/2022 INSC 0275/
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NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
I.A. NO.6482 OF 2022
IN 
CIVIL APPEAL NOS. 5395­5398 OF 2019
SECURITIES AND EXCHANGE BOARD 
OF INDIA                     …..APPELLANT (S)
VERSUS
IL AND FS SECURITIES SERVICES
LTD. AND ORS.   .….RESPONDENT(S)
AND IN THE MATTER OF:
DALMIA CEMENT (BHARAT) LTD.   …..APPLICANT/
RESPONDENT NO.5.
                       J U D G M E N T
Vineet Saran, J.
This is an application for modification of the order dated
21.09.2021   passed   in   I.A.   No.84110   of   2021   in   CA.   Nos.5395­
5398 of 2019.

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2. The short dispute in the present matter is with regard to
the   release   of   the   mutual   funds   in   favour   of   the
applicant/Respondent No.5, which are of the value of about 350
crores.
3. Earlier, by order dated 27.08.2019, this Court had given
the   option   to   applicant/Respondent   No.5   to   get   mutual   funds
converted/encashed   and   the   amount   was   to   be   deposited   in   a
fixed deposit account of a nationalized bank.  The said order was
modified   by   this   Court   by   a   detailed   order   dated   16.03.2021
passed   in   I.A.   No.100812/2020   in   C.A.   Nos.5395­5398   of   2019,
the operative portion of which is extracted below:­
“10. Therefore,   we   modify   the   Interim
Order   dated   27.08.2019   to   the   extent   that   the
Mutual   Fund   units   of   Respondent   No.5­
Applicant, kept with the Respondent No.1­ISSL,
be   released   in   favour   of   the   Respondent   No.5­
Applicant by way of transfer of the said Mutual
Fund units and crediting the same in the demat
account of the Respondent No.5­Applicant.  This
is   subject   to   the   Applicant   furnishing   requisite
Bank   Guarantee   of   equivalent   value   as   the
Mutual   Fund   units,   to   the   satisfaction   of   the
Trial   Court.     The   Respondent   No.5­Applicant
shall   comply   with   this   requirement   within   one
month   of   filing   of   application   for   release   of
Mutual   Fund   units   (along   with   a   copy   of   this
order)   before   the   Trial   Court.     The   Trial   Court
shall   also   dispose   of   such   application
expeditiously.     It   is   clarified   that   the   Interim

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Order   dated   27.08.2019   shall   continue   to
operate   as   it   was   as   against   the   other
parties/non­Applicants herein”
4. Another   application,   I.A.   No.84110/2021,   was   filed
by   the   applicant/Respondent   No.5   and   this   Court   further
modified   the   earlier   order   on   21.09.2021,   operative   portion   of
which reads as under:­
“That   instead   of   bank   guarantee   for   a   sum   of
Rs.344.07 crore,   which has been furnished by
applicant/Dalmia   in   terms   of   our   order   dated
16.03.2021,   the   applicant/Dalmia   shall   now
furnish   a   bank   guarantee   for   a   sum   of   Rs.100
crores   and   further   it   shall   furnish   a   security   to
the extent of Rs.300 crores of an unencumbered
asset, the value of which may be duly certified
by   the   Chartered   Accountant­cum­Valuer,   who
have no conflict of interest having regard to the
parties   involved   and   interest   in   the   subject
matter and may be any one of the following. 
1. PricewaterhouseCoopers Private Limited 
2. Ernst and Young 
3. KPMG 
The   bank   guarantee   already   furnished   by
the applicant/Dalmia to the extent of Rs.344.07
crores   shall   stand   discharged   on   the
applicant/Dalmia fulfilling the above conditions
to   the   satisfaction   of   the   Trial   Court.   The
applicant/Dalmia   shall   also   file   an   affidavit
before   this   Court   to   the   extent   that   the   asset,
which   is   being   furnished   as   security,   is   an
unencumbered property.”

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5.  The   present   application,   I.A.   No.6482   of   2022,   has   been
filed by the applicant/Respondent No.5 for a further modification
of   the   order   dated   21.09.2021,   the   prayers   of   which   read   as
under:­
“a. Allow   the   present   Application
seeking modification of order dated 21.09.2021
passed by this Hon’ble Court in IA No.84110 of
2021; and/or
b. Modify   the   order   dated   21.09.2021
passed by this Hon’ble Court in IA No.84110 of
2021   in   Civil   Appeal   No.5395   of   2019   and
direct   the   Chief   Metropolitan   Magistrate   (East),
Karkardooma   Courts,   Delhi   to   return/release
the   original   Bank   Guarantee   No.
OGT0005210053201   dated   23.03.2021   of   the
IndusInd   Bank   Limited   in   the   sum   of   INR
344.07   Crores,   furnished   by   Dalmia   Cement
(Bharat) Ltd./applicant pursuant to order dated
16.03.2021   passed   by   this   Hon’ble   Court,   to
the   Applicant   on   such   terms   and   conditions   as
may be deemed fit by this Hon’ble Court; and
c. Pass   such   other   order(s)   as   this
Hon’ble Court may deem fit.”
6. The   submission   of   Shri   Guru   Krishna   Kumar,   learned
Senior Counsel appearing for applicant/Respondent No.5 is that
subsequent   to   the   passing   of   the   order   dated   21.09.2021,   a
supplementary   chargesheet   has   been   filed   by   the   Economic
Offences   Wing     (hereinafter   referred   to   as   “EOW”),   in   which   a

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clear   finding   against   the   ISSL/Respondent   No.1   and
Allied/Respondent   No.4   has   been   recorded   to   the   extent   it   has
been   found   that   “after   settlement   of   above   trades   by   ISSL   out   of
the   funds   of   Allied,   the   securities   fraudulently   pledged   by   Allied
became   free   from   collateral   and   ought   to   have   been   rightfully
returned   to   its   original/rightful   owner   i.e.   Complainant   and   ISSL
cannot   have   any   claim   of   any   nature   over   the   said   securities”
(Complainant was the applicant/Respondent No.5).
7. It   has   been   further   contended   that   the   Serious   Fraud
Investigation Office (for short ‘SFIO’) reported prima facie finding
that   the   buying   and   selling   of   illiquid   contracts   was   a   pre­
planned   synchronized   activity   wherein   the   exchange   platform
was   used   to   camouflage   a   financial   transaction.     As   such,   the
SFIO   has   also   recorded   a   clear   finding   that   the   ISSL   has
fraudulently   allowed   movement   of   collaterals.     It   has   been
submitted   that   although   the   matter   is   still   under   investigation
but   prima   facie   view   of   EOW   and   SFIO   are   both   clearly   against
the   ISSL/Respondent   No.1   and   Allied   Financial   Services   Pvt.
Ltd./Respondent   No.4.     It   is   contended   that   the
applicant/Respondent No.5 is incurring huge expenses/costs by

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furnishing bank guarantee and the alternative provided by order
dated 21.09.2021 to furnish bank guarantee for a sum of Rs.100
Crores   and   further   to   furnish   security   to   the   extent   of   Rs.300
Crores   of   unencumbered   asset   is   inequitable   and   unreasonable
in   the   facts   and   circumstances   of   the   case,   as   admittedly   the
securities/mutual   funds   belong   to   the   applicant/Respondent
No.5,   who   should   be   given   superdari   of   the   same   without
imposing any such conditions.  
8. Shri   K.V.   Viswanathan   and   Shri   Sidharth   Luthra,
learned Senior  Counsel appearing for  the Respondent No.1 have
vehemently   opposed   the   prayer   for   any   further   modification   of
the   order   dated   21.09.2021.       They   have   submitted   that   the
conditions   imposed   in   the   order   dated   21.09.2021   are   fully
justified.   It  is  contended  by  them   that  though the EOW  has  on
09.11.2021   filed   a   supplementary   chargesheet   against
Respondents   No.1   and   4   but   the   fulcrum   of   this   chargesheet   is
the order of the SEBI dated 02.07.2021, which was passed prior
to   21.09.2021.     It   is   contended   that   though   observations   have
been   made   in   the   SFIO   report,   the   same   are   not   final   as   the
matter is still under investigation.  

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9. Shri Pratap Venugopal, learned counsel appearing for the
SEBI   and   Shri   Sandeep   Bisht,   learned   counsel   appearing   for
Respondent   No.4/Allied   and   Shri   Rishi   K.   Awasthi,   learned
counsel appearing for the retail investors have also opposed this
prayer   for   any   further   modification   of   the   order   dated
21.09.2021.
10. We   have   heard   learned   counsel   for   the   parties   at   length
and   perused   the   record.     In   our   view,   the   subsequent
supplementary   chargesheet   submitted   by   the   EOW,   and   relied
upon   by   the   learned   counsel   for   the   petitioner,   ought   not   to   be
ignored  while  considering   this  matter.    In  its  earlier  orders,  this
Court has clearly found that the securities need to be released in
favour   of   the   applicant/Respondent   No.5.     The   only   question   is
with   regard   to   the   mode   and   manner   of   the   securities   to   be
furnished by the  applicant/Respondent No.5.   It is not  disputed
that   the   petitioner   has,   in   terms   of   the   order   dated   16.03.2021,
complied   with   the   condition   of   furnishing   bank   guarantee   of
Rs.344.07 Crores.
11. In   paragraph   20   of   this   application   filed   by   the
applicant/Respondent   No.5,   it   is   stated   that   the   applicant   is   a

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public   limited   company,   having   sound   financials   with   a   strong
balance­sheet   and   other   financial   statements   (assets   of   INR
18,556 Crores and turnover of INR 8,779 Crores during financial
year 2020­21).   The same is not denied by the other parties who
have filed their respective replies to this application.  
12. Keeping   in   view   the   aforesaid   facts   and   circumstances,
we   are   of   the   opinion   that   the   operative   part   of   the   order   dated
21.09.2021 deserves to be modified and, accordingly, the same is
modified to the extent that instead of bank guarantee for  a sum
of   Rs.344.07   Crores,   which   has   been   furnished   by
applicant/Respondent No.5, in terms of order dated 16.03.2021,
the   applicant/Respondent   No.5   shall   now   furnish     bank
guarantee for a sum of Rs.100 Crores and it shall further furnish
a corporate guarantee to the extent of Rs.300 Crores.   The bank
guarantee earlier furnished by the applicant/Respondent No.5 to
the   extent   of   Rs.344.07   Crores   shall   stand   discharged   on   the
applicant/Respondent   No.5   fulfilling   the   above   condition   to   the
satisfaction of the Trial Court concerned.  

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13. It   is   again   clarified   that   any   observation   made   in   this
order shall not affect the merit of the case and the appeals will be
heard on merit. 
14. With the aforesaid directions, the I.A. No.6482 of 2022 is
disposed of.                                                                         
 
………..………………………………..J
  (VINEET SARAN)
………..………………………………..J
                     (J.K. MAHESHWARI)
New Delhi
April 11, 2022.