Tuesday, May 9, 2017



                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        I.A. NOS.9-12 & 13-16 OF 2016


                        SLP (C) NOS.6828-6831 OF 2016





                            I.A. NOS.1-4 OF 2016
                                   AND WITH
                  CONTEMPT PETITION (C) NOS.421-424 OF 2016
                        SLP (C) NOS.6828-6831 OF 2016


Uday Umesh Lalit, J.

1.    State Bank of India and 13  other  banks[1]  have  filed  the  instant
special leave petitions challenging the order  dated  04.03.2016  passed  by
the High Court of Karnataka at Bengaluru in  Writ  Petition  Nos.12191-12194
of 2016 refusing to pass any ad interim order against Respondent  Nos.3,  10
and 11. According to the petitioners–banks they  had  individually  advanced
to Respondent No.1 loans of thousands of crores of rupees;  that  by  Master
Debts Recast Agreement dated 21.10.2010  and  other  related  documents  the
existing loans were restructured and treated as a single facility; and  that
Respondent Nos.2 and 3 executed a corporate guarantee dated  21.12.2010  and
a personal guarantee dated 21.12.2010 respectively,  guaranteeing  repayment
of  the  entire  amount  due.   Further,  since  the  above  accounts   were
classified as non-performing assets, the petitioners–banks filed  OA  No.766
of 2013 against  Respondent  Nos.1  to  9  before  Debt  Recovery  Tribunal,
Bengaluru (for  short  “DRT  Bengaluru),  inter  alia  seeking  recovery  of
Rs.6203,35,03,879.32 (Rupees Six  Thousand  Two  Hundred  and  Three  Crores
Thirty Five Lakhs Three thousand Eight Hundred and Seventy  Nine  and  Paise
Thirty Two only)  from Respondent Nos.1  to  4.   It  is  the  case  of  the
petitioners-banks that despite  applications  having  been  filed  requiring
Respondent Nos.1 to 4 to disclose details of  their  assets  on  oath,  said
respondents  never  disclosed  the  assets  and  instead,  said  respondents
secretly tried to dispose of their assets with an intention  to  defeat  the
recovery proceedings pending before DRT Bengaluru.

2.    According to the petitioners–banks, on  25.02.2016  Respondent  Nos.10
and 11  disclosed  to  London  Stock  Exchange  and  Bombay  Stock  Exchange
respectively that Respondent No.3 had resigned  as  Chairman  of  Respondent
No.11;  that Respondent No.10 would pay to Respondent No.3 a sum of  US$  75
million;  that out of said amount a sum of US$  40  million  would  be  paid
immediately;  and that  Respondent No.3 had made a statement  to  the  press
confirming  said transaction and had stated that he intended  to  settle  in
London.   In  these  circumstances,   the   petitioners–banks   moved   four
interlocutory  applications  before  DRT  Bengaluru  on  02.03.2016  seeking
interim prayers:
“(i) to freeze the passport of Respondent No.3
(ii) to issue an arrest warrant against Respondent No.3,
(iii) to issue a garnishee order  against  Respondent  Nos.10  and  11  from
disbursing US$ 75 million, and
(iv) to issue a direction to Respondent  No.3  to  disclose  his  assets  on

3.    It is the case of  the  petitioners–banks  that  DRT  Bengaluru  heard
arguments only with respect to the Garnishee Application on  02.03.2016  and
posted the matters for orders on  04.03.2016  but  failed  to  consider  the
other   applications.   Aggrieved   by   such   non-consideration   of   the
interlocutory applications by DRT Bengaluru, despite  the  urgency  and  the
enormous amounts involved in the matter,  the  petitioners–banks  moved  the
High Court of Karnataka by filing  Writ  Petition  Nos.12191-12194  of  2016
seeking appropriate directions to DRT Bengaluru to hear and dispose  of  the
applications moved by the  petitioners–banks  on  02.03.2016  expeditiously.
Since the  High  Court  refused  to  pass  any  ad  interim  direction,  the
aforesaid special leave petitions were filed in this Court.

4.     By Order dated 09.03.2016 this  Court  issued  notice  returnable  on
30.03.2016 and also permitted  the  petitioners–banks  to  serve  notice  on
Respondent No.3 through the Indian High  Commission,  London  or  any  other
Embassy.  The Order dated 30.03.2016 discloses that Mr.  C.S.  Vaidyanathan,
learned Senior Advocate appeared on behalf of Respondent  Nos.1  and  3  and
the Order recorded his submission that a proposal was already given  to  the
Chairperson of  State  Bank  of  India  (Consortium  leader  of  banks)  for
settlement of dues of Respondent Nos.1 to 4.

5.    The matter came up on 07.04.2016 when the Counsel  appearing  for  the
petitioners–banks submitted that the offer made by  Respondent  Nos.1  to  4
was not acceptable though the Consortium  was  not  against  any  settlement
provided  the  respondents  showed  their  bona  fides  for   a   meaningful
negotiation.  This Court observed in its Order dated 7.04.2016:-
“As a pre-condition to such steps on bona fides, it is  submitted  that  the
third respondent should first of all disclose, on oath, the details  of  all
the properties - movable,  immovable,  tangible,  intangible,  shareholdings
and any right, title or interest including  beneficial  interest  and  those
held in fiduciary capacity, in private  trusts,  public  trusts,  companies,
partnerships, limited liability partnerships, and/or  any  other  entity/ies
both in India and abroad etc. in any form and there should be a  substantial
deposit made before this Court……..

…..Mr. C. S. Vaidyanathan and Mr. Parag P. Tripathi, learned Senior  Counsel
appearing for Respondent Nos.1 to 4 have submitted that they  may  be  given
short time to file their response to the main petition.

Accordingly, they are granted time upto 21.04.2016 to file  their  response.
In the response filed  by  the  third  respondent,  he  shall  disclose  the
details of all his properties - movable,  immovable,  tangible,  intangible,
shareholdings  and  any  right,  title  or  interest  including   beneficial
interest and those held in fiduciary capacity,  in  private  trusts,  public
trusts, companies, partnerships, limited liability partnerships, and/or  any
other entity/ies both in India and abroad etc. in any  form  whatsoever  and
also the rights,  indicated  above,  in  the  name  also  of  his  wife  and
children, as on 31.03.2016.

It shall also be indicated in the response as to what is the  amount  he  is
prepared to deposit before this Court so as  to  show  his  bonafide  for  a
meaningful negotiation. Mr. C.S. Vaidyanathan and  Mr.  Parag  P.  Tripathi,
learned Senior Counsel, have submitted that on the  next  date  of  hearing,
specific instruction shall be obtained from the third respondent as  to  his
probable date of appearance in person before this Court.”

6.    The matter thereafter came up on 26.04.2016,  by  which  time  counter
affidavit was filed by Respondent No.3 disclosing  his  personal  assets  to
the tune of Rs.20,174,146,601, majority of which had been  under  attachment
by the Income Tax Department.  The details of the assets of Respondent  No.3
situated outside the country  and  those  of  his  wife  and  children  were
furnished in a sealed cover.  This Court,  in  its  Order  dated  26.04.2016
“…….It is also submitted that the personal guarantee  executed  by  the  3rd
respondent with the banks do  not  cover  his  assets  abroad.  We  have  no
problem in recording the above submissions and we do so.  However,  we  find
that in the Order dated 7.04.2016, this Court had  directed  the  Respondent
No.3  to  disclose  the  assets  in  an  affidavit.  The  only  purpose  for
disclosing the assets was to have a fair idea for the petitioners to go  for
a meaningful settlement on the proposals made by Respondent No.3.  There  is
no petition before us for  clarification  or  modification  of  Order  dated
07.04.2016.  In  the  above  circumstances,  we  do  not  find  any  tenable
objection in disclosing these assets to the petitioners.

The learned senior counsel further submits that the wife  and  children  are
American citizens and they are not the parties before this  Court.  Whatever
protection is available to them under law, they  are  free  to  avail.  This
disclosure is only for the purpose of enabling the  petitioners  to  have  a
fair idea for a meaningful settlement.

We are distressed to note that Respondent No.3  has  not  responded  to  our
Order dated 7th April, 2016 in the letter and spirit of the said  Order.  He
was to show us his bonafides by showing the color of money in the form of  a
substantial deposit towards dues in the region of 18,000  crores  to  arrive
at a meaningful settlement. It appears there is no bonafides  in  his  offer
for settlement. Apparently, statements made by counsel on  his  behalf  were
made only as a ploy to gain time.

The Registry is directed to disclose the statement of  assets  furnished  in
the sealed cover, to the petitioners.”

7.     On 28.06.2016 Respondent No.10 filed a memo in O.A.  No.766  of  2013
pending before DRT, Bengaluru along  with  two  documents  stating  that  an
amount of US$ 40 million was paid to Respondent  No.3  on  25.02.2016.  Said
memo was to the following effect:-
The opponent 2 in the above application begs to submit the  below  mentioned
Extract confirming payment of US$ (US Dollars) 40 Million to Defendant  No.3
on 25.02.2016.
Resignation of Defendant No.3 from the Board of United Spirits Ltd.
WHEREFORE the Opponent No.2 prays that this Memo and enclosures be taken  on
record in the interests of justice.”

8.     On 14.7.2016 I.A. Nos.9 to 12 of 2016 were filed by the  petitioners-
banks stating that the disclosure statement  made  by  Respondent  No.3  and
furnished to the petitioners-banks in terms of  the  aforesaid  Order  dated
26.04.2016 was vague and lacked in material particulars; that  the  location
of the assets mentioned in the statement was so unclear  that  it  would  be
impossible for any person to identify the  location  of  the  property;  and
that Respondent No.3 had undisputedly received a sum of US$  40  million  as
disclosed in the memo dated 28.06.2016 but there was no whisper  about  said
amount in the disclosure statement. It was submitted:-
“18. It is therefore clear that Respondent No.3 has willfully disobeyed  the
directions issued by this Hon’ble Court on  7.04.2016.  Respondent  No.3  is
therefore guilty of contempt of the Order dated 29.04.2016  passed  by  this
Hon’ble Court. The Petitioners’  reserve  liberty  to  initiate  appropriate
proceedings against the Respondent No.3 in this regards.

22.   In view of the above, it is just and necessary that  this  Application
is allowed and Respondent No.3 is  directed  to  disclose  and  furnish  all
particulars and all descriptions of all his properties- movable,  immovable,
tangible,  intangible,  shareholdings  and  any  right,  title  or  interest
including beneficial interest and  those  held  in  fiduciary  capacity,  in
private trusts, public trusts, companies,  partnerships,  limited  liability
partnerships, and/or any other entity/ies both in India and abroad  etc.  in
any form whatsoever as on 31.03.2016. If this application is not allowed  as
prayed for,  the  Petitioner  and  the  public  at  large  will  be  put  to
irreparable loss and injury.”

In the circumstances it was prayed that Respondent No.3 be directed to  make
a complete and detailed disclosure of the assets as directed by  this  Court
in its Order dated 7.04.2016.

9.     On 14.07.2016 itself  the petitioners-banks filed  Contempt  Petition
Nos. 421-424 of 2016 submitting that  appropriate  contempt  proceedings  be
initiated for deliberate and willful violation of the Order dated  7.04.2016
passed by this Court. Paragraphs 20 to 24 of the petition were as under:-
“20.  A reading of  the  Disclosure  Statement  made  by  Contemnor  clearly
reveals that the Contemnor has not at all  obeyed  the  directions  of  this
Hon’ble Court dated 07.04.2016. One of the primary directions given by  this
Hon’ble Court to the Contemnor  was  that  he  should  disclose  the  proper
details of all  his  properties-movable,  immovable,  tangible,  intangible,
shareholdings  and  any  right,  title  or  interest  including   beneficial
interests and those held in fiduciary capacity, in  private  trusts,  public
trusts, companies, partnerships, limited liability partnerships, and/or  any
other entity/ies both in India and abroad etc. in any  form  whatsoever,  as
on 31.03.2016. However, Contemnor has not at all disclosed  the  details  of
the assets in various forms/entities such as beneficial interest,  etc.  and
thereby intentionally concealing the  information.  In  fact,  there  is  no
whisper regarding the said details in the Disclosure Statement.

21. The disclosure is prima facie vague and lacks any material  particulars.
The location of the assets mentioned  in  the  Disclosure  Statement  is  so
unclear that it is not practically possible for any person  other  than  the
Alleged Contemnor to identify the location of the properties.

22. Further, it is stated that the Alleged Contemnor had received a  sum  of
US$ 40  million  from  Respondent  No.10  pursuant  to  an  Agreement  dated
25.02.2016 entered into between Respondent No.3 and Respondent No.10.

23. It is pertinent to mention here that after  disposal  of  the  captioned
Special Leave Petition, on 28.06.2016 the  Respondent  No.10  filed  a  Memo
along with two documents in  the  DRT,  stating  that  the  above  mentioned
amount of US$ 40 million was paid to  alleged  Contemnor  on  25.02.2016.  A
copy of the said Memo dated 28.06.2016 is annexed herewith …………

24. A reading  of  the  above  documents  clearly  establishes  that  as  on
26.04.2016 when the alleged Contemnor  filed  the  Disclosure  Statement  in
this Hon’ble Court, the alleged Contemnor had  already  received  the  above
mentioned amount of US$ 40 million  before  31.03.2016.  In  fact  the  memo
clearly shows that the said amount of US$  40  million  was  transferred  by
Citi Bank, being Respondent No.10’s bank, via J.P. Morgan  Chase  N.A.  Bank
(intermediary  Bank)  to  the  account  of  the  Alleged   Contemnor   being
maintained with Edmond De Rothschild (Suisse) SA Geneva. However,  there  is
no whisper  of  the  above  mentioned  amount  or  the  transaction  in  the
Disclosure Statement. The alleged Contemnor had deliberately, willfully  and
contumaciously concealed the  aforementioned  payment/transaction  which  is
against the letter and spirit of the Order dated 07.04.2016.”

10.     On  25.07.2016  this  Court  issued  notice  in  aforesaid  contempt
petition as well as in I.A Nos.9 to 12 of 2016.

11.    On 24.08.2016 counter affidavit was filed  on  behalf  of  Respondent
Nos.1 to 4 in I.A. Nos.9 to 12 of 2016. It was submitted:-
 “… it is  incorrect  that  in  the  disclosures  the  Respondent  No.3  has
provided information pertaining to only a few of his overseas assets  as  on
31.03.2016 as alleged.  The Respondent No.3 reiterates that the  disclosures
made to this Hon’ble Court are accurate.  It is respectfully submitted  that
in view of what is recorded in the Order dated 26th April, 2016  as  to  the
purpose of the disclosures, it is now not open to the  Petitioners-banks  to
contend that in the event that the DRT allows the Original Application,  the
Petitioners-banks  may  not  be  able  to  proceed  against  the  properties
mentioned in the disclosures as alleged or  for  reasons  alleged.  In  this
regard, it is pertinent to mention that the Respondent  No.3  had  expressly
submitted before this Hon’ble Court on 26th April, 2016 that  “the  personal
guarantee executed by the 3rd Respondent with the banks  do  not  cover  his
assets abroad”.  It is denied that all particulars and all  descriptions  of
the assets as contemplated by the Order dated 7th April, 2016 have not  been
provided, deliberately or otherwise. It is denied that there is  any  reason
or basis for directing the  Respondent  No.3  to  once  again  disclose  and
furnish particulars and description of his properties as alleged or  in  the
manner alleged.    It is denied that if the I.A.  of  the  Petitioners-banks
is not allowed, the Petitioners or the  public  at  large  will  be  put  to
irreparable loss or injury.”

12.   Applications being I.A. Nos.1 to 4 of 2016 were also filed  on  behalf
of Respondent No.3/Alleged Contemnor for recall of  Order  dated  25.07.2016
passed by this Court issuing notice in contempt petition. It  was  submitted
by Respondent No.3:-
“………….It is further  submitted  that  the  disclosures  made  by  Respondent
No.3/Alleged Contemnor to this Hon’ble Court were (a) pursuant to the  Order
dated 7th April, 2016 were made “as on 31.03.2016” and were accurate  as  on
31.03.2016”, and (b) far from being made under the provisions  of  Order  21
Rule 41(2) of the Code of Civil Procedure, 1908, were “only for the  purpose
of  enabling  the  petitioners  to  have  a  fair  idea  for  a   meaningful
settlement” as  observed  in  the  order  dated  26th  April,  2016.  It  is
respectfully submitted that the Petitioners are  incorrectly  alleging  that
the disclosures are inaccurate, and are now seeking to  substantially  alter
the basis and purpose of the disclosures, as is evident from a mere  perusal
of the  submissions  in  paragraphs  21  and  25  of  the  present  Contempt

 ……It is denied that Respondent No.3 has not obeyed the directions  of  this
Hon’ble Court dated 7th April, 2016 or has not disclosed the details of  the
assets as  alleged  or  in  the  manner  alleged.  It  is  denied  that  the
disclosure is vague or lacks material particulars. It  is  denied  that  the
location of the assets in the disclosure is unclear as  alleged  or  in  the
manner alleged. The  statement  of  assets  is  as  on  a  particular  date,
obviously it cannot detail the  day  to  day  transactions  of  receipts  or
expenditures; nor did the order require the present respondent to do so.  It
is denied that the Respondent No.3/Alleged  Contemnor  has  deliberately  or
willfully or contumaciously concealed  the  aforesaid  payment  against  the
letter and spirit of the Order dated 7th April, 2016.”

      While seeking recall of the Order dated 25.07.2016 it was also  prayed
that the personal appearance of Respondent  No.3/Alleged  Contemnor  in  the
present contempt petition be dispensed with.

13.   Around this time I.A. Nos.13 to 16  were  filed  on  behalf  of  B.N.P
Paribas seeking impleadment in aforesaid Special Leave Petition  Nos.  6828-
6831 of 2016.

14.    On 29.08.2016, this Court issued notice in respect of I.A.  Nos.1  to
4 of 2016 seeking recall of the  Order  dated  25.07.2016.  In  their  reply
filed on 07.09.2016 to aforesaid I.A. Nos.1 to 4 of 2016, it  was  submitted
by the petitioners-banks that the alleged contemnor had not filed any  reply
to the contempt petition nor had he appeared in person in  response  to  the
contempt  petition  as  required  by  Rule  6(1)  of   Rules   to   Regulate
Proceedings for Contempt of Supreme Court 1975 and that present  application
for recall was a mere ruse to circumvent the law. It was submitted:-
      “6. The Alleged Contemnor has received the sum of US$ 40 million  from
Respondent No.10 pursuant to an  Agreement  dated  25-02-2016  entered  into
between  Respondent  No.3  and  Respondent  No.10.  However,   the   Alleged
Contemnor has suppressed the receipt  of  US$  40  million  from  Respondent
No.10  even  in  the  Application  under  reply.  The  non   disclosure   of
whereabouts of  US$  40  million  received  from  Respondent  No.10  further
discredits the Alleged Contemnor.

7. The Alleged Contemnor has not denied the existence of  his  bank  account
held in Edmond De Rothschild Bank, Geneva. However,  details  of  this  bank
account did not find mention in the list of his foreign assets filed  before
this Hon’ble Court on 26.04.2016. It is respectfully submitted that this  is
an act of willful concealment and the Alleged Contemnor is in  violation  of
Order dated 07-04-2016 passed by this Hon’ble Court.”

15.   When IA Nos.9-12 of 2016 along with Contempt  Petition        Nos.421-
424 of 2016 came up before this Court on  25.10.2016,  it  was  prima  facie
found that Respondent No.3  had  not  made  a  proper  disclosure.   In  the
premises, this Court observed and directed:-
“Having heard learned Attorney General  appearing  for  the  applicants  and
Shri C.S.Vaidyanathan,  learned  Senior  Counsel  appearing  for  Respondent
No.3, we are prima facie of the view that Respondent No.3  has  not  made  a
proper disclosure  in  terms  of  our  Order  dated  07.04.2016.  Therefore,
Respondent No.3 is directed  to  make  a  complete  disclosure  of  all  his
properties and in particular, about the receipt of US$ 40 Million. It  shall
be disclosed as to when this amount was received;  where  was  it  deposited
and how the same has been dealt with up  to  date.   Respondent  No.3  shall
also furnish  the  particulars  of  the  assets  abroad  with  full  details
thereof, as has been given with regard to the assets in India.”

16.   Respondent  No.3  thereafter  filed  “further  counter  affidavit”  in
aforementioned I.A. Nos.9-12 of 2016 on 23.11.2016.  The affidavit  enclosed
letter dated  18.11.2016  issued  by  Edmond  De  Rothschild  (Suisse)  S.A.
Paragraph 3 of the affidavit was to the following effect:
“On a mere perusal of the letter dated 18th November, 2016 issued by  Edmond
De Rothschild (Suisse) S.A. (Annex. “R-2” hereto), it is  evident  that  the
US$ 39,999,994 million paid by Diageo Plc was  received  on  25th  February,
2016.  On  instructions  of  Respondent  No.3,  an  aggregate  sum  of   US$
39,999,993.99 was paid to the following parties on 26th and  29th  February,
2016 respectively:

|NAME OF PARTY                |AMOUNT                    |
|S. Three Gift Settlement     |US$13,000,000             |
|(a Trust the sole beneficiary|(On 26.02.2016) & US$     |
|of which is Siddartha Mallya,|333,331.33 (on 29.02.2016)|
|son of Respondent No.3)      |                          |
|L. Three Gift Settlement     |US$13,000,000             |
|(a Trust the sole beneficiary|(On 26.02.2016) & US$     |
|of which is Leena Mallya,    |333,331.33 (on 29.02.2016)|
|daughter of Respondent No.3) |                          |
|T. Three Gift Settlement     |US$13,000,000             |
|(a Trust the sole beneficiary|(On 26.02.2016) & US$     |
|of which is Tanya Mallya,    |333,331.33 (on 29.02.2016)|
|daughter of Respondent No.3) |                          |
|                             |US$ 39,999,993.99         |
|TOTAL                        |                          |

Each  of  the  three  children  of  Respondent  No.3,  who  are   the   sole
beneficiaries of the aforesaid Trusts, are majors and are  citizens  of  the
United States of America.  Respondent No.3 is neither the  Settlor  nor  the
Trustee nor the beneficiary of any of the aforesaid named  Trusts,  and  has
no control over the Trusts or the manner in which  the  respective  corpuses
of each of the aforesaid  Trusts  is  utilized.    However,  the  respective
corpuses as they stood on  31st  March,  2016  have  been  included  in  the
statements of assets of the three  children  handed  over  to  this  Hon’ble
Court in sealed envelope on 26th April, 2016.”

17.   The response was thereafter filed  by  the  petitioners-banks  to  the
aforementioned  “further  counter  affidavit”  filed  by  Respondent   No.3.
Attention was invited to the restraint Orders passed by the  High  Court  of
Karnataka on 03.09.2013 and 13.11.2013. It was submitted that  the  transfer
of US$ 40 million by Respondent  No.3  to  his  children  was  not  only  in
contempt of the Orders passed by the High Court but was also an  attempt  to
subvert the Course of Justice by diverting the funds  to  shield  them  from
ongoing recovery proceedings.  Paragraphs 13 to 16  of  the  reply  were  as
“13.  Notwithstanding the above, it is respectfully submitted that  pursuant
to filing  of  O.A.  No.766/2013  before  the  Hon’ble  DRT,  Bengaluru,  on
26.07.2013, Respondent Nos.1 to  3  gave  an  oral  undertaking  before  the
Hon’ble DRT, that they would not alienate or dispose  of  their  properties.
Thereafter,  since  no  interim  order  was  passed  by  the  Hon’ble   DRT,
Petitioners filed a writ petition bearing W.P.No.38870/2013 &  W.P.No.39048-
39052/2013 before the Hon’ble High Court of Karnataka,  seeking  a  writ  in
the nature of Mandamus directing the Hon’ble DRT to hear and dispose of  the
interlocutory applications filed by the petitioners in the OA  i.e.  IA  No.
2593/2013 to 2598/2013 & IA No.3034/2013 expeditiously.   In  the  aforesaid
writ  petition, the Hon’ble High Court of Karnataka was pleased  to  pass  a
restraint Order on 03.09.2013 against respondent Nos. 1 to 3 herein  in  the
following terms:

“In that view, there shall  be  interim  order  of  injunction  against  the
Respondent Nos.1 to 3 from transferring, alienating, disposing  or  creating
third party rights in respect of movable as  well  as  immovable  properties
belonging to  them  until  further  order  in  these  petitions.”  (emphasis

14.   The said order was further confirmed by  the  order  dated  13.11.2013
passed in  the  above  mentioned  writ  petitions,  whereby  the  said  writ
petitions were disposed  of.   Copy  of  the  orders  dated  03.09.2013  and
13.11.2013  passed   by   the   Hon’ble   High   Court   of   Karnataka   in
W.P.No.38870/2013 & W.P. No.39048-39052/2013 are annexed ………. .

15.   Therefore, it is clear  that  the  Respondent  No.3  has  clearly  and
flagrantly violated the orders of the Hon’ble High Court  of  Karnataka  and
is guilty of contempt of Court.  It is stated that by transferring  the  US$
40 million to his children, the  Respondent  No.3  has  not  only  acted  in
contempt  of the Hon’ble High Court, but  has  also  tried  to  subvert  the
course of justice by diverting the funds offshore  to  shield  it  from  the
recovery proceedings on going before the  Hon’ble  DRT.   Therefore,  it  is
essential that the said US$ 40 million be brought  back  by  the  Respondent
No.3 and be deposited with this Hon’ble Court, or the Hon’ble  DRT,  pending
the disposal of the recovery proceedings.  It is further submitted  that  it
is settled law that this Hon’ble Court has the power to punish for  contempt
of its subordinate Courts.  Therefore, it is prayed that this Hon’ble  Court
hold the Respondent No.3 guilty of contempt of the  Hon’ble  High  Court  of

16.   It is further pointed out that even the statement that the  Respondent
No.3 has transferred the said US$ 40 million to his children does  not  hold
water.  On perusal of the further counter affidavit of the Respondent  No.3,
the explanation provided by the Respondent No.3 regarding the  disbursal  of
US$ 40 million prima facie does not correlate with the statements  given  on
behalf of his children.  The Respondent No.3 has failed to explain  why  the
US$ 40 million was disbursed to his children despite an oral undertaking  to
the contrary given before the Hon’ble DRT on 26.07.2014, and  despite  being
injuncted by way of orders dated 03.09.2013 and  13.11.2013  passed  by  the
Hon’ble High Court of Karnataka  in  W.P.  No.38870/2013  &  W.P.  No.39048-
39052/2013.  The said orders injuncting the Respondent No.3 from  alienating
his assets  has  attained  finality  as  it  was  never  challenged  by  the
Respondent No.3 till date.”

18.   I.A. Nos.9-12 of 2016 along  with  Contempt  Petition  Nos.421-424  of
2016 thereafter came up  before  this  Court  on  11.01.2017.   Having  gone
through the response filed by  the  petitioners-banks  to  “further  counter
affidavit” filed by Respondent No.3 which inter alia referred to the  orders
dated 03.09.2013 and 13.11.2013 passed by the High Court of Karnataka,  this
Court passed the following Order:
“In the affidavit filed on 10.12.2016, the petitioners have brought  to  the
notice of this Court that the transfer of US$ 40 Million in  favour  of  the
children of Respondent No.3 is in flagrant violation of  the  orders  passed
by the High Court of Karnataka. Therefore, it  is  prayed  that  appropriate
orders may be issued to secure the deposit of the  said  amount  of  US$  40
Million before this Court or the DRT  forthwith,  pending  disposal  of  the
further recovery proceedings.

The learned senior counsel appearing for Respondent No.3 seeks three  weeks'
time to file reply to the submission.”

19.   Despite the aforesaid Order dated 11.01.2017 which took  note  of  the
violation of the orders passed by the High Court  of  Karnataka  and  though
time was sought to file reply, nothing was filed in  reply  or  rebuttal  by
Respondent No.3.

20.   When the aforesaid IA Nos.9-12 of 2016 along  with  Contempt  Petition
Nos.421-424 of 2016 with application IA Nos.1-4 of 2016  seeking  recall  of
the Order dated 25.07.2016, came up for hearing, Mr. Mukul Rohtagi,  learned
Attorney General for India and Mr.  Shyam  Divan,  learned  senior  advocate
appeared on behalf of the petitioners-banks  while  Mr.  C.S.  Vaidyanathan,
learned senior advocate appeared for Respondent No.3. It  was  submitted  by
the learned Attorney  General  that  Respondent  No.3  had  made  no  honest
disclosure and in fact there was a deliberate attempt to flout the Order  of
this Court.  In his  submission,  Respondent  No.3  must  first  of  all  be
directed to deposit US$ 40 million which he had transferred in violation  of
the Orders of the Courts, before he  could  be  heard  in  the  matter.  Mr.
Divan, learned senior counsel submitted that the orders dated  3.9.2013  and
13.11.2013 were clear and unambiguous. He further submitted that the  breach
on part of Respondent No.3 was willful and deliberate  and  that  it  was  a
clear attempt in over- reaching the Court and  putting  the  amounts  beyond
the reach of the Court.

      Mr. Vaidyanathan, learned senior advocate on the other hand  submitted
that  Respondent  No.3  was  not  asked  or  called  upon  to  disclose  all
transactions but to disclose the status as it obtained on 31.03.2016 and  as
such the disclosure by Respondent No.3 was consistent with the tenor of  the
order passed by this Court.  In his submission the amount of US$ 40  million
was pursuant to Non-Compete agreement  with  Diageo  Plc  and  was  received
after the orders passed by the High Court of  Karnataka  on  03.09.2013  and
13.11.2013.  He further submitted that the width of  those  orders  did  not
cover or include any moneys which the respondents would  receive  in  future
and as such there was no violation of those orders at all.  He  relied  upon
the decision of this Court in Indian Airports  Employees’  Union  v.  Ranjan
Chatterjee and Another[2] and  submitted  that  since  the  matter  involved
interpretation of the orders at 3.09.2013 and 13.11.2013 it cannot  be  said
that  there  was  any  willful  disobedience  of  the  orders.   He  further
submitted that the violation if any, was that of the orders  passed  by  the
High Court of Karnataka and as such this Court ought not to take  cognizance
of such alleged violation inasmuch as it  would  deny  Respondent  No.3  the
opportunity to place the matter before the High Court.

21. The  orders  passed  by  this  court  were  clear  and  unambiguous  and
Respondent No.3 was called upon to make complete disclosure of  his  assets.
Whether the  assets  to  be  so  disclosed  were  covered  by  the  personal
guarantee given by Respondent No.3 or not  was  immaterial.  He  was  called
upon to make a  complete  disclosure  and  was  bound  to  comply  with  the
directions. The assertion made by the petitioners-banks that the details  of
the bank account held in Edmond De Rothschild Bank were never  disclosed  by
Respondent No.3 is correct. In fact, no details of  any  bank  account  with
overseas banks were given by Respondent No.3. The  violation  by  Respondent
No.3 could not be termed as a mere infraction. The violation  by  Respondent
No.3 regarding non-disclosure becomes more pronounced  because  it  is  this
very account held  in  Edmand  De  Rothschild  Bank  that  was  utilized  to
transmit funds to the tune of US$ 40 Million.

22.   We now turn to the alleged violation of orders  dated  03.09.2013  and
13.11.2013 passed by the High Court of Karnataka. It is  not  disputed  that
such orders were passed  restraining  the  concerned  respondents  including
Respondent No.3 and  that the orders  were  passed  in  proceedings  arising
from O.A. No.766 of 2013 before   DRT  Bengaluru.  The  present  proceedings
before this court have also arisen from the very same O.A.  No.766 of  2013.
The orders of restraints passed by the High  Court  were  therefore  in  the
very same proceedings with which we are  presently  concerned.  Said  orders
bound the concerned respondents including  Respondent  No.3  and  restrained
them from  transferring,  alienating,  disposing  or  creating  third  party
rights in respect of movable as well as immovable  properties  belonging  to
them till further orders in the proceedings.  A question has been raised  by
  Mr. Vaidyanathan learned senior  advocate  whether  the  orders  would  be
restricted only so far as the properties which were  in  the  hands  of  the
concerned respondents as on the date when those  orders  of  restraint  were
passed.   In  other  words,  whether  any  properties  which  in  future  or
subsequent to the Orders had come in the hands or control of  the  concerned
respondent would be covered by such orders or not.    On  plain  reading  of
the Orders, in our view, whether the properties were in  the  hands  of  the
concerned respondents on the date when the orders of restraint  were  passed
by the High Court or had come in their hands or under  their  control  at  a
later point  in  time,  regardless  of  such  qualification  all  properties
whether movable or immovable were  governed  by  the  orders  of  restraint.
There is no ambiguity of any sort and the  Orders  of  restraint  are  quite
clear. Consequently, funds amounting to US$ 40  million  which  came  to  be
under the control of and in the hands of  Respondent  No.3  were  completely
covered and governed by said orders of restraint.

23.   The memo dated 28.06.2016 filed  by  Respondent  No.10  in  said  O.A.
No.766 of 2013 annexed, “Extract confirming payment of US$ (US  Dollars)  40
Million to Defendant No.3 on 25.02.2016”. It is thus beyond any  doubt  that
the payment of US$ 40Million was received by Respondent No.3 on  25.02.2016.
These facts are admitted by Respondent No.3 in Paragraph 3 of  his  “further
counter affidavit”. The explanation that the funds now stand transferred  in
favour of the trusts over which Respondent No.3 has no control  at  all,  in
fact aggravates the extent of violation. It is clear that  the  funds  which
were in control of Respondent No.3 have now been sought  to  be  put  beyond
the reach of processes of court, which is reflective of the intent.

24.   The  applications  moved  by  the  petitioners-banks   on   02.03.2016
themselves had made clear  reference  to  the  fact  that  as  disclosed  by
respondent Nos.10 and 11 to London Stock Exchange and Bombay Stock  Exchange
respectively Respondent No.10 would pay to Respondent No.3 a  sum  of  US$75
million and  accordingly  petitioners-banks  had  moved  four  interlocutory
applications for orders against respondent  Nos.10  and  11  for  disbursing
said amount of US$ 75 million. The amount of US$ 40 Million so  received  by
Respondent No.3 was therefore subject matter  of  the  present  controversy.
The least that was expected of Respondent  No.3  was  to  disclose  relevant
facts pertaining  to  receipt  and  disbursement  of  US$  40  million.  The
violation on that count is thus not only against the  directions  issued  by
this court but also against express mandate of orders dated  03.09.2013  and
13.11.2013 passed in the proceedings in question.

25.   Having thus found that the actions on the part of Respondent  No.3  in
disbursing the amount of US$ 40 million was against the text  and  tenor  of
the orders passed by the High Court of Karnataka,  the question then  arises
whether this Court can take  cognizance  of  such  violation  or  should  it
leave it to be decided by the High Court of Karnataka itself in  a  properly
instituted legal proceeding.

26.   In Delhi Judicial Service Association,  Tis  Hazari  Court,  Delhi  v.
State of Gujarat and others[3], a  question  arose  whether  the  power  and
jurisdiction of  this  Court  under  Article  129  of  the  Constitution  is
confined to  “the contempt of  this Court”  alone.     Submissions  advanced
in that behalf were noted in paragraph 14 of the  judgment  which  sets  out
the submission of the learned Attorney General:
“...The Supreme Court as the Apex Court is the  protector  and  guardian  of
justice throughout the land, therefore, it has a right and also  a  duty  to
protect the courts whose orders and judgments are  amenable  to  correction,
from commission of contempt against them.”

      The subsequent paragraphs of the judgment namely paragraph 26  onwards
show that the contentions so advanced by the learned Attorney  General  were
accepted by this Court.  It is true that the discussion was in  the  context
of   the contempt of a subordinate court.   However,  the  nature  of  power
exercisable by this Court was considered in the  backdrop  that  this  Court
has supreme appellate jurisdiction over all  courts  and  tribunals  in  the
country which is  clear  from  the  observations  in  paragraph  31  of  the
judgment. We must say that Mr. Vaidyanathan did  not  seriously  contend  to
the contrary but his submission was that if the jurisdiction is  so  assumed
and cognizance is taken by  this  Court,  Respondent  No.3  would  lose  one
opportunity of having the matter assessed at the level of  the  High  Court.
 In our considered view, since we are dealing with the very  same  cause  in
which the orders of restraint were passed by the High Court and since it  is
coupled with the violation of orders of this Court as well, the  matter  can
and ought to be dealt with by this Court.

27.   The record shows that by  order  dated  11.01.2017  the  violation  of
those orders for restraint passed by the High Court of Karnataka  was  taken
note of by this Court and the Counsel appearing for  respondent  had  sought
time to file an appropriate  reply.   However,  no  such  reply  was  filed.
Respondent No.3 was thus put to clear notice about the  violation  of  those
orders of restraints passed by the High Court of  Karnataka.   As  such,  no
prejudice has been caused or visited upon Respondent No.3.

28.   We find that the allegations against Respondent No.3 of committing  of
contempt are on two counts, in that -
a) He is guilty of disobeying  the  Orders  passed  by  this  Court  in  not
disclosing full particulars of the assets as was directed by this Court.
b) He is guilty of violating the express Orders of Restraint passed  by  the
High  Court  of  Karnataka  in  the  same  Cause  from  which  the   present
proceedings have arisen.
      Though the contempt on  the  second  count  is  theoretically  of  the
orders passed by the High Court of Karnataka since those orders  pertain  to
the very same Cause and the actions  on  part  of  Respondent  No.3  in  not
disclosing  the  account  in  question  through  which  the  transfers  were
affected also fall with respect to contempt on first count,  we  proceed  to
exercise our contempt jurisdiction even with regard to the second count.  As
stated above, Respondent No.3 was adequately put to notice and no  prejudice
has been caused as a result of  such  assumption  of  jurisdiction  by  this

29.   Having considered the entirety of the matter, we find that  Respondent
No.3 is guilty of having committed contempt of court on both the counts.  At
this stage it must be stated that in  terms  of  Rule  6  (1)  of  Rules  to
Regulate Proceeding for Contempt of Supreme Court 1975, Respondent No.3  was
obliged and duty bound to appear in person in response to the notice  issued
by this Court in Contempt Petition. Instead, he chose  to  file  application
seeking recall of the orders issuing notice. Having considered  the  matter,
we see no reason to recall that order and dismiss I.A. Nos.1 to  4  of  2016
preferred by Respondent No.3 in Contempt Petition Civil No.421-424 of  2016.
Respondent No.3 is therefore duty bound to appear in person in  the  present
contempt proceedings.

30.   Since Respondent  No.3  has  not  filed  any  reply  to  the  Contempt
Petition nor did he appear in person, though we have  found  him  guilty  of
having committed contempt of court, we deem it necessary  to  give  him  one
more opportunity and also hear him on the proposed punishment. We  therefore
adjourn matter to 10.07.2017  for  hearing  Respondent  No.3  in  person  on
matters in issue including one  regarding  the  proposed  punishment  to  be
awarded to him for contempt of court. The  instant  contempt  petitions  and
connected cases shall now be listed at 2 o'clock on  10.07.2017.  Respondent
No.3 may keep his affidavit ready to be tendered on the same day by  stating
mitigating circumstances, if any and any other  submissions  he  chooses  to

31.   We direct the Ministry of  Home  Affairs,  Government  of  India,  New
Delhi to secure and ensure presence of Respondent No.3 before this Court  on
10.07.2017.  A copy of this  Judgment  be  sent  to  the  Ministry  of  Home
Affairs for compliance.

(Adarsh Kumar Goel)

(Uday Umesh Lalit)

New Delhi,
May 09, 2017
[1]   State Bank of India, Axis Bank Limited, Bank  of  Baroda,  Corporation
Bank, The Federal Bank Limited, IDBI Bank  Limited,  Indian  Overseas  Bank,
Jammu & Kashmir Bank Limited,  Punjab & Sind  Bank,  Punjab  National  Bank,
State Bank of  Mysore, UCO Bank, United Bank of India and  Oriental Bank  of
[2]    (1999) 2 SCC 537
[3]    (1991) 4 SCC 406

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