JYOTI HARSHAD MEHTA & ORS. versus THE CUSTODIAN & ORS.

Citation: [2009] 12 S.C.R. 1229 · Decided: 07-08-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2009) 12 S.C.R. 1229 
JYOTI HARSHAD MEHTA & ORS. 
A 
v. 
THE CUSTODIAN & ORS. 
(Civil Appeal No. 5176 of 2009 @ D-25207 of 2008) 
AUGUST 7, 2009 
B 
[S.B. SINHA AND DEEPAK VERMA, JJ.] 
Special Court (Trial of Offences Relating to Transactions 
in Securities) Act, 1992 - ss.3(2) & (3), 4(1), 9A and 11 -
Diversion of public funds for short term investment in c 
securities market - Trial of criminal offences, as also civil 
disputes, arising therefrom - Custodian appointed in terms 
of the Act notified Harshad Mehta as also the appellants -
<. 
All their properties stood attached - Judge, Special Court 
directed sale of flats purportedly belonging to appellants -
D 
• 
Order challenged - Matter remitted back to Special Court -
Judgment passed by Judge, Special Court - Challenge to -
Dispute over interpretation and/or application of provisions of 
the Act - Held: On facts, the Judge, Special Court failed to 
consider relevant aspects in detail and did not weigh 
E 
submissions and counter-submissions of both the parties in 
proper perspective - There was non-application of mind on 
his part - Direction to Judge, Special Court to consider the 
matter afresh -
Interpretation of Statutes - Purposive 
construction -"ut res magis valeat quam pereat''. 
F 
The Reserve Bank of India in course of an 
investigation, had inter alia opined that Harshad Mehta 
(since deceased), alongwith his associates had diverted 
huge amount of public funds belonging to Public Sector 
Banks and Financial Institutions for short term G 
investments in the securities market. The Special Court 
(Trial of Offences Relating to Transactions in Securities) 
Act, 1992 provided inter alia for constitution of a Special 
1229 
H 
1230 
SUPREME COURT REPORTS 
[2009] 12 S.C.R. 
A Court for trial of criminal offences, as also civil disputes, 
arising therefrom during the "window period" i.e. from 1st 
April, 1991 and 6th June, 1992. Around this time, the family 
members of late Harshad Mehta had purchased movable, 
immovable properties and shares. Out of these 
B properties, there were nine residential flats purchased, in 
a building called "Madhuli", in Worli, Mumbai. These flats 
were merged and redesigned for joint living of the entire 
family and these properties are the subject matter of the 
present lis. 
c 
In terms of the said Special Act, a Custodian was 
appointed. The Custodian notified Harshad Mehta as also 
the appellants; pursuant whereto all their properties 
stood attached. The Judge, Special Court, on an 
application filed by the custodian inter alia directed sale 
; 
D of flats purported to be belonging to the appellants. The 
order came to be challenged before this Court in Ashwin 
• 
Mehta which remitted the matter back to the Special Court 
with certain directions. The matter was taken up thereafter 
by the Judge, Special Court which passed the impugned 
E judgment. 
Before this Court, the appellants contended that the 
Judge, Special Court misconstrued and misread the 
directions issued by this Court in Ashwin Mehta; that he 
F failed to take into consideration that the properties 
belonging to the appellants were not and could not have 
been treated as the benami properties of Harshad Mehta; 
that in such an event sub-section(1) of Section 4 of the 
Special Act was attracted; that sub-section (1) of Section 
G 4 of the Special Act postulates that the notified persons 
must acquire property in the name of another from the 
tainted money during the window period and having 
regard to the findings of the Auditors that Harshad Mehta 
had purported to have advanced amounts by way of 
H loans or otherwise to the appellants much prior thereto, 
J 
~ 
JYOTI HARSHAD MEHTA & ORS. v. CUSTODIAN & 1231 
ORS. 
the impugned judgment is wholly unsustainable; that the 
right to keep property being a Constitutional as well as 
Human Right and furthermore the provisions of the 
Special Act being penal in nature, they deserve a strict 
construction; that no finding having been arrived at, that 
the properties in question had any nexus with the tainted 
funds received from the illegal security transactions, they 
should have been released from attachment by the 
Custodian; that the appellants being notified persons are 
responsible for discharging their own liabilities from their 
own assets and not those of Harshad Mehta and/or any 
other person and therefore it was not proper on the part 
of the Judge, Special Court to club the appellants as part 
of the H

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