Supreme Court appoints ex-CJI UU Lalit as mediator in Rs 500 crore RAKIA dispute

The Supreme Court appointed former CJI U U Lalit as sole mediator to resolve a dispute over enforcement of a UAE court decree of about Rs 500 crore in favour of RAKIA against industrialist Nimmagadda Prasad in the Vanpic project case

New Delhi: The Supreme Court on Monday appointed former Chief Justice of India U U Lalit as the sole mediator to amicably resolve the dispute over the execution of a money decree of Rs 500 crore passed by a UAE court in favour of Ras Al Khaimah Investment Authority (RAKIA) and against Hyderabad-based industrialist Nimmagadda Prasad.

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).

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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.

On Monday, a bench comprising Chief Justice Surya Kant and Justice Joymalya Bagchi was informed by senior advocate Gopal Subramanium, appearing for Prasad, that the industrialist has deposited Rs 125 crore as cash security as directed earlier.

The senior lawyer also said that the original title deeds of a 37-acre land parcel in Telangana have been submitted in the court. He also added that the land parcel is free from encumbrances.

Subramanium said his client was willing to undergo mediation for an amicable settlement of the case.

Senior advocates Abhishek Singhvi and Gopal Sankaranarayanan, appearing for the foreign firm, said they were agreeable to time-bound mediation to resolve the dispute with a condition that the status quo with regard to the assets of Prasad be maintained and no third party rights be created till the conclusion of mediation.

Taking note of the consent of both parties, the CJI appointed Justice Lalit as the sole mediator and requested him to undertake the mediation for expeditious disposal of the case.

The bench asked Justice Lalit to undertake the mediation exercise in hybrid mode to enable the representatives of RAKIA to appear through video conferencing, keeping in mind the security situation in the Gulf region.

Clarifying its earlier order, the CJI said the Hyderabad-based businessman can use the funds for running “day-to-day affairs” of his firms, including payment of salaries, and will not alienate immovable properties without prior nod of the court.

The bench said that Justice Lalit may consider hearing related parties while undertaking the mediation exercise.

It said Justice Lalit will decide his professional fees and other ancillary expenses in consultation with the parties to the litigation.

Earlier, the top court directed Nimmagadda Prasad to deposit Rs 125 crore as 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.

It had 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 took note of the affidavit filed by Prasad in compliance with its February 12 order and analysed the proposal to deposit security worth Rs 600 crore.

“In a purported attempt to honour the observations which this court proposed to issue on the previous date regarding furnishing security comprising Rs 600 crore 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 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 along with an affidavit of undertaking that the land is free from all encumbrances except that it was earlier attached by the Directorate of Enforcement (ED) 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 Subramanium 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 had directed.

It said the interim arrangement regarding the security shall be without prejudice to the rights of the parties.