Supreme Court Modifies Order Allowing Unconditional Withdrawal of Funds in Jermyn Capital Case (17 May 2023)

Date of the Judgment: 17 May 2023
Citation: 2023 INSC 5472
Judges: Hon’ble Mr. Justice Krishna Murari and Hon’ble Mr. Justice Sanjay Kumar
Can an order of the Supreme Court be modified to allow for the unconditional withdrawal of funds, previously subject to a bank guarantee? The Supreme Court addressed this question in a miscellaneous application concerning M/S. Jermyn Capital LLC Dubai. The court modified its previous order to permit the appellant to withdraw the funds along with accrued fixed deposit interest, removing the earlier condition of furnishing a bank guarantee. This order was delivered by a bench comprising of Hon’ble Mr. Justice Krishna Murari and Hon’ble Mr. Justice Sanjay Kumar.

Case Background

The case involves a dispute over funds amounting to ₹38.52 crore. Initially, the appellant, M/S. Jermyn Capital LLC Dubai, was required to furnish a bank guarantee to withdraw these funds. This requirement was part of earlier orders passed by lower courts. The appellant had sought the release of these funds. The funds were placed in fixed deposits to earn interest, as directed by the Securities Appellate Tribunal and the Supreme Court in earlier orders. The appellant, through this application, sought a modification of the Supreme Court’s order dated 09.05.2023 which had allowed the appeal but had not addressed the fact that the funds were in fixed deposit earning interest.

Timeline

Course of Proceedings

The appellant, M/S. Jermyn Capital LLC Dubai, filed a miscellaneous application seeking modification of the Supreme Court’s order dated 09.05.2023. The earlier order had allowed the appeal and permitted the withdrawal of ₹38.52 crore with 4% simple interest, but it did not take into account the fact that the funds were in fixed deposits earning interest at a higher rate. The appellant brought to the court’s attention previous orders from the Securities Appellate Tribunal and the Supreme Court, which had directed the funds to be placed in fixed deposits. Consequently, the Supreme Court considered the application for modification.

Legal Framework

There are no specific legal provisions discussed in the judgment. The case primarily deals with the modification of a court order based on the factual circumstances of the case and previous orders.

Arguments

The appellant argued that the Supreme Court’s order dated 09.05.2023 should be modified to reflect the fact that the funds were not just lying idle but had been placed in fixed deposits as per the directions of the Securities Appellate Tribunal and the Supreme Court. The appellant contended that they should be allowed to withdraw the funds along with the actual interest earned on the fixed deposits, not just a flat 4% simple interest. The appellant relied on the previous orders of the Securities Appellate Tribunal dated 08.05.2006, and the Supreme Court orders dated 05.12.2008, 14.05.2009 & 16.11.2009 to support their claim. The Central Bureau of Investigation (CBI) did not make any specific arguments against the modification.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the order dated 09.05.2023 should be modified to allow the appellant to withdraw the funds along with the actual fixed deposit interest accrued, rather than just the 4% simple interest as initially ordered.

Treatment of the Issue by the Court

Authorities

The court considered the following authorities:

• Order dated 08.05.2006 of the Securities Appellate Tribunal.
• Orders dated 05.12.2008, 14.05.2009 & 16.11.2009 of the Supreme Court of India.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the funds in question were not simply held in an account but were specifically placed in fixed deposits to accrue interest, as per earlier orders of the Securities Appellate Tribunal and the Supreme Court itself. The court recognized that the appellant was entitled to the actual interest earned on these deposits, rather than a flat 4% simple interest. This consideration of the actual financial status of the funds was a key factor in the modification of the order.

The court’s reasoning was based on the need to rectify the previous order to accurately reflect the financial status of the funds. The court noted that the funds were not simply held but were in fixed deposits, earning interest. Therefore, the modification was necessary to ensure that the appellant received the full benefit of the interest earned on these deposits. The court stated, “As a consequence, the appellant shall be permitted to unconditionally withdraw the aforesaid amount along with the fixed deposit interest amount that has accrued thereon.” This modification ensures that the appellant receives the actual financial benefit from the fixed deposits, aligning with the purpose of the previous orders.

The court’s decision was unanimous, with both judges concurring on the modification. There were no dissenting opinions.

Key Takeaways

• The Supreme Court can modify its orders to correct factual inaccuracies and ensure justice.
• When funds are held in fixed deposits, the actual interest earned should be considered in any withdrawal orders.
• Previous orders of courts and tribunals are crucial in determining the appropriate course of action.

Directions

The Supreme Court directed that the appellant be permitted to unconditionally withdraw the amount along with the fixed deposit interest amount that has accrued thereon.

Development of Law

The ratio decidendi of this case is that when funds are held in fixed deposits as per court orders, any subsequent withdrawal order must consider the interest accrued on those deposits and allow for the withdrawal of the full amount including the interest. This case clarifies that orders can be modified to reflect the actual financial status of the funds and ensure that the parties receive the full benefit of their investments.

Conclusion

The Supreme Court modified its earlier order to allow M/S. Jermyn Capital LLC Dubai to unconditionally withdraw the funds along with the fixed deposit interest accrued. This decision was based on the fact that the funds were specifically placed in fixed deposits as per previous orders of the Securities Appellate Tribunal and the Supreme Court. The modification ensures that the appellant receives the full financial benefit from the interest earned on these deposits.