Abu Dhabi Court Holds NMC Founder BR Shetty Liable for 5.4 Billion Dollar Fraud

The Abu Dhabi Global Market (ADGM) Court of First Instance has delivered a landmark ruling holding Indian-origin billionaire and NMC Healthcare founder Bavaguthu Raghuram (B.R.) Shetty, along with former Chief Executive Officer Prasanth Manghat, liable for fraudulent and wrongful trading in connection with the multi-billion-dollar collapse of the healthcare empire.

In a detailed judgment exceeding 200 pages, Justice Sir Andrew Smith identified $5.397 billion (approximately ₹45,000 crore) as the starting benchmark for assessing the financial restitution both men must make to the company’s assets. The judgment rejected Shetty’s long-standing defense that he was merely an uninformed figurehead and an unwitting victim of fraud orchestrated by junior and senior executives.

Details of the Multi-Billion Dollar Siphoning

Justice Smith was unequivocal in his findings, observing that both Shetty and Manghat knowingly participated in fraudulent schemes from April 30, 2012—shortly after NMC Health’s London listing—until the company collapsed into administration in 2020.

The court uncovered systematic misappropriation, detailing that:

• Over 500 direct transfers were made into Shetty’s personal bank accounts, totaling AED 4.18 billion (netting roughly AED 2.6 billion after accounting for funds cycled back).
• Diverted funds were channeled into lavish personal expenditures, including private aircraft, luxury properties in Dubai Hills, and investments in a Wyoming oil field.
• NMC orchestrated sham supplier transactions, having vendors raise bogus invoices for goods and services that banks financed, with the borrowed funds secretly redirected back into the group.
• By December 2018, NMC had accumulated approximately $3.88 billion in undisclosed borrowings, while reporting balance-sheet debt of merely $1.99 billion.

High Stakes for Indian Lenders and Dalal Street

For Indian investors and banking institutions, the ruling marks a critical inflection point. NMC Healthcare’s sudden downfall in 2020—triggered by a short-seller report from Muddy Waters Research that flagged unrecorded debt and cash-flow inflation—inflicted severe non-performing asset (NPA) blows on several Indian public sector undertakings (PSUs).

Bank of Baroda (BoB) and State Bank of India (SBI) were among the largest international lenders exposed to Shetty’s sprawling business network, which included NMC Health and UAE Exchange. While Bank of Baroda was originally named as a third defendant in the ADGM proceedings, it reached a settlement with NMC's joint administrators for approximately $600 million, leading to the discontinuance of claims against the lender in the Abu Dhabi court.

However, legal battles in India remain intense. Shetty recently filed a massive $15 billion lawsuit in the Bombay High Court against Bank of Baroda and 25 other defendants, alleging that the bank enabled transactions on guarantees bearing forged signatures. Bank of Baroda has maintained that it will defend its interests firmly, citing ongoing recovery claims and proceedings against Shetty under the National Company Law Tribunal (NCLT). Meanwhile, the Dubai International Financial Centre (DIFC) Courts have also ruled against Shetty in personal guarantee suits brought by SBI’s Dubai branch for defaulted facility repayments.

Cross-Border Asset Recovery in Focus

The definitive finding of dishonesty and fraudulent trading against Shetty significantly alters the cross-border debt-recovery landscape for Indian banks. Following the Indian government’s 2020 notification recognizing the UAE as a reciprocating territory under Section 44A of the Code of Civil Procedure, civil decrees passed by superior UAE courts—including the ADGM courts—can be executed directly in Indian district courts.

The ADGM court will hold a subsequent hearing to determine the final apportionment of financial contributions, interest, and legal costs between Shetty and Manghat. With creditors aggressively pursuing Shetty’s domestic bank accounts, real estate holdings, and corporate equity in India, the Abu Dhabi court’s $5.4 billion finding strips away the founder's liability shields and offers Indian lenders their strongest legal footing yet to recover past write-offs.