Delhi HC upholds interim protection for BharatPe’s shareholder rights, dismisses Unity Bank’s appeal

A division bench of the Delhi High Court has dismissed an appeal by Unity Bank, upholding the interim protection granted to BharatPe’s RIPL (Resilient Innovations Private Limited) under the Shareholders’ Agreement and affirming the order of a single judge.

The court has now, on two occasions, declined to let the bank and its promoter proceed on reserved matters without the prior written consent of RIPL, as the Shareholders’ Agreement (SHA) requires.

Rejecting the bank’s explanation that it had sought RIPL’s consent on Reserved Matters through an “inadvertent error”, the bench called the plea an “argument of desperation and nothing more”. It noted that Unity had expressly sought RIPL’s consent in writing, which showed it knew of the contractual requirement.

The bench reaffirmed that Unity cannot take decisions on Reserved Matters without the prior written consent of RIPL and Centrum, observing that Clause 8 of the SHA explicitly bars any action on such matters without it. It endorsed the single judge’s findings, describing the matter as “elementary”.

The court also rejected Unity’s contention that the Reserve Bank of India had turned down the SHA. It observed that the RBI had never objected to the agreement, which had been submitted to it for approval, and held that the injunction does not obstruct any RBI directive and merely requires enforcement of Clause 8.

Turning down the argument that the SHA cannot override the Articles of Association, the bench noted that Clause 8 opens with a non obstante clause, giving it precedence over the relevant provisions of the Articles.

BharatPe welcomed the decision. A spokesperson said, “The Board must ensure that the Bank complies with the Court’s directions in letter and spirit. We expect the Board to exercise independent judgment, free from undue influence, and act in the interests of the Bank and all its stakeholders, including minority shareholders. Governance processes followed since the Bank’s inception must be respected and applied consistently. They cannot be set aside to favour one shareholder group at the expense of another.

“We expect the Board to guide the Bank in honouring its contractual obligations and ensuring that its actions comply with the Court’s directions. We believe the Hon’ble Division Bench’s decision reinforces the importance of the agreed governance framework and the shareholder rights that formed the basis of the joint venture in 2021. Respect for these commitments is essential to maintaining trust between shareholders and protecting the institution’s long-term interests.”

The ruling reinforces that Unity Bank is bound by the Reserved Matter provisions of the SHA and cannot dismiss its own written requests for shareholder consent as inadvertent errors to avoid its contractual obligations.