New York court dismisses $8 billion lawsuit by NMC Health founder against Bank of Baroda, Ernst & Young etc

The Supreme Court of the State of New York has dismissed an $8 billion lawsuit filed by the founder of NMC Health Dr BR Shetty and an affiliate firm, Neopharma LLC, against two banks including the Bank of Baroda, certain audit firms and others..Shetty had accused these parties of having concealing financial fraud leading to the collapse of the healthcare chain NMC Health. The accused parties included the Bank of Baroda, Credit Europe Bank (banks), and audit firms Ernst & Young LLP and Ernst & Young Middle East (defendants).On July 10, Judge Joel M Cohen opined that the New York Supreme Court's Commercial Division was not the appropriate forum to pursue the lawsuit. The dismissal of the suit was subject to a condition that the defendants must accept the service of court processes if Shetty chooses to file the case again before the appropriate court and jurisdiction. "Plantiffs Dr. Bavaguthu Raghuram Shetty's and Neopharma LLC's Amended Complaint is dismissed without prejudice on the basis of forum non conveniens, conditioned upon Corporate Defendants accepting service of process (or analogues local procedure) in their home jurisdictions should Plaintiffs reassert their claims in such jurisdictions," the order stated. .Shetty is the founder of NMC Health, a healthcare provider which ran a chain of hospitals in the UAE. NMC Health ran into trouble in 2019 when it was accused of misleading its investors about its debt position in its financial statements. It was eventually delisted from the London Stock Exchange and sent into administration (similar to corporate insolvency proceedings in India). In 2021, Shetty filed a lawsuit against Bank of Baroda, Credit Europe Bank, Ernst & Young LLP and Ernst & Young Middle East alleging that they concealed fraudulent transactions concerning NMC. Among other defendants, the lawsuit also levelled allegations against former chief executive of NMC, Prasanth Manghat and Promoth Manghat, who was formerly a top executive at Finablr, a London-listed fintech company founded by Shetty..As per a report in the Financial Times, Shetty's lawyers claimed that he was set up as the "fall guy" by executives of NMC, who forged his signatures on documents to secure fraudulent loans which were not duly flagged by banks and auditors to the concerned authorities. He argued that the defendants, therefore, enabled the fraud that led to the collapse of NMC. The Bank of Baroda’s New York branch was accused of being the “lynchpin” of the entire fraudulent conspiracy because it was used to facilitate foreign-currency denominated (US dollars) fund transfers that enabled the rest of the scheme.Shetty had sought $8 billion in damages from the defendants for these alleged lapses.The defendants moved a motion to dismiss the suit before the New York court on various grounds, including forum non-conveniens, lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act, lack of personal jurisdiction, and failure to state a cause of action. .On July 10, the court dismissed the suit after concluding that it was not the appropriate forum for the plaintiffs to pursue this case..Dr Shetty was represented by Meister Seelig & Fein PLLC.Bank of Baroda was represented by Steven R Campbell, Gregg A Fish and Edward T Kang from Alston & Bird. They were advised on strategic aspects of the litigation by Dharmendra Chatur and Ishi Prakash of Poovayya & Co.Credit Europe Bank was represented by Glenn Agre Bergman & Fuentes LLP. Ernst & Young was presented by King & Spalding LLP and Kramer Levin Naftalis & Frankel LLP..[Read Order]