SC stays criminal proceedings, notices to freeze voting rights

New Delhi: The Supreme Court on Tuesday stayed the criminal proceedings in the FIR lodged by Essel Group against the Yes Bank saying it cannot allow the police sitting in Gautam Buddha Nagar in Uttar Pradesh to freeze voting rights of shareholders of a company.

The bench also stayed the operation of two notices issued by Gautam Buddha Nagar police to the stock exchange and the National Securities Depository Limited (NSDL) asking it to not allow any transfer of shares of Essel group held by the bank.

A bench of Justices DY Chandrachud, AS Bopanna, and Vikram Nath said, Using criminal procedure to achieve results of civil proceedings will have a dangerous consequence. Tomorrow, anybody will catch a police officer and stall the voting of a shareholder. This will be the easiest thing to do .

The bench said, it cannot allow the police sitting in Gautam Buddha Nagar to freeze voting rights of shareholders of a public listed company. Here, the police have done something which the Company Law Tribunal won't do .

The bench said that it cannot allow this kind of act of police to happen in the country and that is why Article 226 of the constitution is a very valuable right under which the High Court can interfere in these kinds of cases.

The top court said, We don't want this kind of power to be given to the police or they will start interfering in corporate matters. This is short-circuiting the judicial process by getting orders from police officers. This we will

not allow.

It ordered, Prima facie, at this stage we are of the view that it would be necessary to protect the interest of the petitioner in respect of the pledged shares and the pledge having been invoked. Hence, we issue notice and direct that pending further orders, there shall be the stay of the operation of the impugned notices. Also, there shall be a stay of further proceedings in respect of the impugned FIR .