MANU/SC/1582/2019

IN THE SUPREME COURT OF INDIA

Contempt Petition (Civil) No. 2120 of 2018 in Special Leave Petition (Civil) No. 20417
of 2017
Decided On: 15.11.2019
Appellants: Vinay Prakash Singh
Vs.
Respondent: Sameer Gehlaut and Ors.
Hon'ble Judges/Coram:
Ranjan Gogoi, C.J.I., Deepak Gupta and Sanjiv Khanna, JJ.
Counsels:
For Appearing Parties: Fali Sam Nariman, Arvind P. Datar, Krishnan Venugopal, Dushyant
Dave, Kailash Vasdev, Neeraj Kishan Kaul, Abhishek Manu Singhvi, Shyam Divan, Gopal
Sankaranarayanan, Rakesh Dwivedi, C.S. Vaidyanathan, Parag Tripathi, Sr. Advs.,
Subhash Sharma, Amit Kumar Mishra, Mohit Singh, Samridhi Hota, Kanika Singhal,
Shashank Manish, Turab Ali Kazmi, Aditya Shankar, Rohan Jaitley, Kunal Chatterjee,
Shivam Pandey, B. Vijayalakshmi Menon, Suman Yadav, Aditya Sarin, Shobhit Ahuja,
Kunal Dutta, Pradeep Chhindra, Abhishek Agarwal, Gagan Gupta, Advs., Karanjawala &
Co., Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Himanshu Satija, Nishant Rao, E.C.
Agrawala, Aastha Mehta, Neha Nagpal, Nirvikar Singh, Aditi P., Gayatri Verma, Priya Puri,
Sumit Goel, Sonal Gupta, Aishwarya Dash, Sumedha Sindhu, Manu Bajaj, Advs., Parekh
& Co., H.S. Chandhoke, Vaibhav Kakkar, Saleem Hasan, Abhishek E. Kisku, Rohit
Dahiya, Akshay Nagarajan, Sandeep Das, Anusha Nagarajan, Hiresh Choudhary,
Lalltaksh Joshi and Surbhi Sharma, Advs.
Case Category:
CONTEMPT OF COURT MATTERS - CIVIL CONTEMPT MATTERS
Case Note:
Contempt of Court - Disobedience of order - Dispute between Petitioner and
Respondents was referred to international arbitration in which arbitral award
was passed - Petitioner filed proceedings for enforcement of foreign award in
High Court - Respondents filed objections which were dismissed - Challenge
to judgment of High Court had been rejected by this Court - This Court
directed that status quo with regard to shareholding of company shall be
maintained.- It was alleged that transfer of shares was in contempt of orders
passed by this Court - Hence, present petition - Whether contemnors No.1-8
were guilty of knowingly and wilfully disobeying the orders of this Court.
Facts:
A dispute between the Petitioner and the Respondents was referred to
international arbitration. An arbitral award was passed whereby the
Petitioner was held entitled to receive certain sum from Respondent No. 1 to
15. The Petitioner filed proceedings for the enforcement of the foreign award
in Delhi High Court. The Respondents No. 1 to 15 in the SLP objected to the
same and filed objections under Section 48 of the Arbitration and Conciliation
Act, 1996. These objections were dismissed except insofar as Respondents

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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. This Court directed that status quo with
regard to shareholding of company shall be maintained. It was alleged that
the transfer of shares was in contempt of orders passed by this Court.
Held, while disposing off the petition:
(i) This Court directed that status quo with regard to shareholding of
companies be maintained. It was clarified that the order would apply to both
encumbered and unencumbered shares. Unencumbered shares were pledged
in favour of company. As far as this violation of the order was concerned, the
same stands condoned. This would further mean that the unencumbered
shares should have been reduced. [25]
(ii) The company, in fact, flagrantly violated this Court's orders and made
various transactions transferring even unencumbered shares. The best course
available to company would have been to approach this Court seeking a
clarification before it made the transfers. This they did not do. therefore,
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 shares,
violated the order. There could be no manner of doubt that contemnors had
violated these orders and, therefore, contemnor Nos. 1-8 were guilty of
knowingly and wilfully disobeying the orders of this Court and find them
guilty of committing Contempt of Court. [31]
JUDGMENT
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. 3,500 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 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:

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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

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 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.
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 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

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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 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

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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 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 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,

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 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 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

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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 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.
2 1 . 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. 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.
2 3 . 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. Quarter Total Shares Encumbered Unencumbered
No. Ending Shares shareholding
of FHHPL in
FHL
1. September 32,50,91,52927,21,59,9555,29,31,574
2016
2. December 32,50,91,52925,22,63,2487,28,28,281

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 2. December 32,50,91,52925,22,63,2487,28,28,281
2016
3. 28th Jan 32,50,91,52925,19,23,2487,31,68,281
2017
4. March 27,02,41,52923,18,01,4403,84,40,089
2017
5. June 2017 22,22,11,70118,38,96,4843,83,15,217
6. September 17,80,26,59717,53,94,82026,31,777
2017
7. December 17,80,26,59717,53,94,82026,31,777
2017
8. March 34,20,451 6,89,084 27,31,367
2018
9. June 2018 32,82,851 5,51,484 27,31,367
10. September 11,53,091 5,51,484 6,01,607
2018
11. December 11,53,091 5,51,484 6,01,607
2018
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.
2 7 . 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 transferred any shares which were not encumbered up to 14.08.2017.

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2 8 . 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 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,

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violated the order. There can be no manner of doubt that IHFL and IVL have violated
these orders and, therefore, we find contemnor Nos. 1-8 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.
3 2 . We afford an opportunity to contemnor Nos. 1-8 to purge themselves of the
contempt by depositing the value of 12,25,000 shares as on 31.08.2017 in the BSE
within eight weeks from today. In case, the said contemnors purge themselves of the
contempt, we may take a lenient view while imposing sentence.
Contemnors 9 & 10, 12 & 13
33. We shall now consider whether MMS, SMS have violated this Court's orders both in
their individual capacity and as directors of OIL and RHC. We are dropping contempt
proceedings against contemnor Nos. 11, 14 and 15 because nothing has been placed on
record to show that they were actively concerned with the running of the two
companies.
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 14.08.2018.
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.
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

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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 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.
4 0 . 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. As far as the present case is concerned, the conduct of contemnor Nos. 9
and 10 definitely undermines the authority of the Court. We are 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. In
our view, action for committing criminal contempt could have been taken against
contemnor Nos. 9 and 10, but by taking a lenient view of the matter we are only
treating it as a civil contempt.

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41. 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 Petitioner.
42. 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 and 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.
43. We would, therefore, not read the orders of this Court in isolation but along with
the five solemn assurances and undertakings given before the High Court. Directions
given by this Court and the orders passed were in light of the fact that the contemnors
always projected that the said assurances and undertakings were binding and adhered.
4 4 . 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. We shall hear them on the
question of sentence. We give one chance to the contemnors No. 9 and 10 to purge
themselves of the contempt.
4 5 . On 21.06.2017, a statement was made on behalf of contemnor Nos. 9 and 10
before the High Court of Delhi that in respect of any transaction that these Respondents
may enter into, a sum of Rs. 2341.90 crores i.e. Rs. 452.60 crores of OIL and Rs.
1889.30 crores of RHC would always be made available and realisable from the assets
of the company. We, therefore, direct that in case each of the Respondents deposits a
sum of Rs. 1170.95 crores i.e. 50% of Rs. 2341.90 crores in this Court within eight
weeks from today then we may consider dealing with them in a lenient manner.

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Violation of order dated 14.12.2018
46. It was also argued that contemnor Nos. 9 and 10 have also violated the order dated
14.12.2018. Since this is not the subject matter of the main contempt petition and no
notice has been issued to the concerned parties in this regard, we feel that this issue
has to be segregated from the rest of the contempt petitions because the main
pleadings and replies are in respect of the alleged contempt of orders dated
11.08.2017, 31.08.2017, 15.02.2018 and 23.02.2018.
47. However, we cannot let the matters stand as they are. On 14.12.2018, this Court
had passed the following order:
Issue notice.
The personal presence of the alleged Respondents-contemnors is dispensed
with for the present.
Status quo with regard to sale of the controlling stake in Fortis Healthcare to
Malaysian IHH Healthcare Berhad be maintained.
The order directs that the status quo with respect to the sale of controlling stake in FHL
to IHH Healthcare Bhd. (Malaysian Company) should be maintained. We are now told
that this sale had already taken place. This matter needs to be enquired into and we
have to be certain when this sale actually took place and when was the controlling stake
in FHL transferred to the IHH Healthcare Bhd. (Malaysian Company). Furthermore, on
09.01.2019, FHL moved an application in this Court and stated that the transaction
between the FHL and IHH Healthcare Bhd. (Malaysian Company) had been completed on
13.11.2018 and prayed that the order dated 14.12.2018 be modified insofar as it
pertains to sale of controlling stake in IHH Healthcare Bhd. (Malaysian Company).
48. I.A. No. 8948 of 2019 was filed by the Petitioner on 15.01.2019 stating that FHL is
proposing to transfer Rs. 4,000/- crores approximately, received by it [as a result of the
transferring of shares to the IHH Healthcare Bhd. (Malaysian Company)] to RHT Health
Trust, Singapore (RHT). Petitioner prayed for restraining this transfer of funds and
compliance of order dated 14.12.2018. FHL filed a reply to this I.A., which made it
apparent that on 15.01.2019 itself FHL had completed the transaction involving
acquisition of assets from Singapore based RHT even though it was fully aware that this
Court was seized of the matter.
4 9 . Interestingly, the main promoters of RHC and OIL i.e. MMS and SMS were the
biggest unit holders in RHT when it was initially incorporated. The statistics of unit
holding as on 20.06.2017 of RHT Trust, Singapore shows that SMS, MMS, their family
members, FHHPL, FHL and RHC virtually owned the RHT trust. That situation has now
changed and now the situation is such that the companies/associations of which MMS
and SMS are partners are no longer visibly present and there are other persons who are
there. When and how the holdings in RHT trust were transferred by various people is a
matter which is required to be gone into.
50. We are prima facie of the view that these transactions were made by MMS, SMS,
RHC, OIL and FHL to defeat the rights of the Petitioner despite making undertakings to
the High Court of Delhi that no action would be taken to prejudice Petitioner's rights.
We are prima facie of the view that these transactions are in wilful disobedience of the
order of this Court dated 14.12.2018 read in conjunction with the earlier orders. We,
therefore, issue suo moto notice of contempt and direct the Registry to register a fresh

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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.
Directions
5 1 . In view of the above discussion, we, dispose of this contempt petition in the
following terms:
(i) We find Sameer Gehlaut, Director of Indiabulls Housing Finance Limited and
Director of Indiabulls Ventures Limited (Contemnor Nos. 1 & 5), Gagan Banga,
Director of Indiabulls Housing Finance Limited and Director of Indiabulls
Ventures Limited (Contemnor Nos. 2 & 6), Ashwini Kumar Hooda, Director of
Indiabulls Housing Finance Limited (Contemnor No. 3), Sachin Chaudhary,
Director of Indiabulls Housing Finance Limited (Contemnor No. 4), Divyesh
Bharat Kumar Shah, Director of Indiabulls Ventures Limited (Contemnor No. 7)
and Pinank Jayant Shah, Director of Indiabulls Ventures Limited (Contemnor
No. 8), who are active directors of IHFL and IVL 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 find them guilty of committing
contempt of this Court. We will hear them on the question of sentence. We
afford an opportunity to contemnor Nos. 1-8 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, we may take a lenient view
while imposing sentence.
(ii) Malvinder Mohan Singh, Director of Oscar Investments Limited and Director
of RHC Holding Private Limited (Contemnor Nos. 9 and 12) and Shivinder
Mohan Singh, 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, we hold both of them guilty
of committing Contempt of this Court. We give one chance to them to purge
themselves of the contempt. We, direct that in case each of the contemnors
deposits a sum of Rs. 1170.95 crores in this Court within eight weeks from
today then we 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, Malvinder Mohan
Singh, Shivinder Mohan Singh 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.
52. List the present contempt petition on 03.02.2020 when all the contemnors named
hereinabove shall remain present in the Court. On that day, we shall hear them on the
issue of sentence. Along with this, the contempt petition which has been ordered to be

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registered shall also be listed on 03.02.2020.
© Manupatra Information Solutions Pvt. Ltd.

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