'Police Preventing Transfer Of Shares? We Can't Allow This': Supreme Court Stays UP Police Notices To Yes Bank

The Supreme Court on Tuesday reprimanded the Uttar Pradesh Police for issuing Cr. P. C. section 102 notice to Yes Bank in respect of shares allegedly pledged by Dish TV and injuncting it from transferring the same or exercising its voting rights at the latter's AGM.The bench of Justices D. Y. Chandrachud, A. S. Bopanna and Vikram Nath was hearing Yes Bank's SLP against the November 25 order of the Allahabad High Court dismissing the bank's writ petition against an FIR and the consequent Section 102 notices. The High Court said that the disputed facts cannot be examined under Article 226, that the petitioner has alternative remedies and that it is not inclined to exercise its writ jurisdiction to stifle a legitimate investigation.On Tuesday, the bench recorded that the principal issue which has been canvassed in the SLP, which arises from a judgment and order of the division bench of the High Court of Judicature at Allahabad of November 25, is that notice was issued under section 102 of the Cr. P. C. by the second respondent, the investigating officer of the crime branch in the Police Commissionerate, G. B. Nagar Greater Noida, and the notice is beyond jurisdiction.The bench further recorded that Senior Advocate Dr Abhishek Manu Singhvi, for the petitioner, submits that a loan of Rs. 5,720 crores was disbursed to the Essel group and its sister concerns between 2016 to 2018; that a pledge of Rs. 44.53 crores approximately was invoked following which, between May and July, 2020, intimation was furnished to the BSE, NSE and RBI; that the invocation of the pledge was sought to be interdicted in civil proceedings which have been since withdrawn; a complaint was lodged on June 22, 2020 by the third respondent, complaining that the borrowers have been induced or pressurised to take loans; that the FIR on the basis of the complaint under sections 420, 467, 468, 409, 120 B, 34 of the IPC was registered on September 12, 2020; that the AGM of the Company 'Dish TV' was to take place on November 30, 2021 which was deferred."In the above backdrop, it has been submitted that a notice under section 102 which has been issued by the second respondent, directing the petitioner not to transfer the 44.53 crore shares or to exercise rights in respect of the shares 'till completion of investigation or further orders' is beyond jurisdiction and manifestly there has been a misuse of criminal process to restrain the petitioner from exercising its rights under the pledged shares", the bench noted."The Allahabad High Court however dismissed the petition on the ground that there is an alternative remedy under section 451 and 457 of the Cr. P. C. Senior advocate Kapil Sibal, for the third respondent on caveat, while seeking an opportunity to file a counter affidavit, submitted that there is neither a genuine loan transaction nor a valid pledge of shares in favour of the petitioners. He submitted that given an opportunity to do so, it would be possible to demonstrate before this court that the order of the second respondent does not suffer from a want of jurisdiction, having regard to the provisions of Section 102", the bench observed."How could the police inspector pass an injunction against you?", expressed the bench.Justice Chandrachud also asserted, "We can't permit police officers sitting in Gautam Buddha Nagar to do this kind of an exercise- preventing voting rights on shares? Restricting transferring of shares? The police officer has done something which even the Company Law Tribunal has not done. What kind of state of affairs would result if this happens? We cannot allow this in the country. That is why 226 is a very valuable right- To interfere in these kinds of cases!""We don't want to give this kind of power to the police. They will start interfering in other public limited companies. Short-circuiting the judicial process by getting orders from police officers? This we will not allow! That would be the easiest thing to catch hold of a police officer and restrain a share-holder from the company from exercising voting rights and transferring shares! Using the criminal process to achieve results which you ought to take recourse to a civil proceeding? Very dangerous! Look at the overall consequences if you allow police officers to do these things!", continued Justice Chandrachud.Then, the bench proceeded to dictate its order- "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, the pledge having been admittedly invoked. Hence, we issue notice and direct that pending further orders, there shall be a stay of the operation of the impugned notices. Also, there shall be a stay of further proceedings in respect of the FIR. The counter affidavit be filed within a period of three weeks"Senior Advocate Abhishek Manu Singhvi, for Yes Bank, had urged, "Can 102 be used in this manner, for a loan dispersal which started in 2016 and...

'Police Preventing Transfer Of Shares? We Can't Allow This': Supreme Court Stays UP Police Notices To Yes Bank

Mehal Jain

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