The Supreme Court has appointed former CJI U.U. Lalit as the sole mediator to resolve a Rs 500 crore foreign decree dispute between Ras Al Khaimah Investment Authority and businessman Nimmagadda Prasad. The case relates to the failed Vanpic Project, where RAKIA alleges misappropriation of project funds.
The Supreme Court of India on Monday appointed former Chief Justice of India U.U. Lalit as the sole mediator to help resolve a long-running dispute involving the enforcement of a foreign money decree worth nearly Rs 500 crore. The dispute arises from a judgment passed by a court in the United Arab Emirates in favour of the Ras Al Khaimah Investment Authority (RAKIA) against Hyderabad-based industrialist Nimmagadda Prasad.
RAKIA is seeking enforcement in India of a UAE civil court judgment for AED 267,941,374. The case has its roots in the controversial Vanpic Project, a 2008 joint venture that aimed to develop ports and an airport in Andhra Pradesh but eventually failed.
According to RAKIA, the dispute emerged after Prasad allegedly misappropriated funds meant for the project. The investment authority claims that Prasad, along with former RAKIA CEO Khater Massaad, misused around USD 120 million that had been allocated for the development venture.
The matter came up before a bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi. During the hearing, senior advocate Gopal Subramanium, appearing for Nimmagadda Prasad, informed the court that his client had complied with earlier directions by depositing Rs 125 crore as cash security.
Subramanium also told the court that the original title deeds of a 37-acre land parcel in Telangana had been submitted before the court registry. He further clarified that the property was free from encumbrances.
Importantly, the senior lawyer stated that Prasad was open to mediation in order to resolve the dispute amicably.
On the other hand, senior advocates Abhishek Singhvi and Gopal Sankaranarayanan, representing the foreign investment authority, told the court that RAKIA was also willing to explore mediation. However, they requested that the mediation be conducted within a fixed timeframe and that the status quo regarding Prasad’s assets be maintained until the process is completed. They also insisted that no third-party rights should be created in the meantime.
Taking note of the agreement between both sides, the Supreme Court decided to refer the matter for mediation and appointed Justice U.U. Lalit as the sole mediator. The bench requested the former Chief Justice to conduct the mediation process so that the dispute could be resolved as quickly as possible.
The court also directed that the mediation may be conducted in hybrid mode. This would allow representatives of RAKIA to participate through video conferencing, particularly considering the current security situation in the Gulf region.
While clarifying an earlier order, the Chief Justice stated that the Hyderabad-based businessman would be allowed to use funds for business operations. The court said he could utilise money for the “day-to-day affairs” of his companies, including payment of salaries. However, the bench made it clear that Prasad would not be allowed to sell or transfer any immovable property without obtaining prior permission from the Supreme Court.
The bench further observed that Justice Lalit may also hear related parties while conducting the mediation process. It added that the former Chief Justice would decide his professional fees and other ancillary expenses in consultation with both sides involved in the litigation.
The dispute over security arrangements had also been discussed in earlier hearings. The Supreme Court had directed Prasad to deposit Rs 125 crore in cash security and submit the original title deeds of the 37-acre land parcel located in Telangana as part of the security.
The case relates to the failed 2008 project aimed at developing ports and an airport in Andhra Pradesh. The court had earlier allowed Prasad time to propose an alternative arrangement for the remaining security amount.
Previously, the bench had directed the industrialist to furnish security worth ₹600 crore in order for the court to hear his challenge against the UAE court decree.
During the proceedings, the Supreme Court examined an affidavit filed by Prasad in compliance with its February 12 order, which required him to submit a proposal explaining how he intended to provide security worth Rs 600 crore.
The court recorded the proposal placed before it by the businessman. The order noted,
“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 crore with the Registry of this Court, the deponent – respondent no.5 has offered the following three assets,”.
As part of the proposal, Prasad had offered shares and other assets valued at around Rs 212 crore. However, these assets had already been attached by commercial courts through orders passed on September 5 and October 6, 2023.
In addition to this, he offered Rs 125 crore as additional cash security and a 37-acre land parcel located in Devarayamjal village in Medchal-Malkajgiri district, which he claimed was worth approximately Rs 408 crore.
The Supreme Court, however, refused to accept the first component of the proposed security. The bench explained its position by stating,
“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,”.
Regarding the 37-acre property, commonly referred to as the Medchal Land, the court directed that the original title documents must be deposited with the registry of the Supreme Court. The bench also required Prasad to submit an affidavit confirming that the land was free from encumbrances.
The court clarified that the land had previously been attached by the Directorate of Enforcement, but it was later released after Prasad furnished an indemnity bond.
The order stated,
“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,”.
With regard to the additional cash security, the Supreme Court took note of the assurance given by Subramanium that Rs 125 crore would be deposited within one week.
The court then directed the registry to invest the deposited amount in a fixed deposit. The bench said,
“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,”.
At the same time, the court clarified that the interim security arrangement would not affect the rights and legal claims of either party in the dispute. The bench therefore observed that
“the interim arrangement regarding the security shall be without prejudice to the rights of the parties.”
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