KILLICK NIXON LTD. versus THE CUSTODIAN AND ORS.

Citation: [2010] 5 S.C.R. 275 · Decided: 27-04-2010 · Supreme Court of India · Bench: B. SUDERSHAN REDDY · Disposal: Dismissed

Judgment (excerpt)

[2010) 5 S.C.R. 275 
KILLICK NIXON LTD. 
v. 
THE CUSTODIAN AND ORS. 
(Civil Appeal No. 2724 of 2006) 
APRIL 27, 2010 
[B. SUDERSHAN REDDY AND SURINDER SINGH 
NIJJAR, JJ.) 
A 
B 
. Special Courts (Trial of Offences Relating to 
Transactions in Securities) Act, 1992 - ss. 3 and 10 -Appeal C 
against interlocutory order of Special Court - Maintainability 
of - Fraudulent securities transactions - Siphoning of huge 
funds of various banks - Special Court passed decrees 
against appellant and its group Companies - Realization of 
amounts under the decrees - Sale of properties in the 
D 
process - Plea of appellant that the appropriation of sale 
proceeds ought to have been carried out individually against 
each of the decrees and not as done by Custodian treating 
all the decrees as a consolidated decree - Plea negated by 
Special Court -
On appeal, held: The order passed by E 
Special Court was purely interlocutory and did not amount to 
deciding any /is as such between the parties - Since appeals 
against interlocutory orders are specially excluded u!s.10, 
interference with the impugned order is unwarranted - Even 
on merits, interference not warranted, since the Special Court 
F 
meticulously analyzed the facts, arrived at a proper 
conclusion and rightly treated the decrees as a consolidated 
one. 
'D' advanced interest free loans to appellant and its 
group companies. The Special Court constituted under G 
the Special Court~ (Trial of Offences Relating to 
Transactions in Securities) Act, 1992 found that 'D', its 
Directors and their close associates indulged in 
fraudulent securities transactions resulting in siphoning 
275 
H 
276 
SUPREME COURT REPORTS 
(2010) 5 S.C.R. 
A of huge funds of various banks. 'D' was accordingly 
notified under the provisions of the Act. 
The Custodian, on behalf of 'D', proceeded against 
the appellant and its group Companies for recovery of 
loans. Appellant and its group Companies filed 
8 applicatior:1s before the Special Court for ascertaining 
their individual liabilities. The Special Court passed 
decrees against the appellant and its group Companies. 
'D', in the meanwhile, filed application before the 
C Special Judge praying that the amounts recovered from 
the group Companies could not be attached towards the 
I 
debt payable by 'D' to the Custodian, since there was no 
nexus between loans advanced to original judgment-
debtors and the transactions with the banks. The Special 
Ct Court dismissed the prayer so made. 
Properties were sold in the process of realizing the 
decretal amounts. Sale proceeds were appropriated 
a!Plinst dues of the entire group of appellant. 
E 
The appellants sabmitted before the Special Court 
that the sale proceeds of the properties of their group 
companies ought to be apportioned individually decree 
wise and that the Custodian cannot be permitted to 
appropriate the amounts paid by the judgment debtors 
F as also the sale proceeds realized from the sale of 
prope~ties towards a consolidated decree. The Special 
Court held that the appellant and its group companies 
were all controlled by 'D' the notified party and the 
amounts that were being rec.overed in execution of the 
G decrees were really public finds which were siphoned off 
by the Directors of '0', and parked in the companies . 
controlled by them. The Special Court accordingly held 
that the appropriation of sale proceeds made by the 
Custodian was proper and accordingly permitted the 
H Custodian to further proceed to recover the remaining 
KILLICK NIXON LTD. v. CUSTODIAN AND ORS. 
277 
balance. Hence the present appeals. 
A 
Dismissing the appeals, the Court 
HELD: 1.1. An interference with the impugned order 
passed by the Special Court, which is purely interlocutory 
8 
and does not decide any rights of any party, is 
unwarranted. The Special Court did not decide any rights 
of the parties but merely passed orders from time to time 
including the one under the appeals for the realization of 
the amounts under the decrees passed which attained 
their finality. The procedure adopted for realization of the 
C 
amounts under the decrees and the manner of 
appropriation by itself does not amount to deciding any 
/is as such between the parties. Under s.10 of the Special 
Courts (Trial of Offences Relating to Transactions in 
Securities) Act, 1992, an appeal shall lie to this Court from 
D 
any judgment, sentence or order of the Special Court but 
not against the interlocutory orders. A

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