The Delhi High Court has dismissed an appeal filed by Unity Small Finance Bank challenging an interim order restraining it from placing a proposal to increase its authorised share capital before its Board without obtaining the consent of BharatPe's parent company, Resilient Innovations Private Limited.

In the said matter, a division Bench of Justice C Hari Shankar and Justice Vinod Kumar held that the bank was bound by the shareholders' agreement executed with Resilient and Centrum Financial Services, which mandated prior written consent for decisions concerning changes in the bank's capital structure.

"There is obviously no ground, whatsoever, for us to interfere with the impugned judgment of the learned Single Judge," the Bench observed while dismissing the appeal.

The dispute arose out of a shareholders' agreement executed in October 2021 between Unity, Resilient and Centrum, which held 49% and 51% shareholding, respectively, in the bank.

The agreement classified decisions relating to changes in the bank's capital structure as Reserved Matters, requiring prior written consent from both shareholders.

Unity proposed increasing its authorised share capital from ₹4,000 crore to ₹4,900 crore to facilitate the conversion of existing warrants into compulsorily convertible preference shares (CCPS). However, Resilient opposed the proposal and approached the High Court under Section 9 of the Arbitration and Conciliation Act, 1996.

On July 24, a Single Judge restrained Unity from tabling or considering the proposal at its Board meeting scheduled for the following day. Aggrieved by the interim injunction, the bank approached the Division Bench.

Before the appellate court, Unity argued that the proposed capital increase was necessary to comply with the Reserve Bank of India's (RBI) requirements concerning dilution of shareholding.

It further contended that the RBI had directed the deletion of Reserved Matters from its Articles of Association and that the shareholders' agreement could not override the Articles.

The Division Bench, however, rejected the submissions.

The Court noted that Unity's own Board agenda had acknowledged that the proposed increase in authorised share capital constituted a Reserved Matter requiring prior shareholder consent.

It also pointed out that the bank had sought Resilient's consent on three occasions between October 2025 and July 2026. Rejecting Unity's explanation that these communications were sent inadvertently, the Bench observed, "That, quite clearly, is merely an argument of desperation, and nothing more."

"We echo the chagrin," the Court remarked, agreeing with the Single Judge's criticism of the bank's contradictory stand.

The Bench further clarified that the removal of Reserved Matters from the Articles of Association did not absolve Unity of its independent contractual obligations under the shareholders' agreement.

It also emphasised that the interim injunction did not prevent the bank from convening Board meetings or complying with RBI directions. The restraint was limited to requiring Unity to obtain the contractually mandated consent before considering the disputed proposal.

Finding no grounds to interfere with the Single Judge's discretionary order, the Division Bench dismissed Unity's appeal.

Senior Advocate Mukul Rohatgi, along with Advocates Sanjay Gupta, Ateev Mathur and Jagriti Ahuja of SNG & Partners, appeared for Unity Small Finance Bank.

Senior Advocates Gopal Subramanium and Amit Sibal, along with Advocates Mohit Goel, Anuj Berry, Sidhant Goel, Aishna Jain, Ishaan Pratap Singh, Pawan Bhushan, Shashwat Mukherjee, Suradish Vatts, Siddhant Juyal, Ramyani Sood and Darpan Sachdeva of Sim & San, appeared for Resilient Innovations Private Limited (BharatPe).

Senior Advocate Sandeep Sethi, along with Advocates Ajay Monga and Amol Sharma, appeared for Centrum Financial Services Limited.

Senior Advocate Raj Shekhar Rao, along with Advocates Ashish Agarwal and Nalin Dhingra, appeared for JBCG Advisory Services Private Limited.