The state-owned lender has responded by declaring that it will firmly defend its interests, while maintaining that it has not yet been formally served with the lawsuit filed on October 13.
Shetty’s commercial suit accuses the bank, several current and former officials, and former executives of his healthcare group of facilitating fraudulent transactions, concealing substantial liabilities and pursuing him over personal guarantees allegedly bearing forged signatures.
The businessman is seeking $5 billion in direct damages and another $5 billion for consequential losses from the defendants jointly and severally. He has additionally claimed $5 billion from Bank of Baroda for alleged reputational damage and loss of goodwill.
His legal action also seeks annual interest of 18% on the first $10 billion claimed, potentially increasing the financial exposure if the court ultimately accepts his demands.
Bank of Baroda, responding through a stock exchange disclosure on Wednesday, said it had not received the pleadings and was therefore unable to comment on their contents.
The lender stated that it would defend the proceedings firmly and take all necessary measures to protect its interests once formally served. The allegations against the bank and other defendants remain unproven.
The bank also disclosed that it was pursuing recovery proceedings against Shetty for outstanding dues of approximately Rs 2,800 crore, equivalent to about $295 million. It said enforcement actions were continuing through legal proceedings in India and the UAE.
The competing claims highlight a dispute over responsibility for financial transactions associated with NMC Healthcare, whose collapse in 2020 exposed billions of dollars in previously undisclosed borrowings.
Shetty maintains that former executives exercised control over financial operations while he was increasingly occupied with philanthropic activities between 2012 and 2017.
His lawsuit identifies former NMC executives Prasanth Manghat and Promoth Manghat among the defendants, alleging that financial transactions conducted under their management diverted corporate funds through entities presented as legitimate suppliers.
According to the pleadings, the transactions involved circular movements of money between accounts, allegedly creating misleading impressions of commercial activity while concealing the group’s actual financial position.
Shetty alleges that Bank of Baroda personnel facilitated these arrangements despite internal compliance warnings and indications that certain transactions required further scrutiny.
The suit claims that more than 100 internal anti-money laundering alerts were disregarded. It also alleges that certain bank officials accepted improper benefits, including expensive electronic devices and a luxury watch.
These accusations form part of Shetty’s pleadings and have not been established through judicial findings.
Another allegation concerns the handling of information provided to statutory auditors. Shetty claims that 15 balance confirmations were prepared but only 11 reached auditor EY, leaving significant borrowing exposures undisclosed.
He further contends that his signature was reproduced from an electronic template and attached to financial guarantees without his knowledge or authorisation.
The businessman argues that these documents subsequently became the basis for attempts to recover substantial sums from him personally, despite his contention that he had never consented to the underlying obligations.
The litigation follows Bank of Baroda’s agreement in July to pay $600 million to settle claims brought by administrators of NMC Health and related entities.
That settlement resolved proceedings concerning the lender’s alleged involvement in financial transactions associated with the healthcare group’s collapse. The agreement involved no admission of liability or wrongdoing by the bank.
The earlier litigation had raised questions about lending controls, customer verification procedures and the handling of transactions involving companies connected with the NMC group.
NMC Health, formerly listed on the London Stock Exchange, entered administration in April 2020 after investigations uncovered substantial undisclosed debt. Its liabilities were subsequently reported at approximately $6.6 billion.
The latest legal proceedings also attracted attention in financial markets. Bank of Baroda shares declined sharply during Wednesday’s trading, falling by approximately 3% as investors assessed the implications of the damages claim.
The commercial suit was instituted through Shetty’s power of attorney holder, Dr Shishir Shetty, and names the bank alongside individuals and corporate entities allegedly connected with the disputed transactions.
Shetty’s pleadings also challenge actions taken against him, including a lookout circular, which he identifies among the measures responsible for his claimed reputational and consequential losses.
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