Undertaking Must Be Solemn, Express & Intended To Be Acted Upon: Supreme Court Upholds Dismissal Of Contempt Petition

The Court further clarified that the encashment of security deposited with the Registry would be subject to the outcome of the Execution Proceedings pending before the Commercial Courts of Hyderabad and Ranga Reddy.

The Apex Court was considering the appeals arising out of four different proceedings preferred by the Appellant, Decree Holder, Ras Al Khaimah Investment Authority (RAKIA) against the Judgement Debtor, Respondent i.e., Nimmagadda Prasad (NP), along with other Respondent entities - Matrix Pharmacorp Pvt. Ltd., Tianish Laboratories Pvt. Ltd., IQuest Enterprises Pvt. Ltd. and Moschip Technologies Ltd.

The 3-Judge Bench of Chief Justice Of India Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana stated, "The High Court dismissed the Contempt Petition on the grounds that the statement is not an undertaking; rather, it is a clarificatory statement. The High Court has observed that the submission recorded on 01.05.2024 by the Commercial Court, upon scrutiny, fails to meet the threshold of a clear, unambiguous, and binding undertaking within the meaning of law and that an undertaking must be solemn, express, and intended to be acted upon by the Court."

“The Respondents are directed to furnish an additional Security of Rs. 200 crores with the Registry of this Court, over and above the sums/assets already deposited within two weeks. The encashment of security deposited with the Registry shall be subject to the outcome of the Execution Proceedings pending before the Commercial Courts of Hyderabad and Ranga Reddy”, it ordered.

Factual Background

The Government of Andhra Pradesh entered into a government-to-government contract by way of a Memorandum of Understanding with the Government of RAK for the development of the Vadarevu Port, Nizampatnam Port, an industrial corridor, and an airport in the State of Andhra Pradesh (VANPIC Project). The Appellant, RAKIA, a public entity established under Emiri Decree No. (2) of 2005 and affiliated with the government of Ras Al Khaimah, entrusted funds to NP for investment in the VANPIC project. The appellant claimed that these funds were misappropriated by NP. The Appellant initiated criminal and civil proceedings against NP before the courts of the UAE. The matter before the Apex Court pertained to civil proceedings.

In the Civil Proceedings, before the Ras Al Khaimah Court of First Instance, Civil Plenary Circuit found the Appellant to be a victim of a fraudulent scheme and further directed NP to pay AED 267,941,374 (Rs 543,92,09,892) with interest until the date of payment. During the pendency of the Execution Proceedings, in and around October 2023, the Appellant filed three separate applications for addition of IQuest as a party and addition of its assets and further seeking injunction against the same in the Hyderabad Execution Proceedings. Matrix subsequently acquired Tianish. Pursuant to the merger, the Appellant filed four separate applications for addition of Matrix and Tianish as parties.

When the matter reached the Telangana High Court, the Bench dismissed the Contempt Proceedings on the ground that the statement made by IQuest in its Counter Affidavit before the Commercial Court of Hyderabad was a clarificatory statement and not an undertaking. In related proceedings, Matrix and Tianish had filed a petition under Section 230 of the Companies Act, 2013 seeking sanction of the scheme of amalgamation of Tianish with Matrix (Merger Application). The Appellant filed an Intervention Petition before the NCLT, seeking to intervene in the said Merger Application and objecting to the Scheme and Merger. In 2025, the NCLT allowed the Merger Application. The NCLAT thereafter dismissed the Appeals filed by the Appellant. The Appellant approached the Apex Court aggrieved by such order.

Reasoning

Dealing with the aspect of contempt, the Bench noted that there was no clear-cut undertaking by IQuest qualifying for an act of contempt under the Contempt of Courts Act and there could not be any contempt as against other entities as well. Considering that neither Matrix nor Viatris nor Moschip were impleaded yet before the Commercial Courts, the Bench stated, “The role of IQuest was only a “back-stop” qua the termination fee, which was later released and, therefore, the statement made by IQuest before the Commercial Court did not have the direct effect of inviting contempt proceedings as far as Matrix, Viatris and Moschip are oncerned. For this reason and for other reasons as stated above, we do not intend to interfere with the finding of the High Court that there is no contempt made out by the Respondent entities.”

The Bench found merit in the Appellant's contention that the Respondent NP was attempting to camouflage his assets and was engaged in dissipating them with a view to defeating the execution of the decree. “If the status quo order is vacated without any condition for appropriate security, it would amount to obstruction of justice. The Appellant has thus made out a case for imposing a further deposit on the Respondents to enable the Appellant to execute the money decree”, it added.

Examining the statement made by IQuest that it had no intention to go ahead with the acquisition of Viatris based on which the High Court passed the subsequent orders, the Bench noted that the said transaction was effectuated on their own admission through another process of Matrix acquiring Tianish by making IQuest to act as “back-stop” qua the termination fee.

As per the Bench, this act might not have amounted to an act of contempt of court, but it would have given rise to an apprehension that the interest of the Appellants would not be secured in case these transactions were not prohibited or the interest of the decree holder was not secured adequately. The Bench was of the view that the Statement made by IQuest before the Commercial Court, Hyderabad in its Counter Affidavit could not be treated as an unconditional undertaking. Thus, the findings of the High Court that the statement did not invite a contempt action were upheld.

The Bench further noticed that the present value of the decree inclusive of interest till July 23, 2026 was a sum of Rs.949.96 crore, out of which NP had been able to provide security to the extent of Rs.231.70 crore and also deposited title deeds of Medchal Land, which the Appellant valued approximately as Rs 150 crore. “In the interest of justice, subject to the proper valuation by the Executing Court in the pending proceedings, we make a rough guesstimation value of the Medchal Land at INR 250 crores for the purposes of the present proceedings. We hasten to add that the value of the Medchal Land and the appropriation will be subject to the valuation and further variation of orders passed in the Execution Proceedings", it stated.

The Bench thus ordered that the Respondents (NP and Respondent entities) would be jointly and severally liable to furnish an additional Security of Rs 200 crore with the Registry within two weeks, over and above the sums/assets already deposited. “The deposits will be subject to the outcome of the Execution Proceedings pending before the Commercial Courts of Hyderabad and Ranga Reddy”, it added.

The Bench disposed of the appeal by directing the Commercial Court, Hyderabad, and the Commercial Court, Ranga Reddy to take up the main Execution Petition along with all applications expeditiously and decide the same at the earliest within a period of four months.

Cause Title: Ras Al Khaimah Investment Authority v. Matrix Pharmacorp Private Limited & Anr. (Neutral Citation: 2026 INSC 932)

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