The Supreme Court has directed the judgment debtor and respondent entities in a dispute arising from enforcement of a Ras Al Khaimah foreign decree worth approximately ₹949.96 crore to furnish an additional ₹200 crore security, while leaving open the question of whether family-controlled corporate entities can be proceeded against for satisfaction of the decree.
A Bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi and Justice V. Mohana was hearing appeals filed by Ras Al Khaimah Investment Authority (RAKIA) concerning execution proceedings, contempt proceedings and corporate transactions involving Matrix Pharmacorp, Tianish Laboratories and other entities. The underlying foreign decree had awarded RAKIA approximately AED 267.94 million, which it is seeking to enforce in India.
The Court upheld the finding that a statement made by IQuest before the Commercial Court, Hyderabad could not be treated as an unconditional undertaking capable of attracting contempt. It held that the statement was merely clarificatory and did not amount to a firm undertaking. Consequently, the High Court’s finding that no contempt was made out was not interfered with.
At the same time, the Court found that RAKIA had demonstrated a genuine apprehension that the decree could be frustrated through corporate transactions and changes in control. It noted that the foreign decree was from a superior court of a reciprocating territory and that due weight had to be given to it while considering interim protection in India.
The Court therefore held that its existing status quo protection should not be vacated without adequate security. It noted that the decree stood at approximately ₹949.96 crore, against which security of ₹231.70 crore had been furnished, title deeds of Medchal land had been deposited, and assets worth ₹212 crore had been attached in the execution proceedings.
The respondents have accordingly been directed to furnish an additional ₹200 crore security within two weeks, with the security subject to the outcome of the pending execution proceedings.
The Bench expressly left open the issue of whether the entities controlled by the judgment debtor’s family constitute a unified structure whose assets can be reached to satisfy the decree, as well as the question of lifting the corporate veil. These issues are to be decided by the Commercial Courts seized of the execution proceedings.
The Supreme Court also directed the Commercial Courts at Hyderabad and Ranga Reddy to decide the main execution proceedings and connected applications expeditiously, and in any event within four months.
