case in the proceedings and that the possibility of an outflow was remote, according to the plaint.
However, within a few weeks, the bank agreed in June 2026 to pay about ₹5,700 crore, or $600 million, to settle the proceedings. The settlement was disclosed by the bank on July 2, 2026, under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The plaint emphasises that the settlement was made without admission of liability and that Shetty was not a party to it. He argues that the settlement does not satisfy or reduce his separate claims against the bank and the other defendants.
Shetty contends that the settlement, particularly in the context of the bank’s earlier disclosures, is relevant to the inference to be drawn regarding the bank’s alleged role in the fraud. He also argues that the amount paid to the administrators was many times the loss the bank had reported to its regulator as having been caused by its customer.
Alleged round-tripping through accounts of purported suppliers
The suit sets out a detailed account of how funds were allegedly moved through accounts maintained with Bank of Baroda’s Abu Dhabi branch.
Shetty alleges that the Manghat brothers — Prasanth Manghat and Promoth Manghat, who held senior executive positions in the group — controlled the group’s financial functions and payments after he relinquished control of the businesses from 2012 onwards.
According to the plaint, the brothers and their associates allegedly used accounts in Shetty’s name and accounts of purported suppliers to move funds between group entities, creating the impression of genuine commercial transactions and making it appear that Shetty was involved in the transfers.
The plaint names entities including Silverline General Trading FZE, Eurasian Continent General Trading LLC, Summit Global General Trading LLC and Delta Cape General Trading LLC. These entities were allegedly presented as independent suppliers to NMC, while their accounts were operated by NMC employees and used predominantly for transfers involving group companies.
The suit claims that Bank of Baroda held accounts on both sides of certain transactions, enabling funds to be routed from one group company through an intermediary account and then back into another group entity.
It also alleges that trade finance and reverse-factoring arrangements based on forged invoices were used to disguise bank debt as trade payables and inflate reported earnings.
The plaint cites the bank’s own 2015 audit, which it says recorded frequent transfers of large amounts involving NMC group companies in the account of Megafin General Trading LLC.
One example concerns Eurasian. The plaint states that the company had declared an annual turnover of AED 20 million, but approximately AED 79 million passed out of its account in the last three months of 2016 alone. According to Shetty, large payments out of the account repeatedly followed receipts from NMC entities within two days and in similar amounts.
The plaint alleges that the bank’s compliance department sought supporting documents, but the branch did not respond adequately. It further states that the bank’s chief compliance officer informed the branch that he could take no further steps because of the branch’s non-cooperation.
In February 2017, the bank allegedly filed a suspicious transaction report on Eurasian with the Central Bank of the UAE. Within a week, the plaint claims, almost the entire balance in the accounts of nine purported suppliers was transferred into a single NMC entity, leaving approximately AED 10,000 in each account.
The suit further alleges that three accounts that had been frozen were manually unfrozen for the transfers and frozen again on the same day. The plaint claims that the bank did not file similar reports on the other eight entities despite what it describes as comparable activity.
Another entity, Silverline, allegedly processed close to AED 100 million in January 2017 alone, far exceeding its declared turnover.
More than 100 money-laundering alerts allegedly closed
A central allegation in the suit is that the bank's own compliance systems repeatedly flagged transactions that should have prompted further scrutiny.
The plaint alleges that the bank closed more than 100 anti-money-laundering alerts without adequate investigation and disregarded warnings that its compliance function had raised years before the collapse of NMC.
It cites the account of Guide General Contracting and Maintenance, a company whose bank account was allegedly used to make large payments to NMC executives and finance personnel.
According to the plaint, Guide’s account-opening documents described it as a building and maintenance contractor with an annual turnover of approximately AED 20 million. However, between May 2018 and January 2019, the account allegedly made payments totalling around AED 42 million to Prasanth Manghat alone, including one payment of AED 20 million.
The suit also alleges that approximately AED 38 million was paid to the CFO of an unrelated hospital group. Other payments were allegedly described as employee incentives or annual bonuses to executives and finance personnel associated with NMC.
The plaint claims that Bank of Baroda officers verified these payments even as the bank’s compliance department repeatedly questioned why a contracting company was paying executives of other groups.
According to the suit, the compliance department wrote to the branch over a period of around four months, eventually marking an email “MOST URGENT”. The branch allegedly failed to provide satisfactory answers, while one of the bank’s officers informed an NMC employee that compliance had raised serious questions about the account.
The plaint further alleges that the branch subsequently relied on a one-page letter on Guide’s letterhead, referring to a one-time incentive arrangement under an investment advisory agreement that was never produced to the bank. The branch allegedly described Guide as part of the NMC group despite its account-opening documents not establishing such a connection.
Shetty claims that the alerts were closed on that basis and the payments continued.
The suit also refers to Bright Rise, another entity whose transactions allegedly generated more than 1,000 anti-money-laundering alerts. These were generally closed without investigation until March 2019, according to the plaint.
Forged guarantees and alleged misuse of Shetty’s personal accounts
The suit challenges the personal guarantees that Bank of Baroda allegedly holds against Shetty for loans and credit facilities extended to companies associated with the group.
Shetty maintains that he did not execute these guarantees and that his signatures were reproduced from an electronic template.
The plaint states that he had relinquished control of the group companies from 2012 onwards and formally stepped down as chief executive officer in March 2017. He alleges that he was cut off from the group’s financial records, cash flows and banking facilities, while the Manghat brothers and their associates controlled the finance and treasury functions.
According to the plaint, documents were routinely brought to him in bulk for signature, sometimes while he was travelling, and he would sign between 100 and 200 documents a day in the belief that they reflected matters discussed with him. The suit says he did not use computers or online banking and did not issue banking instructions by email.
It refers to an internal NMC working file titled “001 -- FUNDING TR LETTER”, which allegedly contained draft trust receipts for purported supplier entities alongside copied snippets of Shetty’s signature. The plaint claims that these signatures matched those appearing on actual trust receipts and facility documents.
The suit also relies on reports by a handwriting expert, Ahmad Obaid Al Bah of the Arab Laboratory for Technical Examination, dated July 24, 2023, and a supplementary report dated October 24, 2024. According to the plaint, the expert concluded that signatures on documents relating to accounts opened at National Bank of Fujairah were forged.
Shetty alleges that two accounts were opened in his name at that bank without his knowledge, using documents bearing forged signatures and authorities purportedly permitting other individuals to operate the accounts. The accounts were allegedly used to transfer money from group companies to the Manghat brothers and entities they controlled.
The plaint further claims that Bank of Baroda executed transfer instructions on his personal accounts that were submitted by NMC employees who were not authorised to operate them, and honoured forged cheques.
The suit identifies several facilities for which Bank of Baroda allegedly relies on his personal guarantees, including term loans to NMC and Neopharma, credit facilities to Neopharma, a supplemental term loan to UX Holdings, working-capital facilities to Unimoni Financial Services and bank-guarantee and overdraft facilities to UAE Exchange.
Shetty argues that these facilities were extended or renewed after he had relinquished control of the businesses, without meaningful security or adequate enquiry into the end use of the funds.
He has asked the court to require the bank to produce the original guarantees, facility documents and records showing whether and how his signatures were verified.
Alleged failure to disclose lending to auditors
Another major allegation concerns the bank’s handling of balance confirmations requested by auditors of NMC group companies.
The plaint alleges that Bank of Baroda helped keep lending to the group from its auditors, despite concerns about the group’s financial position.
According to the suit, when auditors questioned why only 11 of 15 balance confirmations had reached them, a letter bearing the allegedly forged signature of a bank officer was produced to explain the shortfall.
Shetty alleges that the bank did not report the forgery and instead quietly recovered its own exposure, despite the knowledge of senior management, including its managing director.
It also refers to concerns raised within the bank about the movement of funds between borrowing accounts and current or deposit accounts.
According to the plaint, in January 2016, the bank’s chief executive for GCC operations conveyed concerns from its Mumbai corporate centre about an NMC company maintaining a large credit balance in its current account while owing substantial sums to the bank.
The communication allegedly raised the possibility that funds had been moved out of borrowing accounts to inflate business figures before being returned shortly afterwards. The suit claims that the Abu Dhabi branch denied such transactions, even though more than AED 21 million was transferred out of the account on the first day of the new financial year to settle overdraft accounts.
Bank officers allegedly received gifts from NMC finance team
The plaint also alleges that senior Bank of Baroda officers handling NMC’s accounts received expensive gifts from the group’s finance function, despite the bank having a circular prohibiting employees from accepting gifts from customers.
Shetty claims that the alleged arrangements were made within the finance function controlled by Prasanth Manghat and that gifts were linked to the bank’s handling of the group’s banking relationship.
The suit alleges that the gifts were graded by the rank of the officers concerned and were intended, among other things, to resolve difficulties with the bank.
The plaintiff argues that these arrangements undermine the bank’s position that its employees were not involved in the alleged wrongdoing. He has sought production of the bank’s records of declared gifts.
Shetty alleges bank used him as a scapegoat after NMC’s collapse
According to the plaint, NMC’s financial problems became public after Muddy Waters Research published a report in late 2019 questioning the company’s reported cash, debt and assets. In early 2020, NMC announced suspected fraud and substantial undisclosed borrowings; trading in its shares was suspended, and administrators were appointed.
The plaint alleges that, within days of his complaint to the Federal Attorney General of the UAE seeking investigations into the alleged fraud, Bank of Baroda initiated multiple actions against him.
These included legal proceedings before the Dubai International Financial Centre courts, proceedings in Bengaluru seeking restrictions on his properties, a UAE travel ban and a Look Out Circular (LOC) in India.
The plaint says bank officers pressured him into signing a document presented as a non-binding comfort letter, representing that the bank would continue supporting the group companies. Shetty claims he signed it unread and that his signature was obtained through misrepresentation.
The plaint alleges that the bank subsequently relied on the document and disputed personal guarantees to pursue recovery proceedings.
It also claims that, at a November 20, 2020 meeting, bank officers indicated that the LOC would be withdrawn only if Shetty abandoned all proceedings against the bank.
The suit cites a February 9, 2024, Karnataka High Court judgment challenging the LOC. According to the plaint, the court held that banks could not issue LOCs solely to support civil recovery, recorded that Shetty had been prevented from leaving India for over three and a half years at the bank’s request without valid justification, and directed that he be permitted to travel.
Bank of Baroda's fraud monitoring returns questioned
The plaint also challenges the bank's Fraud Monitoring Returns, which, according to Shetty, named him in connection with the alleged fraud while exonerating the bank’s own officers.
It alleges that the bank’s internal records contradicted aspects of the returns, including the treatment of collateral, the timing of the discovery of the fraud, the extent of staff accountability reviews and the bank’s handling of anti-money-laundering alerts.
The suit claims that the bank’s compliance function had identified the relevant pattern of transactions more than four years before the fraud became public, but the returns did not disclose those earlier warnings.
It also alleges that the bank’s management committee directed in August 2020 that NMC accounts be examined from the perspective of fraud and that staff accountability be reviewed. In May 2021, the bank allegedly declared an NMC company’s account fraudulent but decided not to declare Shetty’s own account fraudulent, while still naming him in its returns.
Shetty argues that the returns were used to justify the LOC and resist his legal challenge, while failing to disclose information that, in his view, pointed to the bank’s own involvement.
₹28,053 cr net worth in 2016; Shetty says business empire destroyed
The plaint sets out the scale of the losses that Shetty says he suffered as a result of the alleged fraud and the subsequent actions taken against him.
According to a chartered accountant’s certificate dated April 18, 2017, cited in the suit, his net worth as of December 31, 2016, stood at approximately ₹28,053 crore, equivalent to around $4.1 billion at the prevailing exchange rate.
Shetty argues that the figure did not capture the subsequent increase in the value of his holdings up to December 2019, including the listing of Finablr on the London Stock Exchange in 2019.
The plaint claims that his wealth, business interests and reputation were subsequently destroyed, and that he is now insolvent and undergoing an insolvency resolution process.
The losses claimed include exposure under the disputed personal guarantees, money withdrawn from accounts in his name, restrictions imposed on his properties, the diminution in value of his shareholdings and investments, and the loss of opportunities to protect or rebuild his businesses.
He also claims that the proceedings and travel restrictions damaged a reputation built over more than four decades.
₹5,700 crore settlement versus the bank’s reported exposure
The plaint raises concerns about the implications of Bank of Baroda’s settlement with NMC’s administrators for the bank, its shareholders and the public exchequer. The suit further states that the bank’s lending to the group ran into thousands of crores of rupees, while the borrowers were in administration or liquidation, making the loans unrecoverable.
Shetty contends that the settlement and the losses associated with the lending have imposed a substantial cost on the public exchequer.
The plaint also notes that the bank had reported a significantly lower loss to its regulator as having been caused by its customer, compared with the amount subsequently paid to NMC’s administrators.
The suit, however, does not treat the settlement as a judicial finding of wrongdoing by Bank of Baroda. It acknowledges that the agreement was stated to be without admission of liability and seeks separate relief for the plaintiff’s own alleged losses.
In addition to $15 billion monetary compensation, the plaint seeks interim protection of assets in India allegedly connected with the Manghat brothers and their associates. This includes requests to restrain the relevant defendants from disposing of or transferring assets, and to attach or freeze assets, including shareholdings and advances involving Avitis Super Speciality Hospitals and SMARD Building Solutions.
The suit also seeks the appointment of a court commissioner to preserve electronic evidence relating to Shetty.
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