PNB’s UK subsidiary loses £41.6 mn fraud case

Wednesday 30th January 2019 01:48 EST

The UK subsidiary of Punjab National Bank (PNB) has lost a £41.6 million case in the high court in which the judge blasted the bank for making a fraudulent misrepresentation claim against nine recipients of its loans that “was so abstract it was totally inadequate”. Chief Master Marsh ruled that the UK was not the correct jurisdiction for the case, revoked permission for extending the period of service of the claim form, meaning that the state-owned bank can no longer bring any claim against the nine defendants in the UK.

PNB (International), which has seven branches in the UK, was suing five Indians residing in Chennai, one American in the US; and three companies including Pesco Beam in both the US and India, and US-based Trishe Resources in London claiming they fraudulently misled the bank to lend them tens of millions of dollars for oil re-refining and wind energy projects in the US and also claiming breach of contract stating they had not repaid the loans. The loans were extended between March 29, 2011 and December 1, 2014.

Marsh, in his judgment referred to a “catalogue of procedural failings” by the banks. He blasted the bank for not admitting to the court that it had concurrent proceedings against some of the defendants in South Carolina in the US and in Chennai. He said, “The failure to draw to the attention of the court the existence of the foreign claims was a serious breach of the claimant’s duty to the court... and a material breach of the claimant’s duty of frankness.” He added, “The claimant incorrectly certified that there are no claims pending before any court of law or any other authority.”

He also slammed the bank's pleadings, saying, “It is literally impossible for any of the defendants to this claim to know what case in deceit they have to meet. The particulars of claim fail to meet the minimum requirements that are essential. They are beyond prolix and wholly unspecific. The letters of claim were completely inadequate. There is no good reason why those defendants should be sued in this jurisdiction as well as in the US or India. All the more so in the light of the weakness of the claim in deceit and for misrepresentation.”

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