Supreme Court extends Matrix Pharma asset freeze in RAKIA execution case

The Supreme Court of India recently extended its earlier order freezing the assets of Matrix Pharma, Tianish Laboratories, Hyderabad-based businessman Nimmagadda Prasad, his daughter Swathi Gunupati Reddy and his son-in-law Pranav Reddy Gunupati in execution proceedings initiated by the Ras Al Khaimah Investment Authority (RAKIA). [Ras Al Khaimah Investment Authority v. Iquest Enterprises]

A Bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi refused to vacate the Court’s status quo order dated October 15, 2025.

The Court also issued notice in a Special Leave Petition (SLP) filed by RAKIA challenging the Telangana High Court’s dismissal of contempt proceedings against IQuest Enterprises, Swathi Reddy, Viatris Inc and Prasad, which arise from alleged violations of asset-restraint directions passed during execution proceedings.

On the last date of hearing, the Supreme Court pulled up the National Company Law Appellate Tribunal (NCLAT) at Chennai for passing an order expunging restrictions on the merger of Matrix Pharma and Tianish Laboratories without issuing notice to affected parties.

The litigation stemmed from a February 2, 2022 decree of the Ras Al Khaimah Civil Major Circuit Court in the United Arab Emirates (UAE), which held Prasad and others liable for damages claimed by RAKIA, a sovereign investment arm of the Emirate of Ras Al Khaimah.

The dispute could be traced back to RAKIA’s investments in the RAKIA Free Zone Project in Andhra Pradesh (now in Telangana) over a decade ago, made in partnership with Prasad’s entities including Matrix Enport Holdings and IQuest Enterprises.

RAKIA later alleged that Prasad had induced it into large-scale investments through misrepresentation and diversion of funds, leading to losses exceeding $300 million.

Following the UAE court judgment, RAKIA initiated execution proceedings before a commercial court in Hyderabad to enforce the foreign decree against Prasad and associated entities, including Matrix group companies. These proceedings were accompanied by contempt of court petitions before the Telangana High Court, alleging violations of status quo directions regarding alienation of assets.

While these enforcement and contempt proceedings were pending, Tianish and Matrix filed a joint petition before the National Company Law Tribunal (NCLT) at Hyderabad seeking approval for their amalgamation under Section 230 of the Companies Act, 2013.

On March 10 this year, the NCLT sanctioned the merger, but imposed two crucial restrictions directing the transferee company not to alienate or encumber any of its assets without prior approval of the Telangana High Court and to seek leave before creating any charge. These directions were prompted by submissions referring to RAKIA’s pending enforcement actions and the High Court’s status quo orders in the contempt proceedings.

However, on appeal by Matrix and Tianish, the NCLAT Chennai Bench expunged these restrictions.

The NCLAT held that the companies were not parties to RAKIA’s execution or contempt cases and hence could not be bound by those orders. It observed that contempt proceedings are in personam and cannot affect third parties. The NCLAT reasoned that under Section 230, an amalgamation concerns only the transferor and transferee companies and outsiders cannot object unless directly impacted by the scheme.

RAKIA moved the Supreme Court against the NCLAT decision. It contended that the Appellate Tribunal had effectively allowed a merger that could facilitate transfer or dissipation of assets subject to execution in India.

RAKIA argued that the NCLAT erred in treating the companies as unconnected third parties when, in fact, both entities were part of a corporate network linked to Prasad’s family.

During the hearing, RAKIA’s counsel urged the Bench to reimpose restraints on alienation of assets, warning that the merger structure risked frustrating enforcement of the foreign decree.

After hearing the parties Supreme Court effectively revived the asset restrictions originally imposed by the NCLT and subsequently removed by the NCLAT. The direction to maintain status quo extends not only to corporate assets of Matrix Pharmacorp and Tianish Laboratories but also to the personal properties of Nimmagadda Prasad, his daughter Swathi Gunupati Reddy, and his son-in-law Venkata Pranav Reddy Gunupati.

RAKIA was represented by Senior Advocates Abhishek Manu Singhvi and K Vivek Reddy, with Advocates Rishab Gupta, Siddharth Seem, Tanmay Gupta, Pival K Peddireddi and Rishabh Kapur.

The respondents were represented by Senior Advocates Kapil Sibal, Mukul Rohatgi, Shyam Divan, Balbir Singh, S Niranjan Reddy, Atul Nanda and Ranjit Kumar.

[Read Order]