[Dish TV AGM] Using police to achieve results in civil matters dangerous: Supreme Court stays UP police notice against Yes Bank

The Supreme Court on Tuesday pulled up the Uttar Pradesh Police for issuing notice to Yes Bank in a criminal case to prevent the bank from exercising its voting rights in Dish TV's annual general meeting (Yes Bank Limited v. State of Uttar Pradesh)..A Bench of Justices DY Chandrachud, AS Bopanna and Vikram Nath took strong objection to what it considered as using police and criminal process to achieve results in civil proceedings, observing that short circuiting judicial process using police officers is a dangerous trend which will lead to lawlessness.The Court said that such actions preventing exercise of voting rights in a company is something which even company law tribunal has not done."Police officers have done something which even company law tribunal has not done. This will only lead to lawlessness in the country. It is short circuiting judicial orders by using police officers. We cannot allow this. It is like taking police and restraining someone to exercise voting rights. using criminal process to achieve results of civil proceeding will be dangerous, look at overall consequence," the Bench remarked.It, therefore, stayed the criminal proceedings initiated by police against Yes Bank officials. The Court was hearing an appeal filed by Yes Bank against an order of Allahabad High Court dismissing the bank's plea against the freeze notice issued by Gautam Buddh Nagar Crime Branch preventing it from exercising its voting rights in Dish TV. .The UP Police's Gautam Buddh Nagar Crime Branch had last week issued a notice freezing Yes Bank's voting rights in Dish TV operated by Subhash Chandra's Essel Group.The move by police came on a complaint made by Essel Group accusing its former chief executive, Rana Kapoor, of fraud.Yes Bank had extended a loan facility of ₹5,270 crores to Essel Group against pledge of Dish TV shares in 2016. When there was default, Yes Bank had invoked the shares.Dish TV's annual general meeting (AGM) was scheduled to be held today at 3 pm to seek shareholder's consent for ₹1,000 crore rights issue. The AGM now stands postponed and Senior Advocate Sibal had made a statement that there would be no AGM till the disposal of this case. Yes Bank had initially approached the Allahabad High Court against the freeze by UP police but the High Court had rejected the plea leading to the present appeal before the top court..Senior Advocate Abhishek Manu Singhvi representing Yes Bank, told the Supreme Court that the police involvement in the whole matter is an extraordinary way to halt the voting process of the largest shareholder."As the largest shareholder, Yes Bank in the AGM, will endorse the qualification or we may change or reappoint directors. With this fear and in collusion and fraud, an extraordinary notice was issued on November 5, 2021. This notice by the police to Yes bank and NSDL, under (Section) 102 of CRPC allows police to go after stolen goods and freeze them. Under that we were warned to not act on those shares. This an ingenious way to halt the voting process of largest shareholder," he contended.He also criticised the High Court order for not interfering under Article 226."Writ court hears me on Thursday and at 4.30 pm rises with one word order -'dismissed'. It says alternate remedy under magistrate to be exercised. I don't know why constitution framers called it extraordinary jurisdiction. They should have instead called it pedestrian jurisdiction instead," the Court said..The Court also agreed with Dr. Singhvi. "How has the police inspector passed an injunction order against you," Justice Chandrachud asked."It is nepotism at its worst. The language structure, everything reeks of it. This is extraordinary," Singhvi replied.Senior Advocate Kapil Sibal, appearing for Essel Group, said that the matter is not as simple as was being portrayed."Scheme was I take a loan from Yes Bank to clean the books of Yes Bank. This matter does not look as simple as it is being portrayed. We can file a complete reply to this," said Sibal.The Court said that Essel Group can file its reply but the police proceedings will be stayed in the interim."We cannot permit officers sitting in Gautam Buddh Nagar do such kind of exercise and prevent voting rights," the top court made it clear."Prima facie we are of the view that it would be be necessary to protect interest of petitioner in terms of pledged share. We issue notice and pending further orders there shall be a stay on the notices by Gautam Buddh Nagar police," the Court ordered.