Supreme Court stays communication sent to Yes Bank by UP Police asking them not to transfer or exercise rights on Dish TV shares

A Supreme Court bench of Justices DY Chandrachud, Vikram Nath and AS Bopanna today stayed operation of a notice sent by an Investigating Officer of Surajpur Police station to Yes Bank asking them not to transfer or exercise right in shares pledged with them by Essel Group (Dish TV). The bench further stayed the proceedings of the FIR filed against them by Essel Group.

When the hearing of the case commenced, Dr. Abhishek Manu Singhvi, Senior Advocate, appearing for Yes Bank submitted that a loan of Rs. 5270 crores was disbursed to Essel group between 2016-2018. He submitted that Essel group pledged certain shares in lieu of the loan. It was submitted in between May-June 2020 the pledge was invoked and a notice was sent to RBI, BSE and NSE.

Singhvi argued that in June 2020 Essel Group filed a police complaint stating that they were fraudulently induced to borrow the said sum and that Yes Bank cannot act on the pledge. The complaint was converted to FIR on 12th September 2020 and subsequently the IO sent a communication to Yes Bank asking them not to transfer or exercise rights in the shares pledged to them. Singhvi submitted that the Extraordinary General Meeting of Dish TV (a company of ESSEL group) was to be held today and has been postponed owing to the communication from the IO.

It was argued that when communication of IO was challenged before the Allahabad High Court, the court declined to interfere as there was an alternate remedy available with them before the magistrate.

Kapil Sibal, Senior Advocate, appearing for Essel Group while seeking time to file a counter to YES Bank’s SLP submitted that there is no genuine loan or a valid pledge of shares. He also sought for a detailed hearing in order to demonstrate his case.

The court on hearing the parties held that it should prima facie protect the interest of the petitioners in the share and that it appears that the IO’s notice is beyond the jurisdiction. The court also orally noted that if such activities by the police is left unchecked, it will lead to a lot of negative consequences.

The court stayed the operation of the notice issued by the IO and also any further proceedings of the FIR. The court further granted a time of 3 weeks for ESSEL to file their reply in the case.

 

Cause title: Yes Bank Ltd Vs State of UP