SC stays criminal proceedings notices to freeze voting rights in Yes Bank-Dish TV dispute
New Delhi Nov 30 PTI The Supreme Court on Tuesday stayed the criminal proceedings in the FIR lodged by Essel Group against the Yes Bank saying it cannot allow the police sitting in Gautam Buddha Nagar in Uttar Pradesh to freeze voting rights of shareholders of a companyThe bench also stayed the operation of two notices issued by Gautam Buddha Nagar police to the stock exchange and the National Securities Depository Limited NSDL asking it to not allow any transfer of shares of Essel group held by the bankA bench of Justices DY Chandrachud AS Bopanna and Vikram Nath said Using criminal procedure to achieve results of civil proceedings will have a dangerous consequence Tomorrow anybody will catch a police officer and stall the voting of a shareholder This will be the easiest thing to doThe bench said it cannot allow the police sitting in Gautam Buddha Nagar to freeze voting rights of shareholders of a public listed company Here the police have done something which the Company Law Tribunal wont doThe bench said that it cannot allow this kind of act of police to happen in the country and that is why Article 226 of the constitution is a very valuable right under which the High Court can interfere in these kinds of casesThe top court said We dont want this kind of power to be given to the police or they will start interfering in corporate matters This is short-circuiting the judicial process by getting orders from police officers This we will not allow It ordered Prima facie at this stage we are of the view that it would be necessary to protect the interest of the petitioner in respect of the pledged shares and the pledge having been invoked Hence we issue notice and direct that pending further orders there shall be the stay of the operation of the impugned notices Also there shall be a stay of further proceedings in respect of the impugned FIRIt asked the parties to file their counter affidavit within three weeksThe top court was hearing an appeal filed by the bank against the November 25 order of Allahabad High Court refusing to quash the notices under section 102 CrpC and FIR lodged by the policeDuring the hearing senior advocate AM Singhvi appearing for Yes Bank said this is one of the most extraordinary cases where malafide criminal proceedings are initiated to scuttle the voting rights of the largest shareholder of the Essel GroupHe said that the earlier Yes Bank had disbursed a loan of amount Rs 5270 crore to the Essel Group and its sister concerns between 2016 and 2018 and for it 445 crore shares were pledged against itSinghvi said that the pledge was invoked by the bank and it became the largest shareholder of the company and to prevent the bank from voting in the Annual General Meeting AGM which was earlier scheduled to be held on November 30 to change or refuse to reappoint the directors these notices were issued Referring to the notices Singhvi said This is nepotism at worst It reeks of it and stinks of it Just see the language of it If the High Court will not interfere in these matters where will I go He said that even in normal situations the courts hardly interfere with the voting rights of shareholders and the transfer of shares voting rights are axioms of company law and corporate lawIt is a fundamental right to do business I am a lender of over Rs 5000 crore and the shares I have under pledge are being rendered worthless by using the criminal procedure This is an abuse of criminal procedure and the high court should have intervened and passed strictures Singhvi saidHe said that against invoking the pledge the Essel Group filed a civil suit in Saket court here but it was withdrawn earlier this year and the FIR which was also lodged last year is suddenly acted upon this yearSenior advocate Kapil Sibal appearing for Essel Groups Subhash Chandra the original complainant said that this case is not what is presented and he can show that the shares which are with the banks are taintedThe scheme was that I take a loan from Yes Bank and Videocon immediately returns that money to the bank to square off the books There was complete round-tripping but the court knows in what state Videocon is today The whole purpose was that you take my money and clean my books he saidHe urged the court to allow him to file a reply in the matter and added that Yes Bank can move the magistrate court to avail its remedies as said by the High CourtSibal said For 18 months they have not sold the shares and are sitting over it The bank wants to take over the company What business does the bank have to take over the company They give loans and not take companies unless it is for somebody elseSibal asked the court to record his statement that he will not hold the AGM and if he is able to prove that the shares are tainted then the police have every right to go after themSinghvi intervened and said that the AGM which was scheduled for today was deferred because Yes Bank had mentioned before the CJI bench on Monday PTI MNL MNL RKS 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New Delhi Nov 30 PTI The Supreme Court on Tuesday stayed the criminal proceedings in the FIR lodged by Essel Group against the Yes Bank saying it cannot allow the police sitting in Gautam Buddha Nagar in Uttar Pradesh to freeze voting rights of shareholders of a companyThe bench also stayed the operation of two notices issued by Gautam Buddha Nagar police to the stock exchange and the National Securities Depository Limited NSDL asking it to not allow any transfer of shares of Essel group held by the bankA bench of Justices DY Chandrachud AS Bopanna and Vikram Nath said Using criminal procedure to achieve results of civil proceedings will have a dangerous consequence Tomorrow anybody will catch a police officer and stall the voting of a shareholder This will be the easiest thing to doThe bench said it cannot allow the police sitting in Gautam Buddha Nagar to freeze voting rights of shareholders of a public listed company Here the police have done something which the Company Law Tribunal wont doThe bench said that it cannot allow this kind of act of police to happen in the country and that is why Article 226 of the constitution is a very valuable right under which the High Court can interfere in these kinds of casesThe top court said We dont want this kind of power to be given to the police or they will start interfering in corporate matters This is short-circuiting the judicial process by getting orders from police officers This we will not allow It ordered Prima facie at this stage we are of the view that it would be necessary to protect the interest of the petitioner in respect of the pledged shares and the pledge having been invoked Hence we issue notice and direct that pending further orders there shall be the stay of the operation of the impugned notices Also there shall be a stay of further proceedings in respect of the impugned FIRIt asked the parties to file their counter affidavit within three weeksThe top court was hearing an appeal filed by the bank against the November 25 order of Allahabad High Court refusing to quash the notices under section 102 CrpC and FIR lodged by the policeDuring the hearing senior advocate AM Singhvi appearing for Yes Bank said this is one of the most extraordinary cases where malafide criminal proceedings are initiated to scuttle the voting rights of the largest shareholder of the Essel GroupHe said that the earlier Yes Bank had disbursed a loan of amount Rs 5270 crore to the Essel Group and its sister concerns between 2016 and 2018 and for it 445 crore shares were pledged against itSinghvi said that the pledge was invoked by the bank and it became the largest shareholder of the company and to prevent the bank from voting in the Annual General Meeting AGM which was earlier scheduled to be held on November 30 to change or refuse to reappoint the directors these notices were issued Referring to the notices Singhvi said This is nepotism at worst It reeks of it and stinks of it Just see the language of it If the High Court will not interfere in these matters where will I go He said that even in normal situations the courts hardly interfere with the voting rights of shareholders and the transfer of shares voting rights are axioms of company law and corporate lawIt is a fundamental right to do business I am a lender of over Rs 5000 crore and the shares I have under pledge are being rendered worthless by using the criminal procedure This is an abuse of criminal procedure and the high court should have intervened and passed strictures Singhvi saidHe said that against invoking the pledge the Essel Group filed a civil suit in Saket court here but it was withdrawn earlier this year and the FIR which was also lodged last year is suddenly acted upon this yearSenior advocate Kapil Sibal appearing for Essel Groups Subhash Chandra the original complainant said that this case is not what is presented and he can show that the shares which are with the banks are taintedThe scheme was that I take a loan from Yes Bank and Videocon immediately returns that money to the bank to square off the books There was complete round-tripping but the court knows in what state Videocon is today The whole purpose was that you take my money and clean my books he saidHe urged the court to allow him to file a reply in the matter and added that Yes Bank can move the magistrate court to avail its remedies as said by the High CourtSibal said For 18 months they have not sold the shares and are sitting over it The bank wants to take over the company What business does the bank have to take over the company They give loans and not take companies unless it is for somebody elseSibal asked the court to record his statement that he will not hold the AGM and if he is able to prove that the shares are tainted then the police have every right to go after themSinghvi intervened and said that the AGM which was scheduled for today was deferred because Yes Bank had mentioned before the CJI bench on Monday PTI MNL MNL RKS RKS
