In a significant development concerning the enforcement of foreign decrees in India and the interface between insolvency, mergers, and execution proceedings, the Supreme Court of India has extended its earlier order freezing the assets of Matrix Pharma, Tianish Laboratories, businessman Nimmagadda Prasad, and his family members in execution proceedings initiated by the Ras Al Khaimah Investment Authority (RAKIA).
A three-judge Bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi, and Justice Vipul M Pancholi refused to vacate its status quo order dated October 15, 2025, thereby continuing restrictions on alienation of both corporate and personal assets of the respondents.
The case arises from RAKIA’s efforts to enforce a foreign money decree passed by a UAE court against Prasad and entities linked to him.
Background: RAKIA’s Investment and UAE Court Decree
The dispute traces its origins to RAKIA’s investments in the RAKIA Free Zone Project in Andhra Pradesh (now Telangana), made over a decade ago in partnership with entities associated with Nimmagadda Prasad, including Matrix Enport Holdings and IQuest Enterprises.
RAKIA, a sovereign investment arm of the Emirate of Ras Al Khaimah, later alleged that it had been induced into making large-scale investments through:
- Misrepresentation, and
- Diversion of funds,
resulting in losses exceeding USD 300 million.
On February 2, 2022, the Ras Al Khaimah Civil Major Circuit Court (UAE) passed a decree holding Prasad and other associated parties liable for damages claimed by RAKIA.
Execution Proceedings in India and Contempt Petitions
Following the UAE judgment, RAKIA initiated execution proceedings before a commercial court in Hyderabad, seeking enforcement of the foreign decree under Indian law.
Alongside execution, RAKIA also moved contempt petitions before the Telangana High Court, alleging that the judgment debtors had violated status quo orders restraining alienation of assets during the pendency of enforcement proceedings.
These proceedings were still pending when subsequent corporate restructuring steps were undertaken by entities linked to Prasad.
Matrix–Tianish Merger and NCLT’s Conditional Approval
During the pendency of execution and contempt proceedings, Matrix Pharma and Tianish Laboratories filed a joint petition before the National Company Law Tribunal (NCLT), Hyderabad, seeking approval of their amalgamation under Section 230 of the Companies Act, 2013.
On March 10, 2025, the NCLT sanctioned the merger but imposed two critical safeguards, directing that:
- The transferee company shall not alienate or encumber any of its assets without prior approval of the Telangana High Court, and
- The company must seek leave before creating any charge over its assets.
These restrictions were imposed after the NCLT was informed of RAKIA’s pending execution proceedings and the High Court’s status quo directions.
NCLAT Removes Asset Restrictions
Matrix and Tianish challenged the NCLT’s restrictions before the National Company Law Appellate Tribunal (NCLAT), Chennai Bench.
The NCLAT expunged the asset-restraint conditions, holding that:
- The companies were not parties to RAKIA’s execution or contempt proceedings;
- Contempt proceedings are in personam and cannot bind third parties; and
- Under Section 230, an amalgamation concerns only the transferor and transferee companies, and outsiders cannot object unless directly impacted by the scheme.
This order effectively removed safeguards that prevented alienation of assets during enforcement of the foreign decree.
Supreme Court’s Intervention and Criticism of NCLAT
RAKIA moved the Supreme Court challenging the NCLAT order, contending that:
- The merger could be used as a device to dissipate or shield assets from execution;
- The companies were not unconnected third parties but part of a corporate network controlled by Prasad’s family; and
- Removal of restrictions would frustrate enforcement of the foreign decree in India.
On an earlier hearing, the Supreme Court had pulled up the NCLAT Chennai Bench for passing the order without issuing notice to affected parties, particularly when serious enforcement proceedings were pending.
Supreme Court Extends Asset Freeze and Maintains Status Quo
In its latest order, the Supreme Court refused to vacate the status quo order and effectively revived the asset restraints originally imposed by the NCLT.
The Court directed that the status quo shall continue, extending to:
- Corporate assets of Matrix Pharma and Tianish Laboratories, and
- Personal properties of Nimmagadda Prasad, his daughter Swathi Gunupati Reddy, and his son-in-law Venkata Pranav Reddy Gunupati.
This ensures that no assets—corporate or personal—are alienated or encumbered while enforcement proceedings remain pending.
Notice Issued in RAKIA’s Contempt SLP
The Supreme Court also issued notice in a Special Leave Petition filed by RAKIA challenging the Telangana High Court’s dismissal of contempt proceedings against:
- IQuest Enterprises,
- Swathi Reddy,
- Viatris Inc, and
- Nimmagadda Prasad.
These contempt proceedings arise from alleged violations of asset-restraint directions during execution of the UAE decree.
Legal Significance of the Ruling
The Supreme Court’s decision has wide legal implications:
1. Enforcement of Foreign Decrees
The order reinforces India’s commitment to effective enforcement of foreign judgments, particularly where allegations of asset dissipation are involved.
2. Limits on Corporate Restructuring During Execution
The ruling sends a clear message that mergers and amalgamations cannot be used to defeat execution proceedings, especially when companies are part of a closely held corporate structure.
3. Supervisory Role Over NCLAT
The Court’s intervention underscores that tribunals must exercise caution when dealing with restructuring applications that may affect pending judicial proceedings.
4. Personal Asset Protection Removed
By extending the freeze to personal properties of promoters and family members, the Court has acknowledged the relevance of beneficial ownership and control, beyond formal corporate separateness.
Representation Before the Supreme Court
RAKIA was represented by Senior Advocates Abhishek Manu Singhvi and K Vivek Reddy, along with a team of advocates.
The respondents were represented by an array of senior counsel including Kapil Sibal, Mukul Rohatgi, Shyam Divan, Balbir Singh, S. Niranjan Reddy, Atul Nanda, and Ranjit Kumar.
Conclusion
The Supreme Court’s decision to extend the asset freeze in Ras Al Khaimah Investment Authority v. IQuest Enterprises marks a crucial step in preventing abuse of corporate restructuring mechanisms to evade judicial enforcement. By prioritising substance over form, the Court has ensured that foreign decree holders are not rendered remediless due to strategic mergers or asset transfers.
As the enforcement and contempt proceedings continue, the ruling stands as a strong precedent on judicial oversight in cross-border commercial disputes, mergers, and execution of foreign judgments in India.
Also Read
