PNB's fraud claim dismissed

Tuesday 12th May 2020 16:00 EDT

The Court of Appeal in London has refused permission for the British subsidiary of Punjab National Bank (PNB) to appeal against a judgment dismissing its USD $45 million claim for fraud and misrepresentation in respect of loans given to Indian and US companies involved in the renewable energy sector.

This was the third consecutive defeat for PNB in this case and the UK High Court has criticised the PNB’s failure to disclose existing proceedings it had brought in the debt tribunal in Chennai. The court also criticised PNB’s lengthy statements of case which it said demonstrated a lack of particularity and specificity, and that the case of fraud was not supported by cogent facts and evidence.

Lord Justice Floyd’s recent decision to refuse permission to appeal has effectively brought to an end the two-year legal battle. Rohit Ralleigh, Senior Solicitor, commented: “English courts expect certain standards of conduct from parties and their legal advisers which were not met. Parties seeking to obtain orders without notice to their opponents have a duty of candour, and generalised allegations of fraud may not survive even the early stages of litigation. Procedural failings are likewise susceptible to punitive orders.”

Robert Maxwell Marsh, Solicitor added: “The Court found that PNB had failed in its duty to make full and frank disclosure whilst obtaining an ex parte order. The Bank failed, for example, to disclose that it had brought related proceedings in other jurisdictions. Likewise, the Court found that PNB’s claims against the defendants in deceit and misrepresentation did not demonstrate a serious issue to be tried and were lacking the core components needed for such claims.

PNB had 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. Although the defendants were all based in India and the US, the Bank asserted that on the basis of the loan facility agreements, the proper place for its claims was England.

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