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The Supreme Court on Tuesday (September 1) held that a clarificatory statement made before a court cannot be treated as an unconditional undertaking for the purpose of contempt proceedings unless it constitutes a solemn, express and unequivocal commitment intended to be acted upon by the court.

A bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana upheld the Telangana High Court's decision declining to initiate contempt proceedings against IQuest Enterprises Pvt. Ltd., observing that the statement made by IQuest regarding its decision not to proceed with an acquisition was merely clarificatory in nature.

“The Statement made by IQuest before the Commercial Court, Hyderabad in its Counter Affidavit as recorded in the order dated 01.05.2024, cannot be treated as unconditional undertaking and hence the findings of the High Court that the statement does not invite a contempt action is upheld…”, the Court said.

The judgment arose from execution proceedings initiated by Ras Al Khaimah Investment Authority (RAKIA) to enforce a foreign decree against Hyderabad-based businessman Nimmagadda Prasad (NP), with the decretal amount having risen to approximately ₹950 crore, including interest. During the proceedings, RAKIA sought to implead IQuest Enterprises Pvt. Ltd. and sought protective orders in respect of its assets.

The controversy centred on IQuest's proposed acquisition of the API business of Viatris. RAKIA alleged that the proposed transaction was part of an attempt to frustrate the execution of the foreign decree and contended that IQuest had violated an undertaking allegedly given before the Commercial Court that it would not proceed with the acquisition.

In its counter-affidavit before the Commercial Court, IQuest had stated that “it was initially interested in the acquisition of Viatris; however, subsequently IQuest has decided not to go ahead.”

The Commercial Court recorded the statement and closed RAKIA's application seeking an injunction against IQuest.

RAKIA subsequently alleged that the statement constituted an undertaking to the court, and that subsequent transactions involving Matrix and other entities amounted to a breach of that undertaking. It consequently initiated contempt proceedings against IQuest and its stakeholders before the Telangana High Court.

The High Court rejected the contempt plea, holding that IQuest's statement was merely clarificatory in nature and did not constitute a binding undertaking. Aggrieved by the decision, RAKIA approached the Supreme Court.

The issue before the Court was whether a statement made by a party in its counter-affidavit, indicating that it had decided not to proceed with a particular transaction, could subsequently be treated as a binding undertaking whose breach would amount to contempt of court.

Answering in the negative, the judgment authored by Justice Mohana observed that for treating a statement an undertaking for the purpose of contempt jurisdiction, it must be solemn, express, and intended to be acted upon by the Court. The Court cited its 1980's judgment of Babu Ram Gupta vs Sudhir Bhasin & Anr., where it was observed that “if there was an undertaking given by the Counsel on behalf of his client the undertaking should be carefully construed to find out the extent; and nature of the undertaking actually given by the person concerned. It is not open to the Court to assume an implied undertaking when there is none on the record.”

Applying the law, the Court found that IQuest's statement did not amount to a binding undertaking.

The Court observed that the statement merely conveyed that IQuest had initially been interested in acquiring the Viatris business but had subsequently decided not to proceed with the acquisition.

The statement, therefore, did not contain an express promise to the court that IQuest would refrain from the transaction in the future under all circumstances.

The Court held that it “cannot be treated as a firm conviction to qualify as an undertaking” and was instead “merely a clarificatory statement.”

“…we are in agreement with the findings of the High Court. The Statement made by IQuest before the Commercial Court, Hyderabad in its Counter Affidavit as recorded in the order dated 01.05.2024, cannot be treated as a firm conviction to qualify as an undertaking in terms of Babu Ram Gupta (supra) and Patanjali Ayurved Ltd., In re. (Supra). It is merely a clarificatory statement. All that is said by the IQuest was that at that point in time it had decided not to go ahead with the acquisition of Viatris.”, the Court said.

Cause Title: RAS AL KHAIMAH INVESTMENT AUTHORITY VERSUS MATRIX PHARMACORP PRIVATE LIMITED & ANR.

Citation : 2026 LiveLaw (SC) 879

Click here to download judgment

Appearance:

For Appellant(s) : Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. Gopal Sankaranarayanan, Sr. Adv. Dr. Rishab Gupta, Adv. Mr. Rishabh Kapur, AOR Mr. Siddharth Seem, Adv. Mr. Siddharth Venugopal, Adv. Mr. Tushar Srivastava, Adv.

For Respondent(s) :Mr. Mukul Rohatgi, Sr. Adv. Mr. Shyam Divan, Sr. Adv. Mr. S. Niranjan Reddy, Sr. Adv. Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Dama Seshadri Naidu, Sr. Adv. Mr. Indranil Deshmukh, Adv. Mr. Raunak Dhillon, Adv. Ms. Saloni Kapadia, Adv. Ms. Aishwarya Gupta, Adv. Mr. Jeezan Riyaz, Adv. Mr. Harshit, Adv. Mr. Shubh Sahai, Adv. Mr. Karan Gandhi, Adv. Ms. Anshula Lahoriya, Adv.  Mr. Abhishek Swaroop, Adv. Ms. Sanya Sud, AOR Ms. Sana Jain, Adv. M/s. Cyril Amarchand Mangaldas, AOR  Mr. Sahil Raveen, AOR Ms. Akhila Palem, Adv. Mr. Raghav Agrawal, Adv. Ms. Dhanya S. Krishnan, Adv. Mr. Dhruv Kohli, Adv. Mr. Balaji Srinivasan, AOR Mr. Ajesh Kumar Shankar, Adv. Mr. Subornadeep Bhattacharjee, Adv. Mr. Amith L.M., Adv. Mr. Balbir Singh, Sr. Adv. Ms. Aanchal Tikmani, AOR Mr. Naman Tondon, Adv. Mr. Nama Tondon, Adv. Mr. Mujadid Gilani, Adv. Mr. Ashutosh Ghade, AOR Ms. Saloni Meshram, Adv. Ms. Preetika Dwivedi, AOR Mr. Abhisek Mohanty, Adv. Mr. Ansh Rajauria, Adv.

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