Page 1 1

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

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

IN

SLP (C) NOS.6828-6831 OF 2016

STATE BANK OF INDIA AND ORS. ……PETITIONERS

VERSUS

KINGFISHER AIRLINES LTD. AND ORS. ..…. RESPONDENTS

With

I.A. NOS.1-4 OF 2016

IN

AND WITH

CONTEMPT PETITION (C) NOS.421-424 OF 2016

IN

SLP (C) NOS.6828-6831 OF 2016

JUDGMENT

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

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 Commerce.

Page 2 2

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.

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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 oath.”

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

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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

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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

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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 observed:-

“…….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

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amount of US$ 40 million was paid to Respondent No.3 on 25.02.2016. Said

memo was to the following effect:-

“MEMO

The opponent 2 in the above application begs to submit the

below mentioned documents:

1.Extract confirming payment of US$ (US Dollars) 40 Million

to Defendant No.3 on 25.02.2016.

2.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

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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.

Page 9 9

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.

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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 26

th

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 26

th

April, 2016 that “the personal guarantee

executed by the 3

rd

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 7

th

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 7

th

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

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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 26

th

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 Petition.

……It is denied that Respondent No.3 has not obeyed the

directions of this Hon’ble Court dated 7

th

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 7

th

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

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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

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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 18

th

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 25

th

February, 2016. On

instructions of Respondent No.3, an aggregate sum of US$

39,999,993.99 was paid to the following parties on 26

th

and 29

th

February, 2016 respectively:

NAME OF PARTY AMOUNT

S. Three Gift Settlement

(a Trust the sole beneficiary of

which is Siddartha Mallya, son

of Respondent No.3)

US$13,000,000

(On 26.02.2016) & US$

333,331.33 (on 29.02.2016)

L. Three Gift Settlement

(a Trust the sole beneficiary of

which is Leena Mallya,

daughter of Respondent No.3)

US$13,000,000

(On 26.02.2016) & US$

333,331.33 (on 29.02.2016)

T. Three Gift Settlement

(a Trust the sole beneficiary of

which is Tanya Mallya,

daughter of Respondent No.3)

US$13,000,000

(On 26.02.2016) & US$

333,331.33 (on 29.02.2016)

TOTAL US$ 39,999,993.99

Each of the three children of Respondent No.3, who are

the sole beneficiaries of the aforesaid Trusts, are majors and are

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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 31

st

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 26

th

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 under:

“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

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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 supplied)

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 Karnataka.

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

Page 16 16

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

Page 17 17

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

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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

2

(1999) 2 SCC 537

Page 19 19

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

Page 20 20

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

Page 21 21

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.

Page 22 22

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

3

(1991) 4 SCC 406

Page 23 23

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.

Page 24 24

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 court.

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

Page 25 25

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

advance.

Page 26 26

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.

………………………J.

(Adarsh Kumar Goel)

…………………..……J.

(Uday Umesh Lalit)

New Delhi,

May 09, 2017