A division bench of the Delhi High Court has dismissed an appeal by Unity Bank, upholding the interim protection granted to BharatPe's parent company 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.

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