ASHWIN S. MEHTA AND ANR. versus CUSTODIAN AND ORS.

Citation: [2006] 1 S.C.R. 56 · Decided: 03-01-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off
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Judgment (excerpt)

A 
B 
c 
ASHWIN S. MEHTA AND ANR. 
v. 
CUSTODIAN AND ORS. 
JANUARY 3, 2006 
[S.B.SINHA AND P.P.NAOLEKAR, JJ.] 
Special Courts (Trial of Offences Relating to Transactions in Securities) 
Act, 1992: Sections 3 and 9-A. 
Notified persons-liabilities-Notified persons consisted of four brothers, 
their wives and their widowed mother-These notified persons were related to 
late Harshad Mehta-Properties of late Harshad Mehta and the notified persons 
stood attached in terms of the provisions of the Act-Notified persons purchased 
nine residential flats in a building-Special Court allowed the applications 
D filed by the Custodian seeking permission for the sale of residential premises 
and commercial premises of eight notified persons-However, the Special 
Court dismissed the applications filed by the notified persons for releasing of 
the residential flats as well as the commercial premises from attachment-
Correctness of-Held: The properties of the notified persons stood automatically 
attached-Any other income from such attached properties would also stand 
E attached-For that purpose it is not necessary that they should be accused of 
commission of an offence as such-Special Court is directed to consider afresh 
the matters regarding tax liabilities of the notified persons, the auction sales 
in respect of commercial and residential properties Qnd whether individual 
liabilities of the notified persons ought to have been separately considered by 
F the Special Court as not a part of Harshad Mehta Group-Notified persons 
are entitled to inspection of all the documents in the Custodian's power or 
possession-Assistance from a Chartered or Cost Accountant may be taken by 
both parties-Matter remitted to Special Court. 
The appellants who were related to one Harshad S. Mehta (since 
G deceased) purchased nine residential flats in a building. The family of the 
appellant consisted of four brothers, their wives, children and their 
widowed mother. 
The appellants and the said late Harshad S. Mehta were persons 
notified in terms of the Special Courts (Trial of Offences Relating to 
H 
56 
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! 
ASHWIN S. MEllTA "· CUSTODIAN 
57 
Transactions in Securities) Act, 1992. The properties of late Harshad S. A 
Mehta and the appellants stood attached in terms of the provisions of the 
Act. 
The Special Court allowed the applications filed by the respondent-
Custodian seeking permission for the sale of residential premises and 
commercial premises of eight notified entities. However, the Special Court B 
dismissed the applications filed by the appellants for releasing of the 
\' 
residential nats as well as the commercial premises from attachment. 
Hence the appeal. 
The following questions arose before the Court:-
c 
(i) Whether the appellants being not involved in offences in 
transactions in securities could have been proceeded against in terms of 
the provisions of the Special Courts (Trial of Offences Relating to 
Transactions in Securities) Act, 1992? 
(ii)Whether individual liabilities of the appellants ought to have been D 
separately considered by the Special Court as not a part of Harshad Mehta 
Group? 
(iii) Whether the tax liabilities could not have been held to be due 
as the order of assessments did not become final and binding? 
E 
(iv) Whether the commercial properties could have been sold in 
auction? 
(v) Whether the residential properties should have been released 
from attachment? 
F 
Disposing of the appeal, the Court 
HELD: I. Both the parties have raised several contentions before 
this Court which have not precisely been raised before the Special Court. 
Several subsequent events have also been brought to the notice of this G 
Court. The parties have also filed several charts before this Court showing 
~ 
.... J, 
individual assets and liabilities. It has further been contended that various 
best judgment assessmen~s passed by the Assessing Authority against some 
of the appellants have been set aside in appeal and the matters are pending 
reassessment before the Assessing Authority. (77-H; 78-Af 
H 
58 
SUPREME COURT REPORTS 
12006] I S.C.R. 
A 
l.S. Synthetics ltd. v. Fairgrowth Financial Services Ltd., 120041 11 
SCC 456, Fairgrowth, B.C. Dalal v. Custodian (CA No. 2795 of 2004), The 
Kedarnath Jute Mfg. Co. ltd. v. The Commissioner of Income Tax, ( 19721 3 
SCC 252, Harshad Shanti/al Mehta v. Custodian, 1199815 SCC I, Fairgrowth 
Investments Ltd. v. Custodian, 120041 I I SCC 472 and Tejkumar Balakrish
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