This morning, London-based law firm Zaiwalla & Co were successful in a hearing against Punjab National Bank International Limited (PNBIL), representing eight of the defendants against PNBIL.
In Punjab National Bank (International) Ltd v Srinivasan and others  UKHC 89 (Ch), a $45 million claim by the UK subsidiary of state-owned Punjab National Bank against six individuals and three companies, based in India and the US, was dismissed. Jurisdiction was refused in the English Courts and the ex parte orders which had allowed service outside of the jurisdiction and by alternate means (email) were set aside. Zaiwalla & Co acted for 8 of 9 of the successful defendants.
The Bank claimed that it had been misled and defrauded by the actions of the defendants following the granting of loans amounting to $45 million to companies in the US and India controlled by the individual defendants. The bank also alleged that money had been siphoned off and payments due had not been made under the loan facilities and guarantees.
The defendants were associated with either of two groups of companies, Pesco Beam and Trishe Resources. Those and related companies borrowed sums from the Bank to fund, respectively, oil re-refining and wind farm projects in the US.
Our clients argued that (1) the bank had not made out an arguable case in deceit, thus there was no serious issue to be tried in respect of those claims (2) that England was not the most appropriate forum for the claim, (3) there had been material breaches of the Bank’s duty of full and frank disclosure pursuant to which the orders for service out of the jurisdiction should be set aside (4) the Bank did not have permission to serve an amended version of the claim on the defendants outside the jurisdiction (5) service by alternative means (by email) should not have been granted and the court was materially misled as to the need for such an order (6) the order extending the period of validity of the claim form should not have been made (7) the Bank had failed to effect service within the period of validity of the claim form.
“PNB has now lost twice in this case i.e. first before Chief Master Marsh and now before Sir Geoffrey Vos, Chancellor of the High Court. In both instances, the Court found that PNB had failed in its duty to make full and frank disclosure. The Court has ordered PNB to pay a total sum of £215,000 towards the costs of the Respondents in this appeal. PNB’s own costs, which it paid to its legal representatives, were over £300,000. PNB has indicated to the Court that it intends to apply for permission to appeal to the Court of Appeal. As this would be a second appeal, the test for granting permission to appeal is stringent. Permission to appeal will only be granted by the Court of Appeal if PNB can show that its appeal would have real prospects of success and it raises an important point of principle or practice. Sir Geoffrey Vos has indicated that if such an application for permission to bring the second appeal was made before him, he would have refused it.”
Kartik Mittal, Partner
"PNB's claims remain set aside primarily due to its lack of candour with the court. Significantly, the Chancellor of the High Court found there to be no serious issue to be tried on the PNB's fraud claims,. Our clients feel vindicated in their belief that these allegations have no basis in reality."
Rohit Ralleigh, Senior Solicitor