# VINAY PRAKASH SINGH v. SAMEER GEHLAUT & ORS

- **Citation:** [2019] 17 S.C.R. 89
- **Court:** Supreme Court of India
- **Decided:** 2019-11-15
- **Bench:** Ranjan Gogoi, Deepak Gupta, Sanjiv Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vinay-prakash-singh-v-sameer-gehlaut-ors-33682
- **Pages:** 30

## Headnote

Contempt of Courts Act, 1971 - ss.2(b), (c) - Dispute between
the petitioner and the respondents in SLP (C) No.20417/17 referred
to international arbitration - As on 31.03.2017, 'MMS' & 'SMS'-
Directors (contemnor nos.9 & 12 and 10 & 13, respectively) of
Oscar Investments Limited (OIL-respondent no.1 in SLP) and RHC
Holding Private Limited (RHC-respondent no.8 in SLP) through
OIL and RHC held 100% stake in Fortis Healthcare Holding
Private Limited (FHHPL) which in turn held majority stake in
Fortis Healthcare Limited (FHL)- Petitioner filed enforcement
proceedings in the Delhi High Court for the arbitral award passed
in Singapore holding it entitled to receive Rs.3500 crores approx.
from respondent nos.1-15 - Therein, it filed applications for
restraining the respondents from encumbering their assets - Several
assurances given by the respondents that no action would be taken
to prejudice petitioner's rights - Petitioner filed contempt petition
before the High Court alleging violation of its orders by which in
effect, OIL & RHC were restrained from reducing their
shareholding in FHL through FHHPL - High Court recorded fifth
assurance given by the respondents - Challenged by the petitioner
in SLP(C) No.20417/17 - On 11.08.2017, status quo was directed
to be maintained w.r.t the shareholding of FHHPL in FHL -
Petitioner filed contempt petition in this Court alleging that the
conduct of the respondents in creating pledge on 14.08.2017 is
violative of the said order - On 31.08.2017, contempt petition
disposed of clarifying that the order dated. 11.08.2017 was in
respect of both the encumbered and unencumbered shares -
Aforesaid orders clarified by order dated. 15.02.2018 - Another
 [2019] 17 S.C.R. 89
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order passed on 23.02.2018 stating that interim order dated.
15.02.2018 will continue to hold the field till the High Court
decides the matter- Further, Indiabulls Ventures Limited (IVL), with
which FHHPL maintains a demat account transferred 12,25,000
shares of FHL held by FHHPL to Indiabulls Housing Finance
Limited (IHFL) - Present contempt petition filed alleging that this
was in contempt of the aforesaid orders - Held: Transaction of
12,25,000 shares is out of the unencumbered shares because after
31.03.2018, the encumbered shares were much below 12,25,000Official record shows that these shares were not encumbered -
Contemnors failed to place any cogent material on record to show
that these 12,25,000 shares were pledged on or before
31.08.2017- Contemnor nos.1-8, active directors of IHFL & IVL
are guilty of knowingly and wilfully disobeying the orders of this
Court and of committing contempt of Court - To be heard on the
question of sentence - Further directions issued - In the case of
contemnors 9, 10, 12 & 13, they knowingly and willingly lost
control of FHL - Undertakings given to the Delhi High Court as
also the orders of this Court were violated - Delhi High Court will
deal with the issue in so far as the undertakings made before it
are concerned - Contemnor nos.9 & 10 have also wilfully and
contumaciously disobeyed the orders of Supreme Court - Action
for committing criminal contempt could have been taken against
contemnor nos. 9 & 10, but by taking a lenient view of the matter
it is being treated only as civil contempt- To be heard on the
question of sentence - Directions issued - Further, suo moto notice
of contempt also issued - Registry to register fresh contempt
petition w.r.t the violation of the order dated. 14.12.2018 in which
RHC, OIL, 'MMS', 'SMS' and FHL be arrayed as contemnors.
While issuing directions, the Court
HELD: 1.1 Contemnor Nos. 1 to 8
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 specifi

## Text

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VINAY PRAKASH SINGH
v.
SAMEER GEHLAUT & ORS.
(Contempt Petition (Civil) No. 2120 of 2018)
In
(Special Leave Petition (Civil) No. 20417 of 2017)
NOVEMBER 15, 2019
[RANJAN GOGOI, CJI, DEEPAK GUPTA AND
SANJIV KHANNA, JJ.]
Contempt of Courts Act, 1971 - ss.2(b), (c) - Dispute between
the petitioner and the respondents in SLP (C) No.20417/17 referred
to international arbitration - As on 31.03.2017, 'MMS' & 'SMS'-
Directors (contemnor nos.9 & 12 and 10 & 13, respectively) of
Oscar Investments Limited (OIL-respondent no.1 in SLP) and RHC
Holding Private Limited (RHC-respondent no.8 in SLP) through
OIL and RHC held 100% stake in Fortis Healthcare Holding
Private Limited (FHHPL) which in turn held majority stake in
Fortis Healthcare Limited (FHL)- Petitioner filed enforcement
proceedings in the Delhi High Court for the arbitral award passed
in Singapore holding it entitled to receive Rs.3500 crores approx.
from respondent nos.1-15 - Therein, it filed applications for
restraining the respondents from encumbering their assets - Several
assurances given by the respondents that no action would be taken
to prejudice petitioner's rights - Petitioner filed contempt petition
before the High Court alleging violation of its orders by which in
effect, OIL & RHC were restrained from reducing their
shareholding in FHL through FHHPL - High Court recorded fifth
assurance given by the respondents - Challenged by the petitioner
in SLP(C) No.20417/17 - On 11.08.2017, status quo was directed
to be maintained w.r.t the shareholding of FHHPL in FHL -
Petitioner filed contempt petition in this Court alleging that the
conduct of the respondents in creating pledge on 14.08.2017 is
violative of the said order - On 31.08.2017, contempt petition
disposed of clarifying that the order dated. 11.08.2017 was in
respect of both the encumbered and unencumbered shares -
Aforesaid orders clarified by order dated. 15.02.2018 - Another
 [2019] 17 S.C.R. 89
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order passed on 23.02.2018 stating that interim order dated.
15.02.2018 will continue to hold the field till the High Court
decides the matter- Further, Indiabulls Ventures Limited (IVL), with
which FHHPL maintains a demat account transferred 12,25,000
shares of FHL held by FHHPL to Indiabulls Housing Finance
Limited (IHFL) - Present contempt petition filed alleging that this
was in contempt of the aforesaid orders - Held: Transaction of
12,25,000 shares is out of the unencumbered shares because after
31.03.2018, the encumbered shares were much below 12,25,000Official record shows that these shares were not encumbered -
Contemnors failed to place any cogent material on record to show
that these 12,25,000 shares were pledged on or before
31.08.2017- Contemnor nos.1-8, active directors of IHFL & IVL
are guilty of knowingly and wilfully disobeying the orders of this
Court and of committing contempt of Court - To be heard on the
question of sentence - Further directions issued - In the case of
contemnors 9, 10, 12 & 13, they knowingly and willingly lost
control of FHL - Undertakings given to the Delhi High Court as
also the orders of this Court were violated - Delhi High Court will
deal with the issue in so far as the undertakings made before it
are concerned - Contemnor nos.9 & 10 have also wilfully and
contumaciously disobeyed the orders of Supreme Court - Action
for committing criminal contempt could have been taken against
contemnor nos. 9 & 10, but by taking a lenient view of the matter
it is being treated only as civil contempt- To be heard on the
question of sentence - Directions issued - Further, suo moto notice
of contempt also issued - Registry to register fresh contempt
petition w.r.t the violation of the order dated. 14.12.2018 in which
RHC, OIL, 'MMS', 'SMS' and FHL be arrayed as contemnors.
While issuing directions, the Court
HELD: 1.1 Contemnor Nos. 1 to 8
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. 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
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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. 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. 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
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. 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. The official
VINAY PRAKASH SINGH v. SAMEER GEHLAUT & ORS.
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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. 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. [Paras 25, 26, 28-31] [108-C-F;
109-B-F; 110-A-D]
2.1 Contemnors 9 & 10, 12 & 13
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. The explanations provided are not worth
consideration. There has been wilful violation of the orders of
this Court. It is apparent that the contemnors knowingly and
willingly lost control of FHL. 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.
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 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 can be drawn is that this was
a well thought out plan to deprive the petitioner from the amounts
due to it. [Paras 37-39] [112-B-E-G-H; 113-A]
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2.2 No person or institution howsoever powerful, can be
permitted to misuse the process of the Court. Contempt of court
can be committed in various ways. Civil contempt is defined
under the Contempt of Courts Act, 1971 under Section 2(b) to
mean wilful disobedience of any judgment, decree, direction,
order of the Court of wilful breach of an undertaking given to
the Court. Criminal contempt has been defined under Section
2(c) to include anything which scandalises or tends to scandalise
or lower or tends to lower the authority of the Court. Criminal
contempt also means any act which prejudices or interferes or
tends to interfere with the due course of judicial proceedings.
The conduct of contemnor nos.9 and 10 definitely undermines
the authority of the Court. The Court is dealing with an
international arbitration which has fructified into an award but
by misusing the legal process contemnor nos.9 and 10 have
successfully avoided paying off the petitioner. Action for
committing criminal contempt could have been taken against
contemnor nos. 9 and 10, but by taking a lenient view of the
matter it is only being treated as a civil contempt. The order
passed by this Court on 11.08.2017 with a clarification on
31.08.2017, and modification made on 15.02.2018, is not to be
read in isolation but along with the solemn undertakings and
assurances given by the contemnors on as many as five occasions
before the Delhi High Court, the last one being as late as on
21.06.2017. These assurances were to the effect that even if the
Court permits sale of encumbered shares for payment of debt,
it would not have any impact on the (potential) creditors and
availability of the funds would only pare down the debt and
increase the value of the shares. Contrary to the aforesaid
solemn assurances and undertakings, which were repeatedly
reiterated to procure orders, the shareholding went into a
downward spiral, as is apparent from the table in paragraph 23.
There was a significant decline in the total number of shares held
by FHHPL, both encumbered and unencumbered, which fell
down from 27,21,59,955 and 5,29,31,574 in September 2016 to
5,51,484 and 6,01,607 in December 2018. The aforesaid fact with
the impact on valuation was never brought to the notice of the
Court and was concealed with the knowledge that these facts, if
brought to the notice, would have substantial bearing on the
orders that would be passed to protect the interest of the
VINAY PRAKASH SINGH v. SAMEER GEHLAUT & ORS.
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petitioner. What is even more shocking and clearly
contemptuous is the manner in which, in a well thought off plan,
the authorised capital of FHL was increased with the objective
and purpose to transfer controlling interest in the company.
Consequently, the controlling interest of MMS and SMS came
down in FHL, as the company changed hands. Controlling
interest held by the majority shareholders has considerable
market value. Further, the amount brought in by a foreign
shareholder, who now has the controlling interest in FHL, has
been transferred in a dubious and clandestine manner without
full facts being brought on record. This amount is not available
for payment and satisfaction of the Award. About Rs.4,600 crores
has been transferred in a very hurried and clandestine manner
to a trust registered in Singapore i.e. RHT Health Trust (RHT).
Coincidentally, respondents no.9 & 10 themselves or through
their holding companies were at one time the biggest unitholders
in the trust. It is obvious that the respondents being debtors
are manoeuvring, transferring and converting the assets of value,
with the desire and intent that the petitioners would not be able
to recover the decretal amount as per the award. [Paras 40-42]
[113-B-H; 114-A-D]
2.3 Directions given by this Court and the orders passed
were in light of the fact that the contemnors always projected
that the assurances and undertakings were binding and adhered.
There can be no manner of doubt that contemnors 9 and 10 have
changed the shareholding of FHHPL in FHL knowingly and
wilfully. They have done this with a view to defeat the rights of
the petitioner. They have also wilfully and contumaciously
violated the orders of this Court dated 11.08.2017, 31.08.2017
and 15.02.2018. They are accordingly held guilty of committing
contempt of court. [Paras 43, 44] [11-E-G]
3. Violation of order dated 14.12.2018
Suo moto notice of contempt is issued and the Registry
id directed to register a fresh contempt petition with regard to
the violation of the order dated 14.12.2018 in which RHC, OIL,
MMS, SMS and FHL shall be arrayed as contemnors. FHL is
directed to disclose the list of directors/officials actively involved
in the running of the company for the period 01.01.2018 to
31.01.2019. [Para 50] [116-E-F]
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4. Directions
This contempt petition is disposed of in the following
terms :-
(i) Contemnor Nos.1 to 8, who are active directors of IHFL
and IVL are found guilty of knowingly and wilfully disobeying the
orders of this Court dated 11.08.2017, 31.08.2017 and 15.02.2018
as continued on 23.02.2018 and are found guilty of committing
contempt of this Court. To be heard on the question of sentence.
An opportunity is afforded to them to purge themselves of the
contempt by depositing the value of 12,25,000 shares as on
31.08.2017 in the Bombay Stock Exchange within eight weeks
from today. In case, the said respondents purge themselves of
the contempt, a lenient view may be taken while imposing
sentence.
(ii) 'MMS', Director of Oscar Investments Limited and
Director of RHC Holding Private Limited (Contemnor Nos.9 and
12) and 'SMS', Director of Oscar Investments Limited and
Director of RHC Holding Private Limited (Contemnor Nos.10
and 13) have knowingly and wilfully violated the orders of this
Court dated 11.08.2017, 31.08.2017 and 15.02.2018 as continued
on 23.02.2018. Therefore, both of them are held guilty of
committing Contempt of this Court. One chance is given to them
to purge themselves of the contempt. It is directed that in case
each of the contemnors deposits a sum of Rs.1170.95 crores in
this Court within eight weeks from today then the Court may
consider dealing with them in a lenient manner, while imposing
sentence.
(iii) In case any of the contemnors deposits the amount as
directed hereinabove, this Court shall decide on the next date
as to how this amount is to be disbursed.
(iv) The Registry is directed to register a suo motu
contempt petition against RHC Holding Private Limited, Oscar
Investments Limited, 'MMS', 'SMS' and Fortis Healthcare
Limited, for having wilfully violated the order of this Court dated
14.12.2018 and issue notice to them returnable for 03.02.2020
asking them to show cause why they should not be punished for
contempt. [Paras 51, 52] [116-G-H; 117-A-H; 118-A]
VINAY PRAKASH SINGH v. SAMEER GEHLAUT & ORS.
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INHERENT JURISDICTION : Contempt Petition (C) No. 2120
of 2018 In Special Leave Petition (Civil) No. 20417 of 2017.
Petition filed for wilfully violation of this Court's Order dated
11.08.2017, 31.08.2017, 15.02.2018 and 23.02.2018 passed in S.L.P.(C)
No. 20417 of 2017.
Fali S. Nariman, Arvind P. Datar, Krishnan Venugopal, Dushyant
Dave, Kailash Vasdev, Neeraj Kishan Kaul, Dr. A.M. Singhvi, Shyam
Divan, Gopal Shankarnarayanan, Rakesh Dwivedi, C.S. Vaidyanathan,
Parag Tripathi, Sr. Advs., Subhash Sharma, Amit Kumar Mishra, Mohit
Singh, Ms. Samridhi Hota, Ms. Kanika Singhal, Shashank Manish, Turab
Ali Kazmi, Aditya Shankar, Rohan Jaitley, Kunal Chatterji, Shivam
Pandey, Ms. B. Vijayalakshmi Menon, Ms. Suman Yadav, Aditya Sarin,
Shobhit Ahuja, Kunal Dutt, Pradeep Chhindra, Abhishek Agarwal,
Gagan Gupta, M/S. Karanjawala & Co., Mahesh Agarwal, Rishi
Agrawala, Ankur Saigal, Himanshu Satija, Nishant Rao, E. C. Agrawala,
Ms. Aastha Mehta, Ms. Neeha Nagpal, Nirvikar Singh, Ms. Aditi P.,
Ms. Gayatri Verma, Mrs. Priya Puri, Sumit Goel, Ms. Sonal Gupta, Ms.
Aishwarya Dash, Ms. Sumedha Sindhu, Manu Bajaj, M/s Parekh &
Co., H.S. Chandhoke, Vaibhav Kakkar, Saleem Hasan, Abhishek E.
Kisku, Rohit Dahiya, Akshay Nagarajan, Sandeep Das, Ms. Anusha
Nagarajan, Hiresh Choudhary, Lalltaksh Joshi, Ms. Surbhi Sharma,
Advs. for the appearing parties.
The Judgment of the Court was delivered by
DEEPAK GUPTA, J.
The Backdrop
1. A dispute between Daiichi Sankyo Company Limited
(hereinafter 'the petitioner') and the respondents in Special Leave
Petition (Civil) No.20417 of 2017, was referred to international
arbitration. An arbitral award was passed on 29.04.2016 in Singapore
whereby the petitioner was held entitled to receive Rs. 3500 crores
approximately from respondent no.1 to 15 in S.L.P.(C) No.20417 of
2017. This award was challenged both in Singapore and India. The
objections have been dismissed and the award has become final.
Though the respondents submit that in Singapore they have filed an
appeal to the Court of Appeal, however they have not placed any stay
order of the Court of Appeal on record. Admittedly, the award can be
enforced.
2. The petitioner filed proceedings for the enforcement of the
foreign award in Delhi High Court. The respondents no.1 to 15 in the
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SLP objected to the same and filed objections under Section 48 of the
Arbitration and Conciliation Act, 1996 (for short 'the Act'). These
objections were dismissed except insofar as respondents no. 5 and 9
to 12 before the High Court were concerned since these respondents
were minors. The challenge to the judgment of the High Court has
been rejected by this Court on 16.02.2018 in SLP (C) No.4276 of 2018.
3. Before dealing with the issues in detail it would be helpful to
lay out the following chart to explain the relation between various
entities belonging to the respondents in the SLP as on 31.03.2017 as
reflected from order of SEBI dated 14.03.2019:
6%
Shivinder
Mohan Singh (Alleged
Contemnor No.10)
Malvinder Mohan Singh
(Alleged Contemnor No.9))
99%
Shivi Holdings Pvt. Ltd.
Malav Holdings Pvt.. Ltd.
RHC Holding Pvt. Ltd.
(Respondent No.8 in SLP)
Fortis Healthcare
Holding Pvt. Ltd.
Oscar Investments Ltd.
(Respondent No.1 in SLP)
Fortis Healthcare
Ltd.
RHC Finance
Pvt. Ltd.
Fortis Healthcare
Ltd.
Religare
Enterprises Ltd.
Religare Finvest
Ltd.
99%
50%
81%
52%
100%
50%
44% 12%
19%
67%
22%
16%
33%
12%
6%
85%
VINAY PRAKASH SINGH v. SAMEER GEHLAUT & ORS.
[DEEPAK GUPTA, J.]
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This chart clearly shows that as on March 31, 2017, Malvinder
Mohan Singh (MMS) and Shivinder Mohan Singh (SMS) through Oscar
Investments Limited (OIL) and RHC Holding Private Limited (RHC)
held 100% stake in Fortis Healthcare Holding Private Limited (FHHPL)
which in turn held a majority stake in Fortis Healthcare Limited (FHL).
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, 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.
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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 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
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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."
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
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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
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
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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.
The fifth assurance / undertaking
11. Despite this order having been passed, it appears that an
attempt was made to reduce the shareholding of OIL and RHC through
FHHPL in FHL. A newspaper report was published on 20.06.2017 one
day after the order had been passed by the Court reporting that IHH
Healthcare Bhd. (Malaysian Company) was set to acquire 26% stake
in FHL.
12. Thereafter, the petitioner filed a contempt petition before the
High Court of Delhi alleging that the orders dated 06.03.2017 and
19.06.2017 had been violated. The matter was taken up by the High
Court of Delhi on 21.06.2017. The High Court again recorded the
undertaking of the learned senior counsel appearing for respondents 14
and 19 therein by which the High Court of Delhi was assured that the
value of the shares held by OIL and RHC which have been disclosed
as 452.60 crores and 1889.30 crores would not be hampered or
diminished in any manner. Relevant portion of the order is as follows:-
"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.
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11. The effect of the above statement of learned Senior Counsel
for respondent no.14 and 19 is that the sum of Rs. 2341.90 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."
This undertaking is the fifth assurance given by the respondents
to the Delhi High Court.
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 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 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
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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.
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
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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.
18. We can divide the contemnors into two sets. One set being
contemnors 1 to 8 and the second set of contemnors is 9 to 15.
Contemnors 1 and 5 & 2 and 6 are the same namely Sameer Gehlaut
and Gagan Banga. They have been arrayed twice separately in their
capacities as Directors of IHFL and IVL. From the materials on record
as far as the second set is concerned, we are only inclined to proceed
against Malvinder Mohan Singh (contemnor nos. 9 and 12) and
Shivinder Mohan Singh (contemnor nos. 10 and 13) both of whom have
been arrayed twice separately in their capacities as Directors of Oscar
Investments Limited and Directors of RHC Holding Private Limited.
Contemnor Nos. 1 to 8
19. We shall first deal with the issue whether contemnor nos. 1
to 8 have violated the aforesaid orders. The stand of the contemnor
nos.1 to 8 is that loan facilities had been granted by IHFL to various
companies controlled by MMS and SMS. As per the loan agreements
and other documents executed, the borrower(s) created encumbrances
on their immovable and movable properties including shares. Some
shares were pledged or charged for repayment of the loan and IHFL
was given a right to sell these encumbered shares without reference
to the borrower(s). The stand of contemnors nos.1 to 8 is that the
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borrower(s) had a demat account of their shares with IVL and a power
of attorney dated 28.11.2016 was issued in favour of IHFL permitting
it to transfer shares from the demat account so as to ensure that the
value of the security matches the outstanding amount. There is another
undated power of attorney pursuant to the loan agreement dated
30.11.2016 which appears to have been registered on 03.12.2016.
According to IHFL, after 11.08.2017 no shares were credited into the
designated demat account by the pledger.
20. It would be pertinent to mention that IHFL filed an application
in October, 2017 for clarification of order dated 31.08.2017. The stand
of IHFL is that they have not transferred any shares encumbered after
11.08.2017. The case of the petitioner is that 12,25,000 shares were
transferred in September, 2018. This fact is also not denied by IHFL.
However, according to IHFL this was done on the basis of instructions
issued to IVL by IHFL pursuant to the loan document including a power
of attorney dated 28.11.2016. The stand of MMS and RHC is that
IHFL used some pre-signed instruction slips to make these transfers
but these facts were denied by IHFL. Reliance by IHFL is also placed
on the order dated 15.02.2018 quoted hereinabove.
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
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.