SC asks businessman to deposit Rs 125 crore, title deeds to 37-acre land in UAE decree row

New Delhi, Feb 26 (PTI) The Supreme Court has directed Hyderabad-based industrialist Nimmagadda Prasad to deposit Rs 125 crore in cash security and submit the original title deeds of a 37-acre land parcel in Telangana in a case stemming from a failed 2008 joint venture to develop ports and an airport in Andhra Pradesh.

Hearing a high-stakes enforcement proceeding arising from a UAE civil judgment in favour of Ras Al Khaimah Investment Authority (RAKIA), and against Matrix Pharmacorp Private Limited and Prasad, the top court granted time to the industrialist to propose an alternative arrangement for the remaining security.

The bench had asked Prasad to furnish a security of Rs 600 crore for hearing his plea against the UAE decree.

The court, on Wednesday, took note of the affidavit filed by Prasad in compliance with its February 12 order and analysed the proposal to deposit the security worth Rs 600 crore.

"In a purported attempt to honour the observations, which this court proposed to issue on the previous date re: furnishing a security comprising Rs 600 crores with the Registry of this Court, the deponent – respondent no.5 has offered the following three assets," the bench noted in the order.

The businessman offered shares and assets allegedly valued at Rs 212 crore, presently attached by commercial courts under orders passed on September 5 and October 6, 2023.

Besides additional cash security of Rs 125 crore, he also offered a 37-acre land parcel at Devarayamjal village in the Medchal-Malkajgiri District, claimed to be worth RS 408 crore.

"As regards the first component of the security, namely, shares and other assets attached by the Commercial Courts, we are not inclined to accept the same. Faced with this, Shri Gopal Subramanium, learned Senior Counsel, representing respondent no.5, seeks more time to submit an alternative proposal. The request is accepted,” the bench said.

On the issue of the 37-acre property, known as Medchal Land, the bench said the original title deeds should be deposited with the registrar of the top court with an affidavit of undertaking that the land is free from all encumbrances except that it was earlier attached by the Directorate of Enforcement and was released subject to furnishing of an indemnity bond.

"In this vein, respondent no. 5 shall be obligated to furnish an affidavit along with an undertaking to the effect that the requisite indemnity bond has been furnished, thereby complying with the release order passed by the Appellate Tribunal under the Prevention of Money Laundering Act,” it said.

On the issue of additional cash security of Rs 125 crore, the bench took note of the statement of senior advocate Gopal Subramanium, appearing for Prasad, that the amount shall be deposited within one week.

"On doing so, the registry is directed to keep that amount in the UCO Bank of the Supreme Court in a high-interest-bearing FDR initially for a period of six months with an auto-renewal facility," the bench directed.

It said the interim arrangement regarding the security shall be without prejudice to the rights of the parties. It fixed the plea for further instructions on March 11.

Earlier, the Ras Al Khaimah Investment Authority (RAKIA), the investment arm of the UAE emirate, had said the firm has been unable to recover a single rupee despite winning at every level of the UAE judicial system, including the Court of Cassation.

"This case reminds one of the Privy Council's statement – the woes of an Indian decree holder start after the date of the decree," senior lawyer Abhishek Singhvi said.

He alleged that Prasad has created a "remarkable web" of 20 companies involving his daughter, Swathi Gunupati Reddy, and son-in-law, Pranav Reddy Gunupati, to shield assets from execution.

RAKIA is seeking to enforce a UAE civil judgment for AED 267,941,374 (approximately Rs 543 crore principal and Rs 643 crore with interest).

The case stems from the ‘Vanpic Project’, a failed 2008 joint venture to develop ports and an airport in Andhra Pradesh. RAKIA alleges that Prasad, in collusion with former RAKIA CEO Khater Massaad, misappropriated USD 120 million intended for the project.

Singhvi detailed a history of alleged fraud, claiming Prasad transferred shares and properties to family members immediately following investigations by the CBI and ED, and after RAKIA initiated legal action.

Specifically, RAKIA pointed to the recent acquisition of API assets from Viatris through Tianish Laboratories and Matrix Pharma, claiming these transactions breached court undertakings and status quo orders.

"What business does he have to weave this web and not deposit a penny?" Singhvi asked, requesting a forensic audit of Prasad’s family-run entities.

Defending the industrialist, a senior advocate argued that the UAE judgment was flawed and unenforceable under Section 13 of the Civil Procedure Code. He contended that the civil decree was based on an in absentia criminal conviction in the UAE, which Prasad did not participate in.

He said RAKIA still holds a 51 per cent stake in the Vanpic project, which includes a land bank of 13,000 acres in Andhra Pradesh.

"The project is in existence. My assets have been attached," the senior lawyer said, adding that the decree does not follow the principles of Indian law regarding causation and damages.

"Why don’t you deposit the decretal amount and then contest? We will not allow this harassment of different platforms and making a mockery of the law of this country. If we are convinced (by RAKIA), it will take five minutes to deliver judgment," the CJI said. PTI SJK SJK NSD NSD