# M/s. DAIICHI SANKYO COMPANY LIMITED v. OSCAR INVESTMENTS LIMITED & ORS

- **Citation:** [2022] 11 S.C.R. 1020
- **Court:** Supreme Court of India
- **Decided:** 2022-09-22
- **Bench:** Uday Umesh Lalit, Indira Banerjee, K.M. Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-daiichi-sankyo-company-limited-v-oscar-investments-limited-ors-35686
- **Pages:** 78

## Headnote

Contempt of Court - Held: Contemnor Nos. 9 and 10 were
held guilty of committing contempt of the orders passed by the High
Court and Supreme Court - They were given an opportunity to purge
themselves of contempt - However, the kind of assets offered by
Contemnor Nos.9 and 10 in their affidavit are so inadequate that it
is impossible to satisfy the amount awarded in favour of the petitioner
in the foreign arbitral award - Thus, said Contemnors have failed
to purge themselves of contempt - Considering the enormity of their
actions, Contemnor Nos.9 and 10 sentenced to suffer the maximum
sentence i.e., six months imprisonment - Fine of Rs.5,000/- imposed
for having committed contempt of court with default sentence of
two months - Further, regarding the role played by the noticee banks
and financial institutions, no directions are being passed against
them for the present but the executing court or any other authority
competent to exercise such power shall do well to appoint forensic
auditor(s) to undertake proper exercise to unravel the truth -
Directions issued.
Delhi Development Authority v. Skipper Construction
(2007) 15 SCC 60 I : [2005] 3 SCR 313; Supreme Court
Bar Association v. Union of lndia (1998) 4 SCC 409 :
[1998] 2 SCR 795; Satya Brata Biswas v. Kalyan Kumar
(1994) 2 SCC 266 : [1994] 1 SCR 413; Traders Private
Ltd. v. Tosh apartments Private Ltd (2012) 8 SCC 384 :
[2012] 10 SCR 307; Rosnan Sam Boyce v. B.R. Cotton
Mills Ltd. (1990) 2 SCC 636 : [1990] 2 SCR 381 -
referred to.
Case Law Reference
[2005] 3 SCR 313
referred to
Para 19
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1021
[1998] 2 SCR 795
referred to
Para 19
[1994] 1 SCR 413
referred to
Para 19
[2012] 10 SCR 307
referred to
Para 19
[1990] 2 SCR 381
referred to
Para 19

## Text

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SUPREME COURT REPORTS
[2022] 11 S.C.R.
 [2022] 11 S.C.R. 1020
1020
M/s. DAIICHI SANKYO COMPANY LIMITED
v.
OSCAR INVESTMENTS LIMITED & ORS.
(Special Leave Petition (C) No. 20417 of 2017)
SEPTEMBER 22, 2022
[UDAY UMESH LALIT, CJI, INDIRA BANERJEE AND
K.M. JOSEPH, JJ.]
Contempt of Court - Held: Contemnor Nos. 9 and 10 were
held guilty of committing contempt of the orders passed by the High
Court and Supreme Court - They were given an opportunity to purge
themselves of contempt - However, the kind of assets offered by
Contemnor Nos.9 and 10 in their affidavit are so inadequate that it
is impossible to satisfy the amount awarded in favour of the petitioner
in the foreign arbitral award - Thus, said Contemnors have failed
to purge themselves of contempt - Considering the enormity of their
actions, Contemnor Nos.9 and 10 sentenced to suffer the maximum
sentence i.e., six months imprisonment - Fine of Rs.5,000/- imposed
for having committed contempt of court with default sentence of
two months - Further, regarding the role played by the noticee banks
and financial institutions, no directions are being passed against
them for the present but the executing court or any other authority
competent to exercise such power shall do well to appoint forensic
auditor(s) to undertake proper exercise to unravel the truth -
Directions issued.
Delhi Development Authority v. Skipper Construction
(2007) 15 SCC 60 I : [2005] 3 SCR 313; Supreme Court
Bar Association v. Union of lndia (1998) 4 SCC 409 :
[1998] 2 SCR 795; Satya Brata Biswas v. Kalyan Kumar
(1994) 2 SCC 266 : [1994] 1 SCR 413; Traders Private
Ltd. v. Tosh apartments Private Ltd (2012) 8 SCC 384 :
[2012] 10 SCR 307; Rosnan Sam Boyce v. B.R. Cotton
Mills Ltd. (1990) 2 SCC 636 : [1990] 2 SCR 381 -
referred to.
Case Law Reference
[2005] 3 SCR 313
referred to
Para 19
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E
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1021
[1998] 2 SCR 795
referred to
Para 19
[1994] 1 SCR 413
referred to
Para 19
[2012] 10 SCR 307
referred to
Para 19
[1990] 2 SCR 381
referred to
Para 19
CIVIL APPELLATE JURISDICTION : Special Leave Petition
(C) No.20417 of 2017.
From the Judgment and Order dated 21.06.2017 of the High Court
of Delhi at New Delhi in CCPO No.21 of 2017.
With
Contempt Petition (C) No.2120 Of 2018 In Special Leave Petition
(C) No.20417 of 2017 and Suo Motu Contempt Petition (C) No.04 of
2019.
Mukul Rohatgi, Rakesh Dwivedi, Jaideep Gupta, Krishnan
Venugopal, Arvind P. Datar, Kailash Vasdev, Harish N. Salve, Rajiv Nayar,
Gaurav Pachnanda, Ms. Meenakshi Arora, Shyam Divan, C.U. Singh,
Jayant Mehta, Sr. Advs., Amit Kumar Mishra, Eklavya Dwivedi, Mohit
Singh, Ms. Samridhi Hota, Ms. Kanika Singhal, Shivam Pandey, Turab
Ali Kazmi, Ms. Saloni Agarwal, Rohan Jaitley, Aditya Shankar, Jaiveer
Shergill, Kunal Chatterji, Keshav Dhingra Sehgal, Shivendra Singh, Ms.
Maitrayee Banerjee, Pravar Veer Misra, Rahul Unnikrishnan, Anuradha
Dutt, Ms. Suman Yadav, Aditya Sarin, Tushar Jarwal, Ms. Neoma
Vasudev, Shobhit Ahuja, Ms. B. Vijayalakshimi Menon, H.S. Chandhoke,
Sanjeev Kumar, Saleem Ansari, Vaibhav Kakkar, Abhishek Kisku, Anshul
Sehgal, Sahil Arora, Rohit Dahiya, Faisal Sherwani, Ms. Ruby Singh
Ahuja, Vishal Gehrana, Ms. Kritika Sachdeva, Anmol Jassal, Ms.
Namrata Sinha, Ms. Avni Sharma, M/s. Karanjawala & Co., Vivek Jain,
Nirvikar Singh, Zulfiquar Menon, Abhishek Singh, Manish Shekhari, Nitin
Sharma, Ganesh Khemka, Anuj Berry, Abhik Chakraborty, Govind
Manohar, Prateek Yadav, Ms. Anshula Laroiya, Shradul S. Shroff, Pratap
Venugopal, Ms. Surekha Raman, Ms. Viddusshi Shandilya, Akhil Abraham
Roy, Vijay Valsan, M/s. K J John & Co, Sandeep Devashish Das, Ms.
Aishwarya Singh, Ms. Roopali Singh, Ms. Sayobani Basu, Ms. Durga
Manda, Anant Misra, Mayank Pandey, Sandeep Joshi, Anang Shandilya,
Sanjeev Prakash Upadhyaya, Sanjay Kumar Visen, Atul Sharma, Ms.
Renuka Iyer, Abhishek Agarwal, Sanjay Gupta, Ateev Mathur, Amol
Sharma, Gagan Gupta, Aman Raj Gandhi, Ms. Sanjana Arora, Ashwani
M/S. DAIICHI SANKYO COMPANY LIMITED v. OSCAR
INVESTMENTS LIMITED
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Kumar, Rishi Sethi, Vidhur Sikka, Ms. Sandhya Chawla, Kumar Gaurav,
Ms. Ritu Reniwal, Robin Khokhar, Mahesh Agarwal, Rishi Agrawala,
Ankur Saigal, Himanshu Satija, Nishant Rao, Ms. Mansi Taneja, Ms.
Ayushi Aamod, E.C. Agrawala, Ms. Saman Ahsan, Ms. Srijata Majumdar,
Ms. Monika Vyas, M/s. Khaitan & Co., Vinam Gupta, Alok Kumar, Ms.
Somya Yadava, Ms. Drishti Harpalani, Uday Arora, G.N. Reddy, Varghese
Thomas, Hormuz Mehta, Ms. Tamoghna Goswami, Dheeraj Nair, Sameer
Parekh, Sumit Goel, Ms. Sonal Gupta, Manu Bajaj, Ms. Nitika Pandey,
M/s. Parekh & Co., Rohan Thawani, Hardeep Singh Anand, Advs. for
the appearing parties.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, CJI
1. The present proceedings arise out of an action initiated by
Daiichi Sankyo Company Limited (hereinafter referred to as "Daiichi")
for enforcing a Foreign Arbitral Award dated 29.04.2016 made in
Singapore and passed in favour of Daiichi and against 20 Respondents
i.e. Respondent 1: Malvinder Mohan Singh, Respondent 2: Malvinder
Mohan Singh as Karta of HUF, Respondent No.3: Malvinder Mohan
Singh as Trustee of Bhai Hospital Trust, Respondent No.4: Japna M.
Singh, Respondent 5: Nimrita Singh, Respondent 6: Shivinder Mohan
Singh, Respondent 7: Shivinder Mohan Singh as Karta of HUF,
Respondent 8: Aditi Singh, Respondent 9: Anhad Parvinder Singh,
Respondent 10: Kabir Parvinder Singh, Respondent 11: Udayveer Singh,
Respondent 12: Vivan Singh, Respondent 13: Nimmi Singh, Respondent
14: Oscar Investments Ltd., Respondent 15: Malav Holdings Pvt. Ltd.,
Respondent 16: Modland Wear Pvt. Ltd., Respondent 17: Fern Healthcare
Pvt. Ltd., Respondent 18: ANR Securities Pvt. Ltd., Respondent 19:
RHC Holdings Pvt. Ltd., Respondent 20: Oscar Traders (Partnership
Firm) ("Respondents/ Judgment Debtors"), directing them to jointly and
severally pay a sum of approximately INR 2562 crores with further
additional pre-award interest (4.44%) and post-award interest (5.33%),
in Arbitration Case No.19074/CYK. The Award was challenged in
Singapore as well as in India but the objections were dismissed and the
Award became final. In the proceedings initiated for enforcement of
said Award in the High Court1, anobjection was raised under Section 48
of the Arbitration and Conciliation Act, 1996 (for short, 'the Act').
However, said objection was dismissed except insofar as original
respondents No. 5 and 9 to 12, who were minors when the award was
1High Court of Delhi at New Delhi.
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declared. The further challenge in this Court to the rejection of the
objection did not succeed and Special Leave Petition (Civil) No. 4276 of
2018 preferred therefrom was dismissed by this Court on 16.02.2018.
2. In the enforcement proceedings being OMP (EFA) (Comm.)
No.6 of 2016 initiated by Daiichi, an apprehension was expressed that
the Respondents were engaging in designs to move the assets outside
the reach of Daiichi. It was submitted that Fortis Healthcare Holdings
Private Limited ("FHHPL") was a holding company under the control
of the Respondents and the value of its shares was derived solely from
the value of the downstream operating company- Fortis Healthcare
Limited ("FHL"); and that FHL shares held by FHHPL were being
sold/ encumbered by the Respondents. In said proceedings, an
undertaking given by the learned counsel appearing for respondent
Nos.14 and 19 was recorded by the High Court in its order dated
21.06.2017 in following terms:
"8. Since the petitioner has raised an issue with regard to the
shareholding of Fortis Healthcare Holding Pvt. Ltd. in Fortis
Healthcare Limited, the present order is being restricted to the
value of the said unencumbered asset disclosed in the affidavit.
9. Learned Senior Counsel appearing for respondent no. 14 and
19 submits that the value of the unencumbered asset comprising
of equity share in Fortis Healthcare Holding Private Limited has
been disclosed as Rs.452.60 Crores by respondent no.14 and
Rs.1889.30 crores by respondent no. 19.
10. Learned Senior Counsel appearing on behalf of respondent
no. 14 and 19 undertakes that, irrespective of any transaction that
the said respondent may enter into, the value as disclosed to the
court would not be, in any manner, hampered or diminished.
11. The effect of the above statement of learned Senior Counsel
for respondent no.14 and 19 is that the sum of Rs.2841.09 Crores
(i.e. Rs.452.60 + Rs.1889.30 crores) would always be available
and realizable as an asset of respondent no.14 and 19, in Fortis
Healthcare Holding Pvt. Ltd. Towards the satisfaction of the
decretal amount as and when the stages so arises.
12. The statement is taken on record and the undertaking
accepted."
M/S. DAIICHI SANKYO COMPANY LIMITED v. OSCAR
INVESTMENTS LIMITED [UDAY UMESH LALIT, CJI]
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3. In Special Leave Petition (Civil) No.20417 of 2017 the
aforestated order dated 21.06.2017 is under challenge mainly on the
ground that rather than recording said undertaking of the learned counsel,
the High Court ought to have issued appropriate process to secure the
assets of those against whom the Award was passed. As a matter of
fact, the undertaking so recorded in the order dated 21.06.2017 was the
fifth assurance / undertaking given by the learned counsel appearing for
respondent Nos.14 and 19. Previous four such assurances were recorded
by this Court in its judgment and order dated 15.11.20192 passed in Vinay
Prakash Singh vs. Sameer Gehlaut & Ors. as under:
"Proceedings before the Delhi High Court
The first assurance
4. During the enforcement proceedings, the petitioner filed I.A.
No.6558 of 2016 before the High Court of Delhi praying that the
respondents be restrained from alienating or encumbering their
assets. The petitioner expressed an apprehension that the
respondents would fritter away their assets which would make
the award unenforceable. On 24.05.2016 Mr. Kapil Sibal, learned
senior counsel appearing for the respondents assured the High
Court that the interest of the petitioner will be protected. Though
this assurance was not recorded by the Court, the same forms a
part of the letter sent by the counsel for petitioner, relevant portion
of which reads as follows:-
"1...Further, while directing that, inter alia, the Arbitration
Award dated 29 April 2016, be kept confidential, a formal
protective order has not been passed by the Hon'ble Court on
the strength of duly instructed oral assurance tendered by
Learned Senior Counsel Mr. Kapil Sibal (appearing for the
Respondents) that the Petitioner's interest would be protected
to the extent of the total sum awarded under the Arbitral Award
dated 29 April 2016, and there would be no fait accompli. Mr.
Kapil Sibal had also submitted that even recording of his
personal statement in the order would affect the respondents'
interest in the share market as some of his clients are listed in
stock exchange."
It appears that the respondents had urged before the Court that
their assurance should not be recorded in the order of the Court,
2"The judgement", for short.
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since that might affect the value of their shares in the share market.
This was the first assurance given by the respondents to the
High Court of Delhi. It would be pertinent to mention that the fact
that such an assurance was made is also recorded in the order of
the High Court dated 23.01.2017 wherein Mr. Harish N. Salve,
learned senior counsel appearing for the respondents 1 to 4 and
13 therein reiterated the assurance given to the Court as recorded
in the letter dated 24.05.2016.
The second assurance
5. On 25.07.2016, the High Court of Delhi passed an order directing
the respondents to disclose the details of their immovable assets
and also to disclose the details of assets that have been alienated
and encumbered to third parties. It appears that during this period
reports appeared in various newspapers that the respondents were
disposing their stakes in subsidiary companies and were also
clandestinely disposing of their assets. Left with no alternative,
the petitioner filed an Interlocutory Application being I. A. No.
618 of 2017 before the High Court of Delhi in which the following
prayer was made: -
a. "Urgently pass an order directing the Respondents to secure
the Award amount by depositing it with the Registrar of the
Delhi High Court or by providing adequate security or by bank
guarantee or by any other means that this Hon'ble Court may
deem fit;
b. Pass an order directing the attachment of the movable and
immovable assets and properties of the Respondents, and any
assets and properties in which the Respondents have any
beneficial interests until the disposal of the present petition, at
least to the extent of the amounts awarded in the Award;
c. Pass an order restraining the Respondents and their group
companies from selling, alienating or encumbering their movable
or immovable properties/assets in any manner whatsoever;
d. Pass ex-parte, ad interim orders in terms of prayers (a), (b)
and (c) above and confirm the same after notice to the
Respondents;"
On 23.01.2017, Mr. Harish N. Salve, learned senior counsel for
some of the respondents before the High Court of Delhi reiterated
the assurance given in the letter dated 24.05.2016 and sought two
M/S. DAIICHI SANKYO COMPANY LIMITED v. OSCAR
INVESTMENTS LIMITED [UDAY UMESH LALIT, CJI]
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SUPREME COURT REPORTS
[2022] 11 S.C.R.
weeks' time to furnish an affidavit by one of the respondents
giving the details of assets of all the respondents. This was the
second assurance.
The third assurance
6. The information was not provided in the manner sought by the
High Court which is reflected in the order dated 06.03.2017. The
order records that the respondents have been directed to furnish
details of all unencumbered assets both movable and immovable
and not merely the list of the investments, loans and advances as
reflected in the affidavit filed by the respondents. The respondents
were directed to furnish further details and the counsel for
respondents had submitted that this would be done within 1 week.
The High Court in its order dated 06.03.2017 clarified as follows:-
"8. The Court would like to clarify that the above understanding
by Respondent No.19 of what was required to be furnished in
terms of the order dated 23rd January 2017 is not correct. The
Respondents were in fact required to furnish the information
relating to all the unencumbered assets, both moveable and
immovable, and not merely investments and loans and
advances."
7. On 06.03.2017 Dr. Abhishek Manu Singhvi and Mr. Rajiv Nayar,
learned senior counsel appearing for the respondents made a
statement that the complete details/particulars of all unencumbered
assets would be filed before the Registrar within one week.
Certificates of Chartered Accountants of the respondents were
also directed to be filed giving the following details: -
(i) "the value of all the unencumbered assets, including both
movable and immovable assets of Respondents 14 and 19, both
the book value as well as the fair value;
(ii) where these assets include investments in equity shares,
preference shares and debentures, to indicate to what extent
are these investments in related/group entities of the
Respondents and in companies whose shares are listed and
which of these shares have a condition of right of first refusal.
(iii) a clarification as to how much of the borrowings reflected
in the balance sheets are secured by way of pari passu charge
on the present and future current assets of the companies."
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The Court again noted the statement of Dr. A.M. Singhvi and Mr.
Rajiv Nayar to the following effect: -
"12. Both Dr. Singhvi and Mr. Nayar state that if any change
is proposed in the status of any of the unencumbered assets
whose details are to be furnished as directed hereinbefore, the
Respondents will first apply to the Court."
This was the third assurance on behalf of the respondents.
The fourth assurance
8. OIL and RHC filed the certificates disclosing the value of the
unencumbered assets and investments. On 28.02.2017 OIL had
unencumbered assets of a book value of 1953.70 crores and fair
value of 1204.78 crores. The fair value of the unencumbered
investments of OIL in listed entities including related/group entities
was valued at 854.64 crores. As far as RHC is concerned, the
book value of the unencumbered assets was shown as 6,346.69
crores and the fair value thereof at 3579.26 crores. The fair value
of unencumbered investments was shown as 3246.76 crores.
Therefore, it was projected by the respondents that these two
companies had a net value which was much more than the amount
claimed by the petitioner.
9. As pointed out earlier FHL is a Public Limited Company in
which OIL and RHC held majority shares amounting to 52.20%
through their wholly owned subsidiary, Fortis Healthcare Holdings
Private Limited (FHHPL) up till March, 2017. On 25.05.2017,
FHL issued notice to its shareholders proposing that the
shareholding of foreign investors would be increased. Immediately,
thereafter, the petitioner filed I.A. No.7142 of 2017 before the
High Court of Delhi praying that OIL and RHC be restrained
from reducing their 100% shareholding in FHHPL and be restrained
from indirectly transferring FHHPL shares in FHL. It was prayed
that these two companies be directed to maintain their holding of
52% in FHHPL. In the meantime, the disclosures made by FHL
to the Bombay Stock Exchange (BSE) showed that the
shareholding of FHHPL in FHL had fallen to 45.7%.
10. On 19.06.2017 the High Court of Delhi recorded in its order
that the learned senior counsel appearing for both OIL and RHC
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INVESTMENTS LIMITED [UDAY UMESH LALIT, CJI]
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submitted that they are not seeking to change the status of any
unencumbered assets as disclosed to the Court and the
shareholding as disclosed in terms of the order dated 06.03.2017
shall not be affected. The statement was taken on record by the
High Court and the application disposed of in terms of this
statement. This effectively meant that the Court had restrained
OIL and RHC from reducing their shareholding in FHL through
FHHPL in any manner. Relevant portion of the order passed by
the High Court of Delhi dated 19.06.2017 reads as follows: -
"5. Learned Senior Counsel for respondent no.14 and 19 submits
that they are not seeking to change the status of any unencumbered
asset as disclosed to the court and by mere passing of the impugned
resolution, the shareholding as disclosed, in terms of order dated
06.03.2017, shall not be affected.
6. The statement is taken on record.
7. In view of the above statement, the application is disposed of."
This was the fourth assurance given by the respondents."
4. While dealing with said Special Leave Petition (Civil) No.20417
of 2017,the proceedings arising from the order dated 21.06.2017 and the
orders passed by this Court were noted by this Court in theJudgment as
under:
"Proceedings before this Court
13. The order dated 21.6.2017 of the Delhi High Court was
challenged by the petitioner before this Court and the main
contention of the petitioner was that despite the respondents
violating the undertakings time and again restraint orders were
not being passed. In the Special Leave Petition (Civil) No.20417
of 2017 filed by the petitioner this Court passed the following
order on 11.08.2017: -
"In the interim it is directed that status quo as on today with
regard to the shareholding of Fortis Healthcare Holding Private
Limited in Fortis Healthcare Limited shall be maintained."
As per the statutory disclosures made by FHHPL to the
BSE and National Stock Exchange (NSE), it was disclosed that
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on 14.08.2017, 30,59,260 shares of FHHPL in FHL were pledged
in favour of Indiabulls Housing Finance Limited (IHFL).
14. The petitioner filed a contempt petition being Diary No.27334
of 2017 alleging that the conduct of the respondents in creating a
13 pledge on 14.08.2017 is violative of the order dated 11.08.2017
In the meantime on 21.08.2017, OIL filed an application being
I.A. 77497 of 2017 for directions permitting sale of encumbered
shares to pay its debts and also prayed that a clarification be
issued that the order dated 11.08.2017 is limited to shares other
than to those pledged to banks and financial institutions. In I.A.
77497 of 2017, OIL had stated as follows: -
"24. It is in these circumstances that the Respondent Company
seeks a direction from this Hon'ble Court that the order dated
11 August 2017 passed by this Hon'ble Court is limited to shares
other than those pledged to the banks and the financial
institutions, the sale of which is being made after obtaining
prior consent of the pledgee(s).
 25. It is submitted that the said direction will not, in any event,
have an impact on the potential creditors and that the availability
of these funds will only help pare down the debt. This will only
raise the value of the shares held by Respondents."
Similar application being I.A. No.76959 of 2017 with
identical paragraphs 24 and 25 was filed by RHC.
15. On 31.08.2017, this Court directed as follows:-
"As the present Special Leave Petition is due to come up for a
fuller consideration on 23rd October, 2017, we do not consider
it necessary to delve into the issues raised at this stage as the
time taken to answer the same would be the same as would be
required to hear and decide the matter finally. We, therefore,
decline to pass any order in the matter, save and except, to put
on record that the interim order of this Court dated 11th August,
2017 was intended to be in respect of both the encumbered
and unencumbered shares of Fortis Healthcare Limited held
by Fortis Healthcare Holding Private Limited. Consequently,
there will be no transfer of the shares to the extent indicated
above.
M/S. DAIICHI SANKYO COMPANY LIMITED v. OSCAR
INVESTMENTS LIMITED [UDAY UMESH LALIT, CJI]
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Parties may complete the pleadings in the meantime.
As we have now clarified the previous order of this Court
dated 11th August, 2017 no case for contempt is made out.
However, it is needless to say that the present order and the
above clarification would govern the rights of the parties
henceforth. The contempt petition is accordingly disposed of."
16. On this date, the contempt petition was disposed of and at the
same time it was mentioned that the order and the clarification
contained therein would govern the rights of the parties henceforth.
The order dated 11.08.2017 and 31.08.2017 were later clarified
by this Court vide order dated 15.02.2018 which reads as follows:-
"Having heard the learned counsels for the parties, we clarify
our interim orders dated 11th August, 2017 and 31st August,
2017 to mean that the status quo granted shall not apply to
shares of Fortis Healthcare Limited held by Fortis Healthcare
Holding Pvt. Ltd. as may have been encumbered on or before
the interim orders of this Court dated 11th August, 2017 and
31st August, 2017.
The applications for directions are disposed of in the above terms."
It would be pertinent to mention that on 23.02.2018, this
Court passed the following order:
"Interim order of this Court dated 15th February, 2018 will
continue to hold the field till the High Court decides the matter."
17. During the period 06.09.2018 to 18.09.2018 Indiabulls Ventures
Limited (IVL), with which FHHPL maintains a demat account
transferred 12,25,000 shares of FHL held by FHHPL to IHFL. In
the present contempt petition filed in October, 2018, it is alleged
that this transfer of shares was in contempt of the orders dated
11.08.2017, 31.08.2017, 15.02.2018 and 23.02.2018."
5. As stated in Paragraph 17 quoted hereinabove, Contempt
Petition (C) No.2120 of 2018 was filed in this Court alleging that transfer
of shares were effected in violation of the orders dated 11.08.2017,
31.08.2017, 15.02.2018 and 23.02.2018 passed by this Court. While
dealing with the matters in issue including the question whether 12,25,000
shares were pledged prior to 11.08.2017 or not, this Court had set out a
chart in paragraph 3 of the Judgment as under:
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6. The issues whether there was contempt of the orders passed
by this Court and whether pledge of 12,25,000 shares was prior to
11.08.2017 or not were considered by this Court as under:
"21. The main issue is whether these 12,25,000 shares were
pledged prior to 11.08.2017 or not. At this stage it would be pertinent
to mention that the stand of IHFL that no pledge was created
after 11.08.2017 is incorrect. The disclosure made on 21.08.2017
by FHHPL to BSE and NSE clearly discloses that 30,59,260 shares
of FHL held by FHHPL were pledged on 14.08.2017 in favour of
IHFL. This disclosure of 21.08.2017 is a part of the record and
not specifically denied by IHFL.
22. We may point out that till October 2017, IHFL was not
represented in this Court. However, on 16.08.2017 and 31.08.2017
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through emails RHC informed IHFL about the status quo order
passed by this Court. Thus, IHFL cannot claim that they were not
aware of this Court's orders. However, from the material on record
especially the replies filed by OIL, RHC, MMS and SMS it is
apparent that on 06.09.2018, 07.09.2018, 08.09.2018 IHFL
transferred 6,00,000 shares of FHL held by FHHPL. When RHC
came to know about these transfers, it immediately informed IHFL
that transfers were in violation of the orders passed by this Court
on 11.09.2017. Despite the communication dated 11.09.2018, IHFL
continued to transfer shares of FHL held by FHHPL on 11.09.2018,
12.09.2018, 14.09.2018, 17.09.2018 and 18.09.2018. On 24.09.2018,
this Court was informed that IHFL had transferred 12,25,000 shares
held by FHHPL in FHL in violation of the Court's orders. As on
29.09.2018, another transaction of 9,04,760 shares had taken place.
The main issue is whether 12,25,000 shares were encumbered or
not.
23. FHL is a public company and being a listed company, it has to
disclose its shareholding patterns to the stock exchange. A chart
showing share holding pattern of FHHPL in FHL will show the
position of holdings at various stages:
S. No.
Quarter Ending
Total Shares
Encumbered
Shares
Unencumbered
shareholding of
FHHPL in FHL
1
September 2016
32,50,91,529
27,21,59,955
5,29,31,574
2
December 2016
32,50,91,529
25,22,63,248
7,28,28,281
3
28th Jan 2017
32,50,91,529
25,19,23,248
7,31,68,281
4
March 2017
27,02,41,529
23,18,01,440
3,84,40,089
5
June 2017
22,22,11,701
18,38,96,484
3,83,15,217
6
September 2017
17,80,26,597
17,53,94,820
26,31,777
7
December 2017
17,80,26,597
17,53,94,820
26,31,777
8
March 2018
34,20,451
6,89,084
27,31,367
9
June 2018
32,82,851
5,51,484
27,31,367
10
September 2018
11,53,091
5,51,484
6,01,607
11
December 2018
11,53,091
5,51,484
6,01,607
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It is true that we have to decide whether there is any disobedience
of the orders of this Court, but while doing so we will make
reference to the proceedings before the Delhi High Court and the
above chart to show how both sets of respondents have violated
the orders of the courts. As pointed above, on 19.06.2017 learned
counsel for OIL and RHC had made a statement before the Delhi
High Court that the status of unencumbered assets as disclosed
to the court would not be changed and the shareholding as
disclosed in terms of order dated 06.03.2017 shall not be affected.
When the petitioner felt that this order is not being complied with,
it filed contempt petition in the Delhi High Court. Within two days
another order was passed by the Delhi High Court on the basis of
the undertaking given to it.
24. The above chart would show that in the quarter ending June
2017, the total shares held by FHHPL in FHL were 22,22,11,701
and the encumbered shares were 18,38,96,484. Only 3,83,15,217,
were unencumbered.
25. This Court on 11.08.2017 directed that status quo with regard
to shareholding of FHHPL in FHL be maintained. On 31.08.2017
it was clarified that the order would apply to both encumbered
and unencumbered shares. On 14.08.2017, 30,59,260,
unencumbered shares were pledged in favour of IHFL. As far as
this violation of the order dated 11.08.2017 is concerned, in view
of the order dated 31.08.2017, the same stands condoned. This
would further mean that the unencumbered shares should have
been reduced to 3,52,55,957.
26. However, the figures of September 2017 show a totally
different situation. The total shareholding has fallen to 17,80,26,597
and the unencumbered shares to 26,31,777. This means that in
addition to 30,59,260 shares pledged on 14.08.2017, 3,26,24,180
number of shares were encumbered or transferred during this
period. There is no explanation by OIL, RHC, MMS or SMS, as
to how these unencumbered shares were encumbered or
transferred in total violation of the orders of the courts.
27. We shall now deal with the issue as to whether IHFL and
IVL had violated the orders of this Court or not? To decide this
issue, it would be appropriate to determine whether IHFL
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transferred any shares which were not encumbered up to
14.08.2017.
28. This brings us to the shareholding pattern of FHL for the
period between 01.07.2018 and 30.09.2018 because it is during
this period that IHFL transferred the shares. According to IHFL
these 12,25,000 shares stood pledged with them. Neither in I.A.
No.109493 of 2017 nor in the reply filed by contemnor nos. 1-8, is
there any clear-cut statement as to how and when the different
pledges were created. Reference has been made to loan
documents of 2016 and also to the pledge of 14.08.2017. According
to alleged contemnor nos. 1 to 8, FHL was maintaining a demat
account with IVL. The case set up is that when the value of the
shares of IHFL fell in the market, to make the security equal to
the outstanding due to IHFL, further shares were transferred by
IVL to IHFL. It is urged that this was done in view of the
instructions given prior to 11.08.2017 by FHHPL to IVL and IHFL.
These transfers were done on the basis of the delivery instructions
slips executed by IHFL as power of attorney holder of FHHPL.
Even if this be true, the alleged contemnors are guilty of violating
the orders of this Court. The order dated 11.08.2017 clearly debars
FHHPL from changing its shareholding in IHFL. Vide order dated
31.08.2017, it was clarified that the order dated 11.08.2017 would
apply both to encumbered and unencumbered shares. It was only
on 15.02.2018 that the order was clarified that it would not apply
to shares encumbered prior to 11.08.2017 and 31.08.2017. A
reading of the 3 orders makes it clear that no unencumbered shares
could be charged after 31.08.2017 at least. Even if FHHPL had
given power of attorney empowering IVL to transfer shares from
its demat account to top up the security value, that power of
attorney could not be used to violate the orders of this Court.
What FHHPL could not do, could obviously not be done by its
agent or attorney. The shares which were used to top up the
security after 31.08.2017 were obviously unencumbered shares
prior to this date. The plea is clearly unacceptable and a lame
excuse for the wilful disobedience of the order directing
maintenance of status quo which, as modified, was to apply to
the unencumbered shares. The respondents were aware and
cannot claim ignorance of the purported agreements under which
they were required to top-up upon the securities, in case of fall of
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market value of the shares. In other words, the interim order
passed by this Court was to apply even if there was a fall in
market value of the securities held by the creditors.
29. To make this position clear, we may refer to the disclosures
made by FHL to BSE. The above chart shows that in the quarter
ending 30.06.2018, FHHPL held 32,82,851 shares in FHL out of
which only 5,51,484 were encumbered, meaning that the balance
27,31,367 were unencumbered shares. The disclosure of
30.09.2018 and 31.12.2018 both reflect that the number of
encumbered shares have not changed but the total shareholding
of FHHPL in FHL has reduced from 32,82,851 to 11,53,091. This
means that what was transferred were 21,29,760 unencumbered
shares and not encumbered shares. The transaction of 12,25,000
shares therefore is out of the unencumbered shares because after
31.03.2018, the encumbered shares were much below 12,25,000.
30. We are not entering into the dispute whether the shares were
transferred on the basis of pre-signed slips or delivery instruction
slips based on the power of attorney but the fact remains that the
official record shows that these shares were not encumbered and
the contemnors have failed to place any cogent material on record
to show that these 12,25,000 shares were pledged on or before
31.08.2017.
31.IHFL, in fact, flagrantly violated this Court's orders and made
various transactions transferring even unencumbered shares. The
best course available to IHFL would have been to approach this
Court seeking a clarification before it made the transfers. This
they did not do. We are, therefore, clearly of the view that IHFL
and IVL and their officials i.e. contemnor nos.1 to 8 knowing fully
well that this Court had passed an order directing status quo to be
maintained with regard to the holding of FHHPL in FHL, violated
the order. There can be no manner of doubt that IHFL and IVL
have violated these orders and, therefore, we find contemnor nos.18 who are active directors of IHFL and IVL guilty of knowingly
and wilfully disobeying the orders of this Court and find them
guilty of committing Contempt of Court. We will hear them on the
question of sentence."
7. This Court thereafter considered the role of contemnor Nos. 9
and 10, namely, Malvinder Mohan Singh (MMS) and Shivinder Mohan
Singh (SMS) respectively as follows:
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"34. We have given detailed facts of the shareholding of FHHPL
in FHL during the period of quarter ending September 2016 to
December 2018 hereinabove. As far as these contemnors are
concerned, the first assurance given by them to the High Court of
Delhi was on 24.05.2016 when they assured the High Court of
Delhi that any dealings made by them would not affect the rights
of the petitioners. As on 30.09.2016, FHHPL held 32,50,91,529
shares in FHL out of which 27,21,59,955 shares were encumbered
shares and 5,29,31,574 shares were unencumbered shares. For
various reasons, the total number of shares fell to 22,22,11,701 in
quarter ending June 2017 and the number of encumbered shares
became 18,38,96,484 and the unencumbered shares dropped by
about 1.5 crore shares to 3,83,15,217. Even after giving an
assurance on 21.06.2017 to the High Court of Delhi, unencumbered
shares were encumbered or transferred as is apparent from the
above table.
35. The petitioner came to this Court when the order dated
11.08.2017 was passed and clarified by order dated 31.08.2017.
During this period also the total shareholding of FHHPL in FHL
fell from 22,22,11,701 to 17,80,26,597 by 4,41,85,104 shares. MMS
and SMS have not furnished any explanation as to how this
happened. The contemnors were the best persons to disclose how
this happened. They have not done so. The only explanation we
have before us is about the pledge of 30,59,260 shares on
14.08.2017. It is difficult to ignore this huge drop in shareholding
but even if we were to ignore this, we do not understand how in
March 2018, the shareholding fell to 34,20,451 and finally in
December 2018 to 11,53,091. The undertaking given to the High
Court of Delhi was that the shareholding as on 19.06.2017 and
21.06.2017 would be maintained. On 11.08.2017, this Court
injuncted the respondents from changing the shareholding. On
11.08.2017, this Court passed the order of status quo referred to
above. Despite that specific order, on 14.08.2017 a pledge was
created. This was a violation of the orders of this Court. RHC
and OIL filed applications before this Court on 21.08.2017 praying
for modification of the order and for a direction that the order
dated 11.08.2017 may be limited to the shares other than those
which already stood pledged to banks and financial institutions.
Though separate applications have been filed, Paragraph 25 of
both the applications are identical and has been quoted hereinabove.
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36. These applications were filed on affidavit and it has held out
to this Court that if the order dated 11.08.2017 is limited to
unencumbered shares it would have no impact on the availability
of funds to protect the interest of the petitioner. On the basis of
this statement, the order dated 31.08.2017 was passed and this
Court took a lenient view on the matter and disposed of the
contempt without taking any action.
37. Unfortunately, the actions of these contemnors clearly show
that these statements were made without the least intention of
complying with them. These contemnors had already prepared a
well thought out scheme of diluting their shareholdings directly or
indirectly in FHL to defeat the rights of the petitioner.
38. The explanations provided are not worth consideration.
According to SMS he was not even taking part in the
administration of these companies and had gone into religious
service. This is belied from the fact that he has been attending
most of the meetings of the Board of Directors. The next defence
taken by both the contemnors is that they lost control over the
companies because the encumbered shares were sold. As pointed
out above it is not only the encumbered shares but also the
unencumbered shares which have been transferred. In December
2017, the unencumbered shares of FHHPL in FHL were 26,31,777
and in December, 2018 there were only 6,01,607 unencumbered
shares. This shows beyond any manner of doubt that there has
been wilful violation of the orders of this Court. It is apparent that
the contemnors knowingly and willingly lost control of FHL.
39. A litigant should always be truthful and honest in court. One
who seeks equity must not hide any relevant material. In the present
case, the petitioner has violated the undertakings given to the Delhi
High Court as also the orders of this Court. The Delhi High Court
will deal with the issue in so far as the undertakings made before
it are concerned. We have no doubt in our mind that contemnor
nos.9 and 10 have also wilfully and contumaciously disobeyed the
orders of this Court. What has happened during the period when
this matter has been pending in this Court is that the shareholdings
of FHHPL, which is wholly owned by OIL and RHC which in
turn are controlled by SMS and MMS, have virtually vanished in
FHL. FHHPL owns no shares in FHL now. It may be true that
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IHH Healthcare Bhd. (Malaysian Company) through its actually
owned subsidiary Northern TK Venture Pte Ltd. is now the
majority stake holder but that is due to allotment of preferential
shares. In addition to the preferential shares allotted to them, the
shares which were owned by MMS and SMS through their
holdings in FHHPL in FHL have vanished into thin air and the
only conclusion which we can draw is that this was a well thought
out plan to deprive the petitioner from the amounts due to it.
40.