A UK court on Thursday dismissed a claim brought by the Punjab National Bank against nine defendants it had loaned $45 million for oil refining and energy generating projects in the United States, criticising the ways in which the claim was made.

The claim was brought by PNB (International) on the ground of alleged deceit, misrepresentation and breach of contract against seven individuals and two companies based in India and the US. It also alleged that money had been siphoned off and payments due had not been made under the loan facilities and guarantees.

A UK-incorporated bank, PNB (International) is a wholly owned subsidiary of PNB India. It has seven branches in London and elsewhere in the UK.

The defendants in the case were Ravi Srinivasan, Trishe Resources Inc (US), Narasimhan Ramkumar, Vatsala Ranganathan, Pesco Beam Environmental Solutions Inc (US), Pesco Bean Environmental Solutions Pvt Ltd, Shankar Anantharaman, Like Staengl and Anantharam Subramaniam.

None of the defendants had links with England, but the loan contracts were negotiated and executed in London. The loan accounts were held and operated in London. The bank relied on these facts while making the claim in the high court.

However, pointing out a series of lapses in PNB’s claim, the high court’s Chief Master Marsh said: “The core components of a claim in deceit are absent”, adding that “the claims in deceit and misrepresentation do not demonstrate a serious issue to be tried”.

Represented by the London-based law firm of senior lawyer Sarosh Zaiwalla, the defendants argued that the bank had not made out an arguable case in deceit; that England was not the appropriate forum for the claim; that PNB misled the court on key issues, and that it failed to properly effect service of the claim.

The court agreed and dismissed the bank’s claim. Marsh observed that while there were significant factors that point towards England as an appropriate forum, PNB had made similar legal claims in the US and Chennai, which it had failed to inform the court about in breach of its duty to the court to provide full and frank disclosure.

Marsha added: “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. The proceedings were highly material to the exercise of the court’s jurisdiction to give permission to serve out of the jurisdiction.”

Zaiwalla & Co said in a statement that the matter raises serious questions about the way the bank’s claim has been put before the court and served.

“The decision serves as a reminder that serious allegations of fraud have to be supported by cogent facts and evidence: speculative claims will not be permitted to proceed to trial. The decision of the court has saved everyone concerned a great deal of time and money by being dismissed at an early stage, although the bank will still face claims for substantial costs as well as having to pay its own costs.”

First Published: Jan 24, 2019 18:31 IST