The Supreme Court on Tuesday stayed the notice issued by Uttar Pradesh police freezing Yes Bank's voting rights at Dish TV's annual general meeting. The top court bench led by Justice DY Chandrachud took exception to the police action and stayed the investigation in this matter.
The court's decision grants relief to Yes Bank which would otherwise be unable to vote as a shareholder at Dish TV's Annual General Meeting earlier slated for today.
"We cannot permit police officers sitting in Gautam Buddha Nagar to freeze voting rights of a shareholder," the bench said. "Police officers have done something which even company law tribunal has not done (freeze shares and voting rights). This will only lead to lawlessness in the country," Justice Chandrachud observed.
"It is short-circuiting judicial orders by using the police. We can't allow this; it's like taking the police and restraining someone from exercising voting rights. Using criminal proceedings to achieve results in civil proceedings will be dangerous. Look at the overall consequence," the bench observed.
The top court's decision came on a plea filed by Yes Bank challenging the November 4 police notice freezing its voting rights at Dish TV's AGM. Senior Advocate AM Singhvi, representing the Yes Bank, had mentioned the matter on Monday morning seeking an urgent hearing ahead of the AGM that was scheduled for today. However, in light of the scheduled hearing, Dish TV postponed its AGM by a month.
Supreme Court's order today is a significant development in the legal dispute over voting rights between Yes Bank and Dish TV. The case before the top court not only decides the company's fate but will also impact other cases where the banks have gone up against defaulters for control over collateral.
In May 2020, Yes Bank acquired a 24.5 % stake (or Rs. 44.53 crores) of pledged shares in Jawahar Goel-led Dish TV as part of collateral pledged by his brother and Essel group promoter Subhash Goel.
However, in August 2020 Subhash Chandra filed an FIR against Yes Bank and its former promoter Rana Kapoor accusing them of fraud while brokering a deal between Videocon D2H and Dish TV.
Challenging the notice, Yes Bank questioned the validity of the police notice freezing its right to exercise its option to act on the shares. Yes Bank termed the notice as an "extraordinary ingenious misuse of the criminal law", and further alleged that the notice freezing its voting rights was strategically timed to prevent the bank, the largest shareholder, from voting in the annual general meeting.
Yes Bank alleged that Dish TV orchestrated the issuance of the notice in a timely fashion to prevent the bank from voting at the AGM since the outcome would result in a change of board of directors.
Essel Group's Subhash Chandra challenged Yes Bank's contention alleging that Dish TV's loan transaction was not genuine and that they were pressured into it in order to "clean the books of Yes Bank".