VINAY PRAKASH SINGH versus SAMEER GEHLAUT & ORS. on 15 November 2019

[2019] 17 S.C.R. 89

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 ANDSANJIV KHANNA, JJ.]

Contempt of Courts Act, 1971 – ss.2(b), (c) – Dispute betweenthe petitioner and the respondents in SLP (C) No.20417/17 referredto international arbitration – As on 31.03.2017, ‘MMS’ & ‘SMS’-Directors (contemnor nos.9 & 12 and 10 & 13, respectively) ofOscar Investments Limited (OIL-respondent no.1 in SLP) and RHCHolding Private Limited (RHC-respondent no.8 in SLP) throughOIL and RHC held 100% stake in Fortis Healthcare HoldingPrivate Limited (FHHPL) which in turn held majority stake inFortis Healthcare Limited (FHL)– Petitioner filed enforcementproceedings in the Delhi High Court for the arbitral award passedin Singapore holding it entitled to receive Rs.3500 crores approx.from respondent nos.1-15 – Therein, it filed applications forrestraining the respondents from encumbering their assets – Severalassurances given by the respondents that no action would be takento prejudice petitioner’s rights – Petitioner filed contempt petitionbefore the High Court alleging violation of its orders by which ineffect, OIL & RHC were restrained from reducing theirshareholding in FHL through FHHPL – High Court recorded fifthassurance given by the respondents – Challenged by the petitionerin SLP(C) No.20417/17 – On 11.08.2017, status quo was directedto be maintained w.r.t the shareholding of FHHPL in FHL –Petitioner filed contempt petition in this Court alleging that theconduct of the respondents in creating pledge on 14.08.2017 isviolative of the said order – On 31.08.2017, contempt petitiondisposed of clarifying that the order dated. 11.08.2017 was inrespect of both the encumbered and unencumbered shares –Aforesaid orders clarified by order dated. 15.02.2018 – Another

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Aorder passed on 23.02.2018 stating that interim order dated.15.02.2018 will continue to hold the field till the High Courtdecides the matter– Further, Indiabulls Ventures Limited (IVL), withwhich FHHPL maintains a demat account transferred 12,25,000shares of FHL held by FHHPL to Indiabulls Housing FinanceLimited (IHFL) – Present contempt petition filed alleging that thisBwas in contempt of the aforesaid orders – Held: Transaction of12,25,000 shares is out of the unencumbered shares because after31.03.2018, the encumbered shares were much below 12,25,000–Official record shows that these shares were not encumbered –Contemnors failed to place any cogent material on record to showCthat these 12,25,000 shares were pledged on or before31.08.2017– Contemnor nos.1-8, active directors of IHFL & IVLare guilty of knowingly and wilfully disobeying the orders of thisCourt and of committing contempt of Court – To be heard on thequestion of sentence – Further directions issued – In the case ofcontemnors 9, 10, 12 & 13, they knowingly and willingly lostDcontrol of FHL – Undertakings given to the Delhi High Court asalso the orders of this Court were violated – Delhi High Court willdeal with the issue in so far as the undertakings made before itare concerned – Contemnor nos.9 & 10 have also wilfully andcontumaciously disobeyed the orders of Supreme Court – ActionEfor committing criminal contempt could have been taken againstcontemnor nos. 9 & 10, but by taking a lenient view of the matterit is being treated only as civil contempt– To be heard on thequestion of sentence – Directions issued – Further, suo moto noticeof contempt also issued – Registry to register fresh contemptpetition w.r.t the violation of the order dated. 14.12.2018 in whichFRHC, OIL, ‘MMS’, ‘SMS’ and FHL be arrayed as contemnors.

While issuing directions, the Court

HELD: 1.1 Contemnor Nos. 1 to 8

While issuing directions, the Court

HELD: 1.1 Contemnor Nos. 1 to 8

The stand of IHFL that no pledge was created after11.08.2017 is incorrect. The disclosure made on 21.08.2017 byGFHHPL to BSE and NSE clearly discloses that 30,59,260 sharesof FHL held by FHHPL were pledged on 14.08.2017 in favourof IHFL. This disclosure of 21.08.2017 is a part of the recordand not specifically denied by IHFL. This Court on 11.08.2017directed that status quo with regard to shareholding of FHHPLHin FHL be maintained. On 31.08.2017 it was clarified that the order would apply to both encumbered and unencumberedshares.On 14.08.2017, 30,59,260, unencumbered shares werepledged in favour of IHFL. As far as this violation of the orderdated 11.08.2017 is concerned, in view of the order dated31.08.2017, the same stands condoned. This would further meanthat the unencumbered shares should have been reduced to3,52,55,957. However, the figures of September 2017 show atotally different situation. The total shareholding has fallen to17,80,26,597 and the unencumbered shares to 26,31,777. Thismeans that in addition to 30,59,260 shares pledged on14.08.2017, 3,26,24,180 number of shares were encumbered ortransferred during this period. There is no explanation by OIL,RHC, MMS or SMS, as to how these unencumbered shareswere encumbered or transferred in total violation of the ordersof the courts. The order dated 11.08.2017 clearly debars FHHPLfrom changing its shareholding in IHFL. Vide order dated31.08.2017, it was clarified that the order dated 11.08.2017 wouldapply both to encumbered and unencumbered shares. It was onlyon 15.02.2018 that the order was clarified that it would not applyto shares encumbered prior to 11.08.2017 and 31.08.2017. Areading of the 3 orders makes it clear that no unencumberedshares could be charged after 31.08.2017 at least. Even ifFHHPL had given power of attorney empowering IVL to transfershares from its demat account to top up the security value, thatpower of attorney could not be used to violate the orders of thisCourt. What FHHPL could not do, could obviously not be doneby its agent or attorney. The shares which were used to top upthe security after 31.08.2017 were obviously unencumberedshares prior to this date. The plea is clearly unacceptable and alame excuse for the wilful disobedience of the order directingmaintenance of status quo which, as modified, was to apply to theunencumbered shares. The respondents were aware and cannotclaim ignorance of the purported agreements under which theywere required to top-up upon the securities, in case of fall ofmarket value of the shares. In other words, the interim orderpassed by this Court was to apply even if there was a fall inmarket value of the securities held by the creditors. Thetransaction of 12,25,000 shares therefore is out of theunencumbered shares because after 31.03.2018, theencumbered shares were much below 12,25,000. The official ABC

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Arecord shows that these shares were not encumbered and thecontemnors have failed to place any cogent material on recordto show that these 12,25,000 shares were pledged on or before31.08.2017. IHFL, in fact, flagrantly violated this Court’s ordersand made various transactions transferring even unencumberedshares. The best course available to IHFL would have been toBapproach this Court seeking a clarification before it made thetransfers. 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

2.1 Contemnors 9 & 10, 12 & 13

Unfortunately, the actions of these contemnors clearlyCshow that these statements were made without the leastintention of complying with them. These contemnors had alreadyprepared a well thought out scheme of diluting theirshareholdings directly or indirectly in FHL to defeat the rightsof the petitioner. The explanations provided are not worthDconsideration. There has been wilful violation of the orders ofthis Court. It is apparent that the contemnors knowingly andwillingly lost control of FHL. A litigant should always be truthfuland honest in court. One who seeks equity must not hide anyrelevant material. In the present case, the petitioner has violated the undertakings given to the Delhi High Court as also theEorders of this Court. The Delhi High Court will deal with theissue in so far as the undertakings made before it are concerned.Contemnor nos.9 and 10 have also wilfully and contumaciouslydisobeyed the orders of this Court. What has happened duringthe period when this matter has been pending in this Court isFthat the shareholdings of FHHPL, which is wholly owned by OILand RHC which in turn are controlled by SMS and MMS, havevirtually 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 PteLtd. is now the majority stake holder but that is due to allotmentGof preferential shares. In addition to the preferential sharesallotted to them, the shares which were owned by MMS and SMSthrough their holdings in FHHPL in FHL have vanished into thinair and the only conclusion which can be drawn is that this wasa well thought out plan to deprive the petitioner from the amountsHdue to it. [Paras 37-39] [112-B-E-G-H; 113-A]

2.2 No person or institution howsoever powerful, can bepermitted to misuse the process of the Court. Contempt of courtcan be committed in various ways. Civil contempt is definedunder the Contempt of Courts Act, 1971 under Section 2(b) tomean wilful disobedience of any judgment, decree, direction,order of the Court of wilful breach of an undertaking given tothe Court. Criminal contempt has been defined under Section2(c) to include anything which scandalises or tends to scandaliseor lower or tends to lower the authority of the Court. Criminalcontempt also means any act which prejudices or interferes ortends to interfere with the due course of judicial proceedings.The conduct of contemnor nos.9 and 10 definitely underminesthe authority of the Court. The Court is dealing with aninternational arbitration which has fructified into an award butby misusing the legal process contemnor nos.9 and 10 havesuccessfully avoided paying off the petitioner. Action forcommitting criminal contempt could have been taken againstcontemnor nos. 9 and 10, but by taking a lenient view of thematter it is only being treated as a civil contempt. The orderpassed by this Court on 11.08.2017 with a clarification on31.08.2017, and modification made on 15.02.2018, is not to beread in isolation but along with the solemn undertakings andassurances given by the contemnors on as many as five occasionsbefore the Delhi High Court, the last one being as late as on21.06.2017. These assurances were to the effect that even if theCourt permits sale of encumbered shares for payment of debt,it would not have any impact on the (potential) creditors andavailability of the funds would only pare down the debt andincrease the value of the shares. Contrary to the aforesaidsolemn assurances and undertakings, which were repeatedlyreiterated to procure orders, the shareholding went into adownward spiral, as is apparent from the table in paragraph 23.There was a significant decline in the total number of shares heldby FHHPL, both encumbered and unencumbered, which felldown from 27,21,59,955 and 5,29,31,574 in September 2016 to5,51,484 and 6,01,607 in December 2018. The aforesaid fact withthe impact on valuation was never brought to the notice of theCourt and was concealed with the knowledge that these facts, ifbrought to the notice, would have substantial bearing on theorders that would be passed to protect the interest of the AB

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Apetitioner. What is even more shocking and clearlycontemptuous is the manner in which, in a well thought off plan,the authorised capital of FHL was increased with the objectiveand purpose to transfer controlling interest in the company.Consequently, the controlling interest of MMS and SMS camedown in FHL, as the company changed hands. ControllingBinterest held by the majority shareholders has considerablemarket value. Further, the amount brought in by a foreignshareholder, who now has the controlling interest in FHL, hasbeen transferred in a dubious and clandestine manner withoutfull facts being brought on record. This amount is not availableCfor payment and satisfaction of the Award. About Rs.4,600 croreshas been transferred in a very hurried and clandestine mannerto a trust registered in Singapore i.e. RHT Health Trust (RHT).Coincidentally, respondents no.9 & 10 themselves or throughtheir holding companies were at one time the biggest unitholdersin the trust. It is obvious that the respondents being debtorsDare manoeuvring, transferring and converting the assets of value,with the desire and intent that the petitioners would not be ableto 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 passedEwere in light of the fact that the contemnors always projectedthat the assurances and undertakings were binding and adhered.There can be no manner of doubt that contemnors 9 and 10 havechanged the shareholding of FHHPL in FHL knowingly andwilfully. They have done this with a view to defeat the rights ofthe petitioner. They have also wilfully and contumaciouslyFviolated the orders of this Court dated 11.08.2017, 31.08.2017and 15.02.2018. They are accordingly held guilty of committingcontempt 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 RegistryGid directed to register a fresh contempt petition with regard tothe violation of the order dated 14.12.2018 in which RHC, OIL,MMS, SMS and FHL shall be arrayed as contemnors. FHL isdirected to disclose the list of directors/officials actively involvedin the running of the company for the period 01.01.2018 toH31.01.2019. [Para 50] [116-E-F]

4. Directions

This contempt petition is disposed of in the followingterms :-

(i) Contemnor Nos.1 to 8, who are active directors of IHFLand IVL are found guilty of knowingly and wilfully disobeying theorders of this Court dated 11.08.2017, 31.08.2017 and 15.02.2018as continued on 23.02.2018 and are found guilty of committingcontempt of this Court. To be heard on the question of sentence.An opportunity is afforded to them to purge themselves of thecontempt by depositing the value of 12,25,000 shares as on31.08.2017 in the Bombay Stock Exchange within eight weeksfrom today. In case, the said respondents purge themselves ofthe contempt, a lenient view may be taken while imposingsentence.

(ii) ‘MMS’, Director of Oscar Investments Limited andDirector of RHC Holding Private Limited (Contemnor Nos.9 and12) and ‘SMS’, Director of Oscar Investments Limited andDirector of RHC Holding Private Limited (Contemnor Nos.10and 13) have knowingly and wilfully violated the orders of thisCourt dated 11.08.2017, 31.08.2017 and 15.02.2018 as continuedon 23.02.2018. Therefore, both of them are held guilty ofcommitting Contempt of this Court. One chance is given to themto purge themselves of the contempt. It is directed that in caseeach of the contemnors deposits a sum of Rs.1170.95 crores inthis Court within eight weeks from today then the Court mayconsider dealing with them in a lenient manner, while imposingsentence.

(iii) In case any of the contemnors deposits the amount asdirected hereinabove, this Court shall decide on the next dateas to how this amount is to be disbursed.

(iv) The Registry is directed to register a suo motucontempt petition against RHC Holding Private Limited, OscarInvestments Limited, ‘MMS’, ‘SMS’ and Fortis HealthcareLimited, for having wilfully violated the order of this Court dated14.12.2018 and issue notice to them returnable for 03.02.2020asking them to show cause why they should not be punished forcontempt. [Paras 51, 52] [116-G-H; 117-A-H; 118-A]

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AINHERENT JURISDICTION : Contempt Petition (C) No. 2120of 2018 In Special Leave Petition (Civil) No. 20417 of 2017.

Petition filed for wilfully violation of this Court’s Order dated11.08.2017, 31.08.2017, 15.02.2018 and 23.02.2018 passed in S.L.P.(C)No. 20417 of 2017.BFali S. Nariman, Arvind P. Datar, Krishnan Venugopal, Dushyant

BFali S. Nariman, Arvind P. Datar, Krishnan Venugopal, DushyantDave, Kailash Vasdev, Neeraj Kishan Kaul, Dr. A.M. Singhvi, ShyamDivan, Gopal Shankarnarayanan, Rakesh Dwivedi, C.S. Vaidyanathan,Parag Tripathi, Sr. Advs., Subhash Sharma, Amit Kumar Mishra, MohitSingh, Ms. Samridhi Hota, Ms. Kanika Singhal, Shashank Manish, TurabAli Kazmi, Aditya Shankar, Rohan Jaitley, Kunal Chatterji, ShivamCPandey, 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, RishiAgrawala, 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.DAishwarya 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. AnushaNagarajan, Hiresh Choudhary, Lalltaksh Joshi, Ms. Surbhi Sharma,Advs. for the appearing parties.

EThe Judgment of the Court was delivered byDEEPAK GUPTA, J.

The Backdrop

1. A dispute between Daiichi Sankyo Company Limited(hereinafter ‘the petitioner’) and the respondents in Special LeaveFPetition (Civil) No.20417 of 2017, was referred to internationalarbitration. An arbitral award was passed on 29.04.2016 in Singaporewhereby the petitioner was held entitled to receive Rs. 3500 croresapproximately from respondent no.1 to 15 in S.L.P.(C) No.20417 of2017. This award was challenged both in Singapore and India. Theobjections have been dismissed and the award has become final.GThough the respondents submit that in Singapore they have filed anappeal to the Court of Appeal, however they have not placed any stayorder of the Court of Appeal on record. Admittedly, the award can beenforced.

2. The petitioner filed proceedings for the enforcement of theHforeign 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 theArbitration and Conciliation Act, 1996 (for short ‘the Act’). Theseobjections were dismissed except insofar as respondents no. 5 and 9to 12 before the High Court were concerned since these respondentswere minors. The challenge to the judgment of the High Court hasbeen rejected by this Court on 16.02.2018 in SLP (C) No.4276 of 2018.

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3. Before dealing with the issues in detail it would be helpful tolay out the following chart to explain the relation between variousentities belonging to the respondents in the SLP as on 31.03.2017 asreflected from order of SEBI dated 14.03.2019:

CShivinderMalvinder Mohan SinghMohan Singh (Alleged(Alleged Contemnor No.9))Contemnor No.10)99%99%DShivi Holdings Pvt. Ltd.Malav Holdings Pvt.. Ltd.12%50%RHC Holding Pvt. Ltd.50%(Respondent No.8 in SLP)81%44% 12%EFortis Healthcare19%Oscar Investments Ltd.Holding Pvt. Ltd.(Respondent No.1 in SLP)52%67%33%Fortis HealthcareRHC FinanceFLtd.Pvt. Ltd.100%22%16%6%6%Fortis HealthcareReligareLtd.Enterprises Ltd.G85%Religare FinvestLtd.H

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This chart clearly shows that as on March 31, 2017, MalvinderMohan Singh (MMS) and Shivinder Mohan Singh (SMS) through OscarInvestments 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).

BProceedings before the Delhi High CourtThe first assurance

4. During the enforcement proceedings, the petitioner filed I.A.No.6558 of 2016 before the High Court of Delhi praying that therespondents be restrained from alienating or encumbering their assets.CThe petitioner expressed an apprehension that the respondents wouldfritter away their assets which would make the award unenforceable.On 24.05.2016 Mr. Kapil Sibal, learned senior counsel appearing forthe respondents assured the High Court that the interest of the petitionerwill be protected. Though this assurance was not recorded by the Court,Dthe 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 Awarddated 29 April 2016, be kept confidential, a formal protective orderhas not been passed by the Hon’ble Court on the strength ofEduly instructed oral assurance tendered by Learned SeniorCounsel Mr. Kapil Sibal (appearing for the Respondents) that thePetitioner’s interest would be protected to the extent of the totalsum awarded under the Arbitral Award dated 29 April 2016, andthere would be no fait accompli. Mr. Kapil Sibal had alsosubmitted that even recording of his personal statement in theForder 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 thattheir assurance should not be recorded in the order of the Court, sincethat might affect the value of their shares in the share market. ThisGwas the first assurancegiven by the respondents to the High Courtof Delhi. It would be pertinent to mention that the fact that such anassurance was made is also recorded in the order of the High Courtdated 23.01.2017 wherein Mr. Harish N. Salve, learned senior counselappearing for the respondents 1 to 4 and 13 therein reiterated theHassurance 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 orderdirecting the respondents to disclose the details of their immovable assetsand also to disclose the details of assets that have been alienated andencumbered to third parties. It appears that during this period reportsappeared in various newspapers that the respondents were disposingtheir stakes in subsidiary companies and were also clandestinelydisposing of their assets. Left with no alternative, the petitioner filedan Interlocutory Application being I. A. No. 618 of 2017 before theHigh Court of Delhi in which the following prayer was made:-

a. “Urgently pass an order directing the Respondents tosecure the Award amount by depositing it with theRegistrar of the Delhi High Court or by providingadequate security or by bank guarantee or by any othermeans that this Hon’ble Court may deem fit;

b. Pass an order directing the attachment of the movableand immovable assets and properties of the Respondents,and any assets and properties in which the Respondentshave any beneficial interests until the disposal of thepresent petition, at least to the extent of the amountsawarded in the Award;

c. Pass an order restraining the Respondents and theirgroup companies from selling, alienating or encumberingtheir movable or immovable properties/assets in anymanner whatsoever;

d. Pass ex-parte, ad interim orders in terms of prayers (a),(b) and (c) above and confirm the same after notice tothe Respondents;”

On 23.01.2017, Mr. Harish N. Salve, learned senior counsel forsome of the respondents before the High Court of Delhi reiterated theassurance given in the letter dated 24.05.2016 and sought two weeks’time to furnish an affidavit by one of the respondents giving the detailsof assets of all the respondents. This was the second assurance.

The third assurance

6. The information was not provided in the manner sought bythe High Court which is reflected in the order dated 06.03.2017. The A

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Aorder records that the respondents have been directed to furnish detailsof all unencumbered assets both movable and immovable and not merelythe list of the investments, loans and advances as reflected in theaffidavit filed by the respondents. The respondents were directed tofurnish further details and the counsel for respondents had submittedthat this would be done within 1 week. The High Court in its orderBdated 06.03.2017 clarified as follows:- “8. The Court would like to clarify that the above understandingby Respondent No.19 of what was required to be furnished interms of the order dated 23rd January 2017 is not correct. TheRespondents were in fact required to furnish the informationCrelating to all the unencumbered assets, both moveable andimmovable, and not merely investments and loans and advances.”

7. On 06.03.2017 Dr. Abhishek Manu Singhvi and Mr. RajivNayar, learned senior counsel appearing for the respondents made astatement that the complete details/particulars of all unencumberedDassets would be filed before the Registrar within one week. Certificatesof Chartered Accountants of the respondents were also directed to befiled giving the following details:-

(i) “the value of all the unencumbered assets, including bothmovable and immovable assets of Respondents 14 andE19, 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 whatextent are these investments in related/group entities ofFthe Respondents and in companies whose shares arelisted and which of these shares have a condition ofright of first refusal.

(iii) a clarification as to how much of the borrowingsreflected in the balance sheets are secured by way ofGpari passu charge on the present and future currentassets of the companies.”

The Court again noted the statement of Dr. A. M. Singhvi andMr. Rajiv Nayar to the following effect:- “12. Both Dr. Singhvi and Mr. Nayar state that if any change isHproposed in the status of any of the unencumbered assets whose details are to be furnished as directed hereinbefore, theRespondents will first applyto the Court.”

This was the third assuranceon behalf of the respondents.

The fourth assurance

8. OIL and RHC filed the certificates disclosing the value of theunencumbered assets and investments. On 28.02.2017 OIL hadunencumbered assets of a book value of 1953.70 crores and fair valueof 1204.78 crores. The fair value of the unencumbered investments ofOIL in listed entities including related/group entities was valued at 854.64crores. As far as RHC is concerned, the book value of theunencumbered assets was shown as 6,346.69 crores and the fair valuethereof at 3579.26 crores. The fair value of unencumbered investmentswas shown as 3246.76 crores. Therefore, it was projected by therespondents that these two companies had a net value which was muchmore than the amount claimed by the petitioner.

9. As pointed out earlier FHL is a Public Limited Company inwhich OIL and RHC held majority shares amounting to 52.20% throughtheir wholly owned subsidiary, Fortis Healthcare Holdings PrivateLimited (FHHPL) up till March, 2017. On 25.05.2017, FHL issuednotice to its shareholders proposing that the shareholding of foreigninvestors would be increased. Immediately, thereafter, the petitionerfiled I.A. No.7142 of 2017 before the High Court of Delhi praying thatOIL and RHC be restrained from reducing their 100% shareholding inFHHPL and be restrained from indirectly transferring FHHPL sharesin FHL. It was prayed that these two companies be directed to maintaintheir holding of 52% in FHHPL. In the meantime, the disclosures madeby FHL to the Bombay Stock Exchange (BSE) showed that theshareholding of FHHPL in FHL had fallen to 45.7%.

10. On 19.06.2017 the High Court of Delhi recorded in its orderthat the learned senior counsel appearing for both OIL and RHCsubmitted that they are not seeking to change the status of anyunencumbered assets as disclosed to the Court and the shareholdingas 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 theapplication disposed of in terms of this statement. This effectivelymeant that the Court had restrained OIL and RHC from reducing theirshareholding in FHL through FHHPL in any manner. Relevant portion A

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Aof the order passed by the High Court of Delhi dated 19.06.2017 readsas follows:- “5. Learned Senior Counsel for respondent no.14 and 19 submitsthat they are not seeking to change the status of anyunencumbered asset as disclosed to the court and by mere passingBof the impugned resolution, the shareholding as disclosed, in termsof 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 disposedof.”

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This was the fourth assurancegiven by the respondents.

The fifth assurance / undertaking

11. Despite this order having been passed, it appears that anattempt was made to reduce the shareholding of OIL and RHC throughDFHHPL in FHL. A newspaper report was published on 20.06.2017 oneday after the order had been passed by the Court reporting that IHHHealthcare Bhd. (Malaysian Company) was set to acquire 26% stakein FHL.

12. Thereafter, the petitioner filed a contempt petition before theEHigh Court of Delhi alleging that the orders dated 06.03.2017 and19.06.2017 had been violated. The matter was taken up by the HighCourt of Delhi on 21.06.2017. The High Court again recorded theundertaking of the learned senior counsel appearing for respondents 14and 19 therein by which the High Court of Delhi was assured that thevalue of the shares held by OIL and RHC which have been disclosedFas 452.60 crores and 1889.30 crores would not be hampered ordiminished in any manner. Relevant portion of the order is as follows:- “9. Learned Senior Counsel appearing for respondent no.14 and19 submits that the value of the unencumbered asset comprisingof equity share in Fortis Healthcare Holding Private Limited hasGbeen disclosed as Rs.452.60 Crores by respondent no.14 andRs.1889.30 crores by respondent no.19.

10. Learned Senior Counsel appearing on behalf of respondentNo.14 and 19 undertakes that, irrespective of any transaction thatthe said respondent may enter into, the value as disclosed to theHcourt would not be, in any manner, hampered or diminished.

11. The effect of the above statement of learned Senior Counselfor 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 availableand realizable as an asset of respondent no.14 and 19, in fortisHealthcare Holding Pvt. Ltd. towards the satisfaction of thedecretal amount as and when the stages so arises.

12. The statement is taken on record and the Undertakingaccepted.”

This undertaking is the fifth assurancegiven by the respondentsto the Delhi High Court.

Proceedings before this Court

13. The order dated 21.6.2017 of the Delhi High Court waschallenged by the petitioner before this Court and the main contentionof the petitioner was that despite the respondents violating theundertakings time and again restraint orders were not being passed.In the Special Leave Petition (Civil) No.20417 of 2017 filed by thepetitioner this Court passed the following order on 11.08.2017:- “In the interim it is directed that status quo as on today withregard to the shareholding of Fortis Healthcare Holding PrivateLimited in Fortis Healthcare Limited shall be maintained.”

As per the statutory disclosures made by FHHPL to the BSEand National Stock Exchange (NSE), it was disclosed that on14.08.2017, 30,59,260 shares of FHHPL in FHL were pledged in favourof Indiabulls Housing Finance Limited (IHFL).

14. The petitioner filed a contempt petition being Diary No.27334of 2017 alleging that the conduct of the respondents in creating a pledgeon 14.08.2017 is violative of the order dated 11.08.2017 In the meantimeon 21.08.2017, OIL filed an application being I.A. 77497 of 2017 fordirections permitting sale of encumbered shares to pay its debts andalso prayed that a clarification be issued that the order dated 11.08.2017is limited to shares other than to those pledged to banks and financialinstitutions. In I.A. 77497 of 2017, OIL had stated as follows:- “24.It is in these circumstances that the Respondent Companyseeks a direction from this Hon’ble Court that the order dated A

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11 August 2017 passed by this Hon’ble Court is limited to sharesother than those pledged to the banks and the financial institutions,the sale of which is being made after obtaining prior consent ofthe 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 availabilityof these funds will only help pare down the debt. This will onlyraise the value of the shares held by Respondents.”

B

Similar application being I.A. No.76959 of 2017 with identicalparagraphs 24 and 25 was filed by RHC.

C

15. On 31.08.2017, this Court directed as follows:- “As the present Special Leave Petition is due to come up for afuller consideration on 23rd October, 2017, we do not consider itnecessary to delve into the issues raised at this stage as the timetaken to answer the same would be the same as would beDrequired to hear and decide the matter finally. We, therefore,decline to pass any order in the matter, save and except, to puton record that the interim order of this Court dated 11th August,2017 was intended to be in respect of both the encumbered andunencumbered shares of Fortis Healthcare Limited held by FortisEHealthcare Holding Private Limited. Consequently, there will beno 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 dated11th August, 2017 no case for contempt is made out. However,it is needless to say that the present order and the aboveclarification would govern the rights of the parties henceforth.The contempt petition is accordingly disposed of.”

F

16. On this date, the contempt petition was disposed of and atthe same time it was mentioned that the order and the clarificationcontained therein would govern the rights of the parties henceforth. Theorder dated 11.08.2017 and 31.08.2017 were later clarified by this Courtvide order dated 15.02.2018 which reads as follows:- G

“Having heard the learned counsels for the parties, we clarifyour interim orders dated 11th August, 2017 and 31st August, 2017to mean that the status quo granted shall not apply to shares of H

Fortis Healthcare Limited held by Fortis Healthcare Holding Pvt.Ltd. as may have been encumbered on or before the interimorders of this Court dated 11th August, 2017 and 31st August,2017.

The applications for directions are disposed of in the aboveterms.”

It would be pertinent to mention that on 23.02.2018, this Courtpassed the following order:

“Interim order of this Court dated 15th February, 2018 willcontinue to hold the field till the High Court decides the matter.”

17. During the period 06.09.2018 to 18.09.2018 IndiabullsVentures Limited (IVL), with which FHHPL maintains a demat accounttransferred 12,25,000 shares of FHL held by FHHPL to IHFL. In thepresent contempt petition filed in October, 2018, it is alleged that thistransfer 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 beingcontemnors 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 Gehlautand Gagan Banga. They have been arrayed twice separately in theircapacities as Directors of IHFL and IVL. From the materials on recordas far as the second set is concerned, we are only inclined to proceedagainst Malvinder Mohan Singh (contemnor nos. 9 and 12) andShivinder Mohan Singh (contemnor nos. 10 and 13) both of whom havebeen arrayed twice separately in their capacities as Directors of OscarInvestments Limited and Directors of RHC Holding Private Limited.

Contemnor Nos. 1 to 8

19. We shall first deal with the issue whether contemnor nos. 1to 8 have violated the aforesaid orders. The stand of the contemnornos.1 to 8 is that loan facilities had been granted by IHFL to variouscompanies controlled by MMS and SMS. As per the loan agreementsand other documents executed, the borrower(s) created encumbranceson their immovable and movable properties including shares. Someshares were pledged or charged for repayment of the loan and IHFLwas given a right to sell these encumbered shares without referenceto the borrower(s). The stand of contemnors nos.1 to 8 is that the A

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Aborrower(s) had a demat account of their shares with IVL and a powerof attorney dated 28.11.2016 was issued in favour of IHFL permittingit to transfer shares from the demat account so as to ensure that thevalue of the security matches the outstanding amount. There is anotherundated power of attorney pursuant to the loan agreement dated30.11.2016 which appears to have been registered on 03.12.2016.BAccording to IHFL, after 11.08.2017 no shares were credited into thedesignated demat account by the pledger.

20. It would be pertinent to mention that IHFL filed an applicationin October, 2017 for clarification of order dated 31.08.2017. The standof IHFL is that they have not transferred any shares encumbered afterC11.08.2017. The case of the petitioner is that 12,25,000 shares weretransferred in September, 2018. This fact is also not denied by IHFL.However, according to IHFL this was done on the basis of instructionsissued to IVL by IHFL pursuant to the loan document including a powerof attorney dated 28.11.2016. The stand of MMS and RHC is thatDIHFL used some pre-signed instruction slips to make these transfersbut these facts were denied by IHFL. Reliance by IHFL is also placedon the order dated 15.02.2018 quoted hereinabove.

21. The main issue is whether these 12,25,000 shares werepledged prior to 11.08.2017 or not. At this stage it would be pertinentEto mention that the stand of IHFL that no pledge was created after11.08.2017 is incorrect. The disclosure made on 21.08.2017 by FHHPLto BSE and NSE clearly discloses that 30,59,260 shares of FHL heldby FHHPL were pledged on 14.08.2017 in favour of IHFL. Thisdisclosure of 21.08.2017 is a part of the record and not specificallydenied by IHFL.F

22. We may point out that till October 2017, IHFL was notrepresented in this Court. However, on 16.08.2017 and 31.08.2017through emails RHC informed IHFL about the status quo order passedby this Court. Thus, IHFL cannot claim that they were not aware ofthis Court’s orders. However, from the material on record especiallyGthe replies filed by OIL, RHC, MMS and SMS it is apparent that on06.09.2018, 07.09.2018, 08.09.2018 IHFL transferred 6,00,000 sharesof FHL held by FHHPL. When RHC came to know about thesetransfers, it immediately informed IHFL that transfers were in violationof the orders passed by this Court on 11.09.2017. Despite theHcommunication dated 11.09.2018, IHFL continued to transfer shares of FHL held by FHHPL on 11.09.2018, 12.09.2018, 14.09.2018, 17.09.2018and 18.09.2018. On 24.09.2018, this Court was informed that IHFLhad transferred 12,25,000 shares held by FHHPL in FHL in violationof the Court’s orders. As on 29.09.2018, another transaction of 9,04,760shares had taken place. The main issue is whether 12,25,000 shareswere encumbered or not.

23. FHL is a public company and being a listed company, it hasto disclose its shareholding patterns to the stock exchange. A chartshowing share holding pattern of FHHPL in FHL will show the positionof holdings at various stages:

It is true that we have to decide whether there is anydisobedience of the orders of this Court, but while doing so we willmake reference to the proceedings before the Delhi High Court andthe above chart to show how both sets of respondents have violatedthe orders of the courts. As pointed above, on 19.06.2017 learned A

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Acounsel for OIL and RHC had made a statement before the Delhi HighCourt that the status of unencumbered assets as disclosed to the courtwould not be changed and the shareholding as disclosed in terms oforder dated 06.03.2017 shall not be affected. When the petitioner feltthat this order is not being complied with, it filed contempt petition inthe Delhi High Court. Within two days another order was passed byBthe Delhi High Court on the basis of the undertaking given to it.

24. The above chart would show that in the quarter ending June2017, the total shares held by FHHPL in FHL were 22,22,11,701 andthe encumbered shares were 18,38,96,484. Only 3,83,15,217, wereunencumbered.C

25. This Court on 11.08.2017 directed that status quo with regardto shareholding of FHHPL in FHL be maintained. On 31.08.2017 itwas clarified that the order would apply to both encumbered andunencumbered shares. On 14.08.2017, 30,59,260, unencumbered shareswere pledged in favour of IHFL. As far as this violation of the orderDdated 11.08.2017 is concerned, in view of the order dated 31.08.2017,the same stands condoned. This would further mean that theunencumbered shares should have been reduced to 3,52,55,957.

26. However, the figures of September 2017 show a totallydifferent situation. The total shareholding has fallen to 17,80,26,597 andEthe unencumbered shares to 26,31,777. This means that in addition to30,59,260 shares pledged on 14.08.2017, 3,26,24,180 number of shareswere encumbered or transferred during this period. There is noexplanation by OIL, RHC, MMS or SMS, as to how theseunencumbered shares were encumbered or transferred in total violationFof the orders of the courts.

27. We shall now deal with the issue as to whether IHFL andIVL had violated the orders of this Court or not? To decide this issue,it would be appropriate to determine whether IHFL transferred anyshares which were not encumbered up to 14.08.2017.G

28. This brings us to the shareholding pattern of FHL for theperiod between 01.07.2018 and 30.09.2018 because it is during thisperiod that IHFL transferred the shares. According to IHFL these12,25,000 shares stood pledged with them. Neither in I.A. No.109493of 2017 nor in the reply filed by contemnor nos. 1-8, is there any clear-Hcut statement as to how and when the different pledges were created.

Reference has been made to loan documents of 2016 and also to thepledge of 14.08.2017. According to alleged contemnor nos. 1 to 8, FHLwas maintaining a demat account with IVL. The case set up is thatwhen the value of the shares of IHFL fell in the market, to make thesecurity equal to the outstanding due to IHFL, further shares weretransferred by IVL to IHFL. It is urged that this was done in view ofthe instructions given prior to 11.08.2017 by FHHPL to IVL and IHFL.These transfers were done on the basis of the delivery instructions slipsexecuted by IHFL as power of attorney holder of FHHPL. Even ifthis be true, the alleged contemnors are guilty of violating the orders ofthis Court. The order dated 11.08.2017 clearly debars FHHPL fromchanging its shareholding in IHFL. Vide order dated 31.08.2017, it wasclarified that the order dated 11.08.2017 would apply both to encumberedand unencumbered shares. It was only on 15.02.2018 that the orderwas clarified that it would not apply to shares encumbered prior to11.08.2017 and 31.08.2017. A reading of the 3 orders makes it clearthat no unencumbered shares could be charged after 31.08.2017 atleast. Even if FHHPL had given power of attorney empowering IVLto 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 thisCourt. What FHHPL could not do, could obviously not be done by itsagent or attorney. The shares which were used to top up the securityafter 31.08.2017 were obviously unencumbered shares prior tothis date. The plea is clearly unacceptable and a lame excuse for thewilful disobedience of the order directing maintenance of status quowhich, as modified, was to apply to the unencumbered shares. Therespondents were aware and cannot claim ignorance of the purportedagreements under which they were required to top-up upon thesecurities, 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 wasa fall in market value of the securities held by the creditors.

29. To make this position clear, we may refer to the disclosuresmade by FHL to BSE. The above chart shows that in the quarterending 30.06.2018, FHHPL held 32,82,851 shares in FHL out of whichonly 5,51,484 were encumbered, meaning that the balance 27,31,367were unencumbered shares. The disclosure of 30.09.2018 and31.12.2018 both reflect that the number of encumbered shares havenot changed but the total shareholding of FHHPL in FHL has reducedfrom 32,82,851 to 11,53,091. This means that what was transferred ABCD

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Awere 21,29,760 unencumbered shares and not encumbered shares. Thetransaction of 12,25,000 shares therefore is out of the unencumberedshares because after 31.03.2018, the encumbered shares were muchbelow 12,25,000.

30. We are not entering into the dispute whether the shares wereBtransferred on the basis of pre-signed slips or delivery instruction slipsbased on the power of attorney but the fact remains that the officialrecord shows that these shares were not encumbered and thecontemnors have failed to place any cogent material on record to showthat these 12,25,000 shares were pledged on or before 31.08.2017.

C31. IHFL, in fact, flagrantly violated this Court’s orders and madevarious transactions transferring even unencumbered shares. The bestcourse available to IHFL would have been to approach this Courtseeking a clarification before it made the transfers. This they did notdo. We are, therefore, clearly of the view that IHFL and IVL and theirofficials i.e. contemnor nos. 1 to 8 knowing fully well that this CourtDhad passed an order directing status quo to be maintained with regardto the holding of FHHPL in FHL, violated the order. There can be nomanner of doubt that IHFL and IVL have violated these orders and,therefore, we find contemnor nos.1-8 who are active directors of IHFLand IVL guilty of knowingly and wilfully disobeying the orders of thisECourt and find them guilty of committing Contempt of Court. We willhear them on the question of sentence.

32. We afford an opportunity to contemnor nos.1-8 to purgethemselves of the contempt by depositing the value of 12,25,000 sharesas on 31.08.2017 in the BSE within eight weeks from today. In case,Fthe said contemnors purge themselves of the contempt, we may takea lenient view while imposing sentence.

Contemnors 9 & 10, 12 & 13

33. We shall now consider whether MMS, SMS have violatedthis Court’s orders both in their individual capacity and as directors ofGOIL and RHC. We are dropping contempt proceedings againstcontemnor nos. 11, 14 and 15 because nothing has been placed on recordto show that they were actively concerned with the running of the twocompanies.

34. We have given detailed facts of the shareholding of FHHPLHin FHL during the period of quarter ending September 2016 to December 2018 hereinabove. As far as these contemnors areconcerned, the first assurance given by them to the High Court of Delhiwas on 24.05.2016 when they assured the High Court of Delhi thatany 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 which27,21,59,955 shares were encumbered shares and 5,29,31,574 shareswere unencumbered shares. For various reasons, the total number ofshares fell to 22,22,11,701 in quarter ending June 2017 and the numberof encumbered shares became 18,38,96,484 and the unencumberedshares dropped by about 1.5 crore shares to 3,83,15,217. Even aftergiving an assurance on 21.06.2017 to the High Court of Delhi,unencumbered shares were encumbered or transferred as is apparentfrom the above table.

35. The petitioner came to this Court when the order dated11.08.2017 was passed and clarified by order dated 31.08.2017. Duringthis period also the total shareholding of FHHPL in FHL fell from22,22,11,701 to 17,80,26,597 by 4,41,85,104 shares. MMS and SMShave not furnished any explanation as to how this happened. Thecontemnors were the best persons to disclose how this happened. Theyhave not done so. The only explanation we have before us is aboutthe pledge of 30,59,260 shares on 14.08.2018. It is difficult to ignorethis huge drop in shareholding but even if we were to ignore this, wedo not understand how in March 2018, the shareholding fell to 34,20,451and finally in December 2018 to 11,53,091. The undertaking given tothe High Court of Delhi was that the shareholding as on 19.06.2017and 21.06.2017 would be maintained. On 11.08.2017, this Courtinjuncted the respondents from changing the shareholding. On11.08.2017, this Court passed the order of status quo referred to above.Despite that specific order, on 14.08.2017 a pledge was created. Thiswas a violation of the orders of this Court. RHC and OIL filedapplications before this Court on 21.08.2017 praying for modificationof the order and for a direction that the order dated 11.08.2017 maybe limited to the shares other than those which already stood pledgedto banks and financial institutions. Though separate applications havebeen filed, Paragraph 25 of both the applications are identical and hasbeen quoted hereinabove.

36. These applications were filed on affidavit and it has held outto this Court that if the order dated 11.08.2017 is limited tounencumbered shares it would have no impact on the availability of funds A

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Ato 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 lenientview on the matter and disposed of the contempt without taking anyaction.

37. Unfortunately, the actions of these contemnors clearly showBthat these statements were made without the least intention of complyingwith them. These contemnors had already prepared a well thought outscheme of diluting their shareholdings directly or indirectly in FHL todefeat the rights of the petitioner.

38. The explanations provided are not worth consideration.CAccording to SMS he was not even taking part in the administration ofthese companies and had gone into religious service. This is belied fromthe fact that he has been attending most of the meetings of the Boardof Directors. The next defence taken by both the contemnors is thatthey lost control over the companies because the encumbered shareswere sold. As pointed out above it is not only the encumbered sharesDbut also the unencumbered shares which have been transferred. InDecember 2017, the unencumbered shares of FHHPL in FHL were26,31,777 and in December, 2018 there were only 6,01,607unencumbered shares. This shows beyond any manner of doubt thatthere has been wilful violation of the orders of this Court. It is apparentEthat the contemnors knowingly and willingly lost control of FHL.

39. A litigant should always be truthful and honest in court. Onewho seeks equity must not hide any relevant material. In the presentcase, the petitioner has violated the undertakings given to the Delhi HighCourt as also the orders of this Court. The Delhi High Court will dealFwith the issue in so far as the undertakings made before it areconcerned. We have no doubt in our mind that contemnor nos.9 and10 have also wilfully and contumaciously disobeyed the orders of thisCourt. What has happened during the period when this matter has beenpending in this Court is that the shareholdings of FHHPL, which iswholly owned by OIL and RHC which in turn are controlled by SMSGand MMS, have virtually vanished in FHL. FHHPL owns no sharesin FHL now. It may be true that IHH Healthcare Bhd. (MalaysianCompany) through its actually owned subsidiary Northern TK VenturePte Ltd. is now the majority stake holder but that is due to allotment ofpreferential shares. In addition to the preferential shares allotted toHthem, the shares which were owned by MMS and SMS through their holdings in FHHPL in FHL have vanished into thin air and the onlyconclusion which we can draw is that this was a well thought out planto deprive the petitioner from the amounts due to it.

40. No person or institution howsoever powerful, can bepermitted to misuse the process of the Court. Contempt of court canbe committed in various ways. Civil contempt is defined under theContempt of Courts Act, 1971 under Section 2(b) to mean wilfuldisobedience of any judgment, decree, direction, order of the Court ofwilful breach of an undertaking given to the Court. Criminal contempthas been defined under Section 2(c) to include anything whichscandalises or tends to scandalise or lower or tends to lower theauthority of the Court. Criminal contempt also means any act whichprejudices or interferes or tends to interfere with the due course ofjudicial proceedings. As far as the present case is concerned, theconduct of contemnor nos.9 and 10 definitely undermines the authorityof the Court. We are dealing with an international arbitration whichhas fructified into an award but by misusing the legal process contemnornos.9 and 10 have successfully avoided paying off the petitioner. Inour view, action for committing criminal contempt could have been takenagainst contemnor nos. 9 and 10, but by taking a lenient view of thematter we are only treating it as a civil contempt.

41. The order passed by this Court on 11.08.2017 with aclarification on 31.08.2017, and modification made on 15.02.2018, is notto be read in isolation but along with the solemn undertakings andassurances given by the contemnors on as many as five occasions beforethe Delhi High Court, the last one being as late as on 21.06.2017. Theseassurances were to the effect that even if the Court permits sale ofencumbered shares for payment of debt, it would not have any impacton the (potential) creditors and availability of the funds would only paredown the debt and increase the value of the shares. Contrary to theaforesaid solemn assurances and undertakings, which were repeatedlyreiterated to procure orders, the shareholding went into a downwardspiral, as is apparent from the table in paragraph 23. There was asignificant decline in the total number of shares held by FHHPL, bothencumbered and unencumbered, which fell down from 27,21,59,955 and5,29,31,574 in September 2016 to 5,51,484 and 6,01,607 in December2018. The aforesaid fact with the impact on valuation was neverbrought to the notice of the Court and was concealed with theknowledge that these facts, if brought to the notice, would have A

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Asubstantial bearing on the orders that would be passed to protect theinterest of the petitioner.

42. What is even more shocking and clearly contemptuous is themanner in which, in a well thought off plan, the authorised capital ofFHL was increased with the objective and purpose to transferBcontrolling interest in the company. Consequently, the controlling interestof MMS and SMS came down in FHL, as the company changed hands.Controlling interest held by the majority shareholders has considerablemarket value. Further, the amount brought in by a foreign shareholder,who now has the controlling interest in FHL, has been transferred in adubious and clandestine manner without full facts being brought onCrecord. This amount is not available for payment and satisfaction ofthe Award. About Rs.4,600 crores has been transferred in a veryhurried and clandestine manner to a trust registered in Singapore i.e.RHT Health Trust (RHT). Coincidentally, respondents no.9 and 10themselves or through their holding companies were at one time theDbiggest unitholders in the trust. It is obvious that the respondents beingdebtors are manoeuvring, transferring and converting the assets ofvalue, with the desire and intent that the petitioners would not be ableto recover the decretal amount as per the award.

43. We would, therefore, not read the orders of this Court inEisolation but along with the five solemn assurances and undertakingsgiven before the High Court. Directions given by this Court and theorders passed were in light of the fact that the contemnors alwaysprojected that the said assurances and undertakings were binding andadhered.

44. There can be no manner of doubt that contemnors 9 and 10Fhave changed the shareholding of FHHPL in FHL knowingly andwilfully. They have done this with a view to defeat the rights of thepetitioner. They have also wilfully and contumaciously violated the ordersof this Court dated 11.08.2017, 31.08.2017 and 15.02.2018. They areaccordingly held guilty of committing contempt of court. We shall hearGthem on the question of sentence. We give one chance to thecontemnors no.9 and 10 to purge themselves of the contempt.

45. On 21.06.2017, a statement was made on behalf ofcontemnor nos. 9 and 10 before the High Court of Delhi that in respectof any transaction that these respondents may enter into, a sum ofHRs.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 assetsof the company. We, therefore, direct that in case each of therespondents deposits a sum of Rs.1170.95 crores i.e. 50% ofRs.2341.90 crores in this Court within eight weeks from today then wemay consider dealing with them in a lenient manner.

Violation of order dated 14.12.2018

46. It was also argued that contemnor nos.9 and 10 have alsoviolated the order dated 14.12.2018. Since this is not the subject matterof the main contempt petition and no notice has been issued to theconcerned parties in this regard, we feel that this issue has to besegregated from the rest of the contempt petitions because the mainpleadings and replies are in respect of the alleged contempt of ordersdated 11.08.2017, 31.08.2017, 15.02.2018 and 23.02.2018.

47. However, we cannot let the matters stand as they are. On14.12.2018, this Court had passed the following order:

“Issue notice.

The personal presence of the alleged respondents-contemnorsis dispensed with for the present.

Status quo with regard to sale of the controlling stake in FortisHealthcare to Malaysian IHH Healthcare Berhad be maintained.”

The order directs that the status quo with respect to the sale ofcontrolling stake in FHL to IHH Healthcare Bhd. (Malaysian Company)should be maintained. We are now told that this sale had already takenplace. This matter needs to be enquired into and we have to be certainwhen this sale actually took place and when was the controlling stakein FHL transferred to the IHH Healthcare Bhd. (Malaysian Company).Furthermore, on 09.01.2019, FHL moved an application in this Courtand stated that the transaction between the FHL and IHH HealthcareBhd. (Malaysian Company) had been completed on 13.11.2018 andprayed that the order dated 14.12.2018 be modified insofar as it pertainsto sale of controlling stake in IHH Healthcare Bhd. (MalaysianCompany).

48. I.A. No.8948 of 2019 was filed by the petitioner on15.01.2019 stating that FHL is proposing to transfer Rs.4,000/- croresapproximately, received by it [as a result of the transferring of sharesto the IHH Healthcare Bhd. (Malaysian Company)] to RHT Health A

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ATrust, Singapore (RHT). Petitioner prayed for restraining this transferof funds and compliance of order dated 14.12.2018. FHL filed a replyto this I.A., which made it apparent that on 15.01.2019 itself FHL hadcompleted the transaction involving acquisition of assets from Singaporebased RHT even though it was fully aware that this Court was seizedof the matter.B

49. Interestingly, the main promoters of RHC and OIL i.e. MMSand SMS were the biggest unit holders in RHT when it was initiallyincorporated. The statistics of unit holding as on 20.06.2017 of RHTTrust, Singapore shows that SMS, MMS, their family members,FHHPL, FHL and RHC virtually owned the RHT trust. That situationChas now changed and now the situation is such that the companies/associations of which MMS and SMS are partners are no longer visiblypresent and there are other persons who are there. When and howthe holdings in RHT trust were transferred by various people is a matterwhich is required to be gone into.

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50. We are prima facie of the view that these transactions weremade by MMS, SMS, RHC, OIL and FHL to defeat the rights of thepetitioner despite making undertakings to the High Court of Delhi thatno action would be taken to prejudice petitioner’s rights. We are primafacie of the view that these transactions are in wilful disobedience ofEthe order of this Court dated 14.12.2018 read in conjunction with theearlier orders. We, therefore, issue suo moto notice of contempt anddirect the Registry to register a fresh contempt petition with regard tothe violation of the order dated 14.12.2018 in which RHC, OIL, MMS,SMS and FHL shall be arrayed as contemnors. FHL is directed todisclose the list of directors/officials actively involved in the running ofFthe company for the period 01.01.2018 to 31.01.2019.

Directions

51. In view of the above discussion, we, dispose of this contemptpetition in the following terms :- G

(i) We find Sameer Gehlaut, Director of Indiabulls HousingFinance Limited and Director of Indiabulls VenturesLimited (Contemnor Nos.1 & 5), Gagan Banga, Directorof Indiabulls Housing Finance Limited and Director ofIndiabulls 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 (ContemnorNo.7) and Pinank Jayant Shah, Director of IndiabullsVentures Limited (Contemnor No.8), who are activedirectors of IHFL and IVL of knowingly and wilfullydisobeying the orders of this Court dated 11.08.2017,31.08.2017 and 15.02.2018 as continued on 23.02.2018and find them guilty of committing contempt of this Court.We will hear them on the question of sentence. Weafford an opportunity to contemnor nos.1-8 to purgethemselves of the contempt by depositing the value of12,25,000 shares as on 31.08.2017 in the Bombay StockExchange within eight weeks from today. In case, thesaid respondents purge themselves of the contempt, wemay take a lenient view while imposing sentence.

(ii) Malvinder Mohan Singh, Director of Oscar InvestmentsLimited and Director of RHC Holding Private Limited(Contemnor Nos.9 and 12) and Shivinder Mohan Singh,Director of Oscar Investments Limited and Director ofRHC Holding Private Limited (Contemnor Nos.10 and13) have knowingly and wilfully violated the orders ofthis Court dated 11.08.2017, 31.08.2017 and 15.02.2018as continued on 23.02.2018. Therefore, we hold bothof them guilty of committing Contempt of this Court.We give one chance to them to purge themselves of thecontempt. We, direct that in case each of thecontemnors deposits a sum of Rs.1170.95 crores in thisCourt within eight weeks from today then we mayconsider dealing with them in a lenient manner, whileimposing sentence.

(iii) In case any of the contemnors deposits the amount asdirected hereinabove, this Court shall decide on the nextdate as to how this amount is to be disbursed.

(iv) The Registry is directed to register a suo motu contemptpetition against RHC Holding Private Limited, OscarInvestments Limited, Malvinder Mohan Singh, Shivinder A

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118SUPREME COURT REPORTS

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Mohan Singh and Fortis Healthcare Limited, for havingwilfully violated the order of this Court dated 14.12.2018and issue notice to them returnable for 03.02.2020 askingthem to show cause why they should not be punishedfor contempt.

B52. List the present contempt petition on 03.02.2020 when all thecontemnors named hereinabove shall remain present in the Court. Onthat day, we shall hear them on the issue of sentence. Along with this,the contempt petition which has been ordered to be registered shall alsobe listed on 03.02.2020.

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Divya Pandey

Directions Issued.

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