Summary
In proceedings to protect recovery under a foreign arbitral award, the Supreme Court found wilful breach of shareholding status-quo orders by active Indiabulls directors and the Singh brothers. Prior powers of attorney could not authorise later transfers contrary to court orders. The Court deferred sentence, offered deposit-based opportunities to purge contempt and separately initiated notice concerning later transactions. It did not finally decide contempt of the later order.
Issues
- Whether transfers of unencumbered shares breached the status-quo orders despite earlier financing documents.
- Whether the Singh brothers wilfully diluted the protected shareholding.
- What further proceedings were required concerning the later order.
Held
- A prior power of attorney or security top-up arrangement could not permit an agent to do what the court’s order prohibited the principal from doing. The official disclosures did not establish that the disputed shares were protected pre-existing encumbrances. (¶¶ 28, 29, 30, 31)
- The active Indiabulls directors knowingly and wilfully breached the orders by the transfers. They could seek leniency by depositing the specified historical value of 12,25,000 shares within eight weeks. (¶¶ 31, 32, 51)
- The Singh brothers’ unexplained dilution, concealment and conduct viewed with repeated assurances established wilful disobedience. They were found guilty of civil contempt, with sentence deferred. (¶¶ 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45)
- Proceedings against contemnors 11, 14 and 15 were dropped for want of material showing active involvement. Later transactions concerning the 14 December 2018 order required separate notice and inquiry. (¶¶ 33, 46, 47, 48, 49, 50, 51)
Result
Specified active Indiabulls directors and both Singh brothers were held guilty; sentence was deferred. Within eight weeks, the former could deposit the 31 August 2017 BSE value of 12,25,000 shares, and each Singh brother Rs. 1,170.95 crore, for possible leniency. Disbursement remained for later decision. Fresh suo motu notice concerning the 14 December 2018 order was issued. Listing for sentence and the fresh matter was directed for 3 February 2020 with personal presence.