Delhi High Court on PIL Alleging Bank Undervaluation: Judicial Restraint in Commercial Dealings.

Headnote:

The Delhi High Court dismissed in limine a Public Interest Litigation (PIL) filed by Infrastructure Watchdog that alleged undervaluation and corruption in One-Time Settlement (OTS) agreements between Asian Hotels (North) Pvt. Ltd. (AHN) and Punjab National Bank (PNB) and Bank of Maharashtra (BOM). The petitioner claimed that undervaluation of the Hyatt Regency Hotel property in Delhi had caused losses to public banks. The Court, however, held that the PIL was speculative, unsupported by credible evidence, and based merely on conjecture and assumptions.

It ruled that courts cannot intervene in purely commercial transactions between private parties or banks acting under their commercial wisdom unless there is strong, prima facie material showing mala fides or corruption. Entertaining such PILs, the Court warned, would seriously harm the banking system, discourage financial institutions from legitimate recoveries, and invite misuse of judicial processes for speculative or publicity-driven motives.

Background:

1. Petitioner’s case: The petitioner alleged that the OTSs between AHN and the two nationalised banks were based on an artificially deflated valuation of the Hyatt Regency Hotel, reducing its assessed worth from over ₹2,600 crores in 2021 to about ₹970 crores in 2024. It sought quashing of the OTS between AHN and BOM (dated 24 January 2025) and a direction to the Ministry of Finance, the CBI, and the CVC to investigate.
2. Banks’ stand: BOM and PNB argued that the OTSs were approved after multiple independent valuations, scrutiny by high-level committees (including retired judges and RBI-nominated directors), and compliance with RBI guidelines. BOM stated it recovered 116% of the ledger balance, negating any loss.
3. Regulatory and judicial precedents: The respondents relied on Dr. Subramanian Swamy v. Union of India (2024 SCC OnLine Del 5706) and BALCO Employees Union v. Union of India (2002) 2 SCC 333, which limited judicial review over commercial and policy decisions.

Court’s Observations:

1. PIL abuse and judicial caution: The Court emphasized that while genuine public interest litigation is a vital tool for justice, speculative or ill-informed PILs in financial matters cause reputational and systemic harm. Issuing notice in such cases can destabilize legitimate commercial operations.
2. Private contracts not amenable to PILs: Following Rajeev Suri v. DDA and Jagdish Mandal v. State of Orissa, the Court reiterated that contractual and commercial transactions between banks and private entities cannot be subject to PIL scrutiny.
3. No credible basis for allegations: The petitioner’s claims were based on outdated property valuations and third-party transactions (some from 2020–21) unrelated to the OTSs. The Court held that these facts did not justify even a prima facie inference of wrongdoing.
4. Procedural lapses: The petitioner failed to disclose verifiable sources of information as required under Rule 9(i)(c) of the Delhi High Court (PIL) Rules, 2010, merely citing a “reliable whistleblower.”
5. Judicial restraint reaffirmed: Citing Kunga Nima Lepcha v. State of Sikkim (2010) 4 SCC 513 and State of Jharkhand v. Shiv Shankar Sharma (2022) 19 SCC 626, the Court reiterated that initiation of criminal or vigilance investigations cannot be ordered on vague, unsubstantiated claims.

Conclusion:

The Court held that the PIL was speculative, unsupported by credible evidence, and aimed at initiating a “roving inquiry” into bona fide commercial decisions of banks. Such attempts, it said, must be “nipped in the bud.”

Held:

1. No case was made out for issuance of notice or for investigation by the CBI, CVC, or any agency.
2. The writ petition was dismissed in limine.

Citation: W.P.(C) 4123/2025

Case: Infrastructure Watchdog v. Union of India & Ors.

Court: High Court of Delhi at New Delhi

Coram: Hon’ble Mr. Justice C. Hari Shankar & Hon’ble Mr. Justice Ajay Digpaul

Date of Decision: 3 November 2025

Reserved on: 15 July 2025