Supreme Court Orders Rs 200 Crore Additional Security to Protect UAE Decree Worth Rs 950 Crore

A three-judge bench upheld dismissal of contempt proceedings but directed NP and respondent entities to deposit Rs 200 crore more, finding genuine apprehension of asset dissipation.

The Supreme Court on 1 September 2026 disposed of a cluster of appeals filed by Ras Al Khaimah Investment Authority (RAKIA), a UAE public entity, against Nimmagadda Prasad (NP) and a group of companies including Matrix Pharmacorp Pvt. Ltd., Tianish Laboratories Pvt. Ltd., IQuest Enterprises Pvt. Ltd., and Moschip Technologies Ltd. The Court upheld the High Court of Telangana's dismissal of contempt proceedings, finding that a statement made by IQuest before the Commercial Court, Hyderabad did not amount to a legally binding undertaking. At the same time, the Court found a prima facie case that NP was attempting to camouflage and dissipate assets to defeat execution of a Ras Al Khaimah foreign decree now valued at approximately Rs 949.96 crore. It directed NP and the respondent entities to furnish Rs 200 crore in additional security within two weeks, and asked the Commercial Courts to decide the execution petitions within four months.

How a UAE Fraud Decree Became a Multi-Forum Indian Dispute

RAKIA is a public entity established under Emiri Decree No. (2) of 2005, affiliated with the government of Ras Al Khaimah. The Government of Andhra Pradesh had entered into a memorandum of understanding with the Government of RAK for the development of what was called the VANPIC Project — Vadarevu Port, Nizampatnam Port, an industrial corridor, and an airport. RAKIA entrusted funds to NP for investment in this project. RAKIA's case is that NP misappropriated those funds.

In Civil Proceedings bearing No. 60/2020 before the Ras Al Khaimah Court of First Instance, a judgment dated 2 February 2022 found RAKIA to be a victim of a fraudulent scheme and directed NP to pay AED 267,941,374 (approximately Rs 543.92 crore) with interest at 6% per annum from 5 October 2021. This was upheld without modification by the Superior Court — Civil Circuit Court in Cassation by judgment dated 27 December 2022 (the RAK Foreign Decree).

RAKIA contended that the UAE is one of the twelve reciprocating territories for the purposes of Section 44A of the Code of Civil Procedure, 1908, making the RAK Foreign Decree executable in India as if it were a decree of the district court. NP, for his part, submitted prima facie that the decree is not enforceable, though the Commercial Courts had already dismissed his objections under Sections 13(a) to 13(f) read with Sections 44A and 47 of the CPC.

RAKIA filed two execution petitions: CEP No. 19 of 2023 before the Commercial Court, Hyderabad and CEP No. 19/2023 before the Commercial Court of Ranga Reddy. By September and October 2023, the respective courts had attached NP's movable and immovable properties, with RAKIA estimating the total attached assets at USD 25.5 million (approximately Rs 212 crore).

The IQuest Statement and the Contempt Controversy

During the execution proceedings, RAKIA sought to implead IQuest, a company it alleged was part of NP's web of companies, and also applied for an injunction against IQuest's assets. In proceedings on 1 May 2024, the Commercial Court, Hyderabad closed the injunction application after IQuest stated in its counter affidavit that it had decided not to go ahead with the acquisition of Viatris.

RAKIA contended that this statement amounted to an undertaking. It further alleged that IQuest then re-routed the same transaction through Matrix, which subsequently acquired Tianish — a company then wholly owned by Viatris's parent entities. The merger between Matrix and Tianish was approved by the NCLT on 10 March 2025 and confirmed by the NCLAT on 24 April 2025.

Alleging that the merger violated the undertaking and was in contempt of the order dated 1 May 2024, RAKIA filed Contempt Case No. 1378 of 2024 before the Telangana High Court against IQuest and its stakeholders, NP's daughter Swathi Gunupati Reddy, Viatris, and NP. The High Court on 19 July 2024 directed status quo in relation to the transaction in dispute. However, on 7 November 2025, the High Court ultimately dismissed the contempt proceedings, holding that the IQuest statement was a clarificatory statement and not an undertaking, and that contempt proceedings are summary in nature and not the forum for examining complex questions of control, shareholdings, or financial independence through the alter ego theory.

Matrix and Tianish separately challenged their impleadment in the contempt proceedings, and the Division Bench of the High Court stayed the impleadment order dated 2 May 2025 and the contempt proceedings insofar as they related to those companies. Both the stay order and the ultimate dismissal of the contempt proceedings were challenged before the Supreme Court.

What the NCLT and NCLAT Did with the Merger

Before the NCLT, RAKIA had filed Intervention Petition No. 4/2024 seeking to object to the Matrix-Tianish scheme of amalgamation filed under Section 230 of the Companies Act, 2013. The NCLT on 10 March 2025 dismissed the intervention petition but approved the merger while granting two protective conditions: post-merger, the company was not to alienate any assets without prior intimation to and approval of the High Court, and any charge creation over assets required prior intimation to the High Court.

RAKIA appealed to the NCLAT. The respondents also filed a cross-appeal challenging the protective conditions. The NCLAT dismissed RAKIA's appeals and allowed the respondents' cross-appeal, expunging the NCLT's protective directions. RAKIA challenged both outcomes before the Supreme Court through Civil Appeal Nos. 12561-12566 of 2025 and Civil Appeal Nos. 12993-12994 of 2025.

Interim Security Already Secured Before the Final Hearing

This Court had issued notice and passed an interim order on 15 October 2025 maintaining status quo on transfer of or creation of third-party rights in the assets of Matrix, Tianish, and in the personal assets of NP, Swathi Gunupati Reddy, and Venkata Pranav Reddy Gunupati. On 15 January 2026, that interim order was made absolute until final disposal.

By orders dated 12 February 2026 and 25 February 2026, the Court directed NP to furnish security of Rs 600 crore. As of 16 March 2026, NP had deposited Rs 225 crore in cash with the Registry and had also deposited title deeds of approximately 37 acres of land at Devarayamjal Village, Shameerpet Mandal, Telangana (Medchal Land), transferred in the name of Swathi Gunupathi Reddy. NP and the respondent entities valued that land at approximately Rs 400 crore; RAKIA disputed this, valuing it at approximately Rs 150 crore.

On 16 March 2026, the Court modified the status quo to allow the respondents to operate their assets in the normal course of business, provided immovable assets were not disposed of without the Court's leave. The Court also extended status quo to Moschip Technologies on 11 May 2026, limiting it to shares swapping or transfer of shares in Moschip.

A mediation attempt before retired Chief Justice U.U. Lalit did not fructify.

Why the Court Agreed on No Contempt but Found Apprehension of Dissipation

The Court examined the question of whether IQuest's counter affidavit statement qualified as an undertaking capable of attracting contempt. It applied the principles in Babu Ram Gupta v. Sudhir Bhasin & Anr. (1980) 3 SCC 47 and Patanjali Ayurved Ltd., In re v. Union of India (2024) 19 SCC 193. Both decisions require that an undertaking be solemn, express, clear, and unambiguous, and that it must convey to the court a firm conviction that an undertaking is being given.

The Court held that the IQuest statement — to the effect that it had at that point in time decided not to go ahead with the acquisition of Viatris — was merely clarificatory. Babu Ram Gupta had established that a court cannot assume an implied undertaking where none exists on the record, and that contempt power must be exercised with care and circumspection. The Court found these principles applicable and agreed with the High Court's conclusion.

Having found no undertaking by IQuest, the Court held that there could be no contempt as against Matrix, Tianish, Viatris, or Moschip either, since none of them had been impleaded before the Commercial Courts at the relevant time, and IQuest's role had been limited to acting as a back-stop only for the termination fee, which was subsequently released.

However, the Court did not stop there. It observed that the circuitous transactions surrounding the merger, even if not amounting to contempt, demonstrated a pattern. The Court found that NP and his immediate family members had pervasive control over several business entities, and that the timing of various transactions and formation of new companies gave rise to a genuine apprehension that RAKIA could be left with a paper decree. The Court said that the principles of comity of nations required respect for the RAK Foreign Decree and that, absent restraint, the decree would be rendered incapable of execution.

The Court found merit, on a prima facie basis, in RAKIA's contention that NP was attempting to camouflage and dissipate assets. It held that vacating the status quo without appropriate security conditions would amount to an obstruction of justice.

The Security Arithmetic and What Remains Open

The Court set out the security position as of 23 July 2026. The present value of the RAK Foreign Decree including interest was approximately Rs 949.96 crore. NP had provided cash security of Rs 231.70 crore. Title deeds of the Medchal Land had been deposited — valued by NP and the respondent entities at Rs 400 crore, but by RAKIA at approximately Rs 150 crore. In the execution proceedings, RAKIA had secured attachment of NP's assets worth approximately Rs 212 crore.

The Court noted that the Medchal Land's value was disputed and that it had marketability problems according to RAKIA. For the purposes of the present proceedings only, and without prejudice to valuation in the execution proceedings, the Court made a rough estimate of the Medchal Land at Rs 250 crore. On that basis, total security remained short of the decretal value.

The Court directed NP and the respondent entities, jointly and severally, to deposit an additional Rs 200 crore with the Registry within two weeks. All deposits are to remain subject to the outcome of the execution proceedings before the Commercial Courts of Hyderabad and Ranga Reddy.

The question of whether NP's family-controlled entities constitute a unified structure whose assets can be reached to satisfy the decree — and the related issue of piercing or lifting the corporate veil — was expressly left open. The Court clarified that the Commercial Courts are not bound by any opinion expressed in the impugned orders of the High Court, NCLT, or NCLAT on that question, and that all issues are to be decided in accordance with law.

Order

The Supreme Court, by its judgment dated 1 September 2026 in Ras Al Khaimah Investment Authority v. Matrix Pharmacorp Private Limited & Anr., disposed of all appeals with the following directions:

First, the High Court's finding that the IQuest statement before the Commercial Court, Hyderabad as recorded in the order dated 1 May 2024 did not constitute an undertaking capable of attracting contempt action is upheld.

Second, NP and the respondent entities are jointly and severally directed to furnish additional security of Rs 200 crore with the Registry of the Supreme Court within two weeks of the judgment date, over and above the amounts and assets already deposited.

Third, all deposits shall be subject to the outcome of the execution proceedings before the Commercial Courts of Hyderabad and Ranga Reddy.

Fourth, the question of whether NP's family-controlled entities form a unified structure whose assets can be attached to satisfy the decree is left open entirely for adjudication before the Commercial Courts, with parties free to raise all contentions.

Fifth, the NCLAT appeals are disposed of in terms of the above directions, effectively restoring the significance of the NCLT's protective conditions in the context of the security framework now imposed by this Court.

Sixth, the Commercial Court, Hyderabad and the Commercial Court, Ranga Reddy are directed to take up the main execution petitions along with all pending applications expeditiously and decide them within four months.