A London court has dismissed a claim, brought by a subsidiary of Punjab National Bank (PNB) in the United Kingdom (UK) against United States (US)- and India-based defendants, which related to their role in $45-million loans issued to oil-refining and wind energy general projects in the US. The judgment was critical on the bank’s failure to bring its attention, in particular, to separate claims being pursued in the US and India.

The claims had been made against nine defendants, including three individuals and six companies, and related to loans disbursed by Punjab National Bank (International Ltd) between 2011 and 2014.

Fraudulent misrepresentation

The bank had alleged the “fraudulent misrepresentation by the defendants”, related to “numerous loans”, alleging it was misled into advancing the money, and that a breach of contract followed, whereby the funds were allegedly siphoned off and used for purposes that were not part of the terms of the loan.

“Between 2011 and 2014, the claimants made a series of loans for the purpose of financing to projects. The said loans were drawn down in their entirety and have now fallen due and are owing. The principals alone total $36 million,” according to court documents submitted by the claimants.

While all but one of the defendants had been based in India (the last was based in the US) and the loans related to US projects because they were disbursed out of London, it had originally been deemed a suitable jurisdiction for the case.

However, claims have also been made in the US and Chennai, and Chief Master Matthew Marsh, in his judgment, was highly critical of the lack of transparency from the bank when it came to these claims, which, he said, meant that they could not demonstrate the UK was the appropriate forum, particularly given the “weakness of the claim in deceit and for misrepresentation”.

“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,” he remarked in the judgment.

Zaiwalla and Co, which represented eight of the defendants, welcomed the dismissal of the case at an early stage, but said the judgment raised serious questions about the way the bank’s claim had been pursued.

“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.” PNB’s legal team is yet to respond.

The loans at issue were made to South Caroline-based Southeastern Petroleum LLC (not one of the parties in the claim), Virginia-based Pesco Beam Environmental Solutions Inc, and Delaware-based Trishe Wind Energy Inc.

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