MANJIT SINGH SODHI versus THE CUSTODIAN & ORS.

Citation: [2022] 7 S.C.R. 165 · Decided: 04-08-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

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Judgment (excerpt)

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MANJIT SINGH SODHI
v.
THE CUSTODIAN & ORS.
(Civil Appeal No. 5126 of 2022)
AUGUST 04, 2022
[DR DHANANJAYA Y CHANDRACHUD AND
J. B. PARDIWALA, JJ.]
Special Court (Trial of Offences Relating to Transactions in
Securities) Act 1992 – ss. 3(2), 4(2), 10, 11 – Limitation Act, 1963 –
ss. 18, 29(2) – Directions for disclosure of assets – Third respondent-
corporation, had availed a short term loan of 25 lakhs from FFSL
(Second respondent) and agreed to pay it after 180 days with
20% interest – Central Government appointed first respondent
as custodian under the provisions of Act of 1992 – FFSL instituted
Miscellaneous petition against the third respondent for the recovery
of an amount of Rs. 25 lakh, together with interest – On 28.03.2003,
the Special Court directed the third respondent to pay to FFSL a
sum of Rs 63.86 lakhs, together with interest – FFSL issued two
notices to third respondent for the payment of decretal amount on
28.04.2003 and 16.12.2011, respectively – By communication dated
22.02.2018, the appellant offered to pay the principal amount of
Rs. 25 lakhs and sought a waiver of the interest and pursuant to his
offer, appellant paid an amount of one lakh – The first respondent
moved execution  application before the Special Court – Appellant
contested that said application on the ground that it was barred by
limitation 
– 
The 
Special 
Court 
passed 
an
ad-interim order directing the disclosure of assets of the appellant
and the third respondent – It further held that the appellant clearly
acknowledge the liability, hence, the claim of the first respondent is
not barred by the limitation – On appeal, held: Based on the decision
of Supreme Court in L S Synthetics Ltd, the ultimate directions which
were issued by the Special Court cannot be interfered with – The
observations contained in the impugned order were for the purpose
of issuing the directions for a disclosure of assets and would not
preclude the custodian (first respondent) from urging that the Act
of 1963 had no application to the Execution application which was
filed for enforcement of the decree dated 28.02.2003 – Appellant
[2022] 7 S.C.R. 165
165
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SUPREME COURT REPORTS
[2022] 7 S.C.R.
directed to file his disclosure of assets subject to his right to urge
his submissions in Execution application.
Disposing of the appeal, the Court
HELD: 1. An “interlocutory order” denotes an interim or
temporary order which does not decide the important rights or
liabilities of the parties. The Special Court in its order dated 6
March 2020 has conclusively held that the execution petition is
not barred by limitation. The determination of the issue of
limitation affects the rights and liabilities of the parties. Thus,
the argument of the first appellant that the appeal is not
maintainable in view of Section 10 of the Act of 1992 is rejected.
[Para 13][173-D-E]
2. Section 18 of the Act of 1963 stipulates that if an
acknowledgment of liability in writing is made before the
expiration of the prescribed period for a suit or application in
respect of any right, a fresh period of limitation shall be computed
from the time when the acknowledgment was signed. Explanation
(c) to Section 18 states that an application for the execution of a
decree or order shall not be deemed to be an application in
respect of any property or right. In the present case, the Special
Court has proceeded on the basis that there was an
acknowledgement of liability by the letter of the appellant dated
22 February 2018. That finding is sought to be assailed by the
appellant by urging that the acknowledgement of liability under
Section 18 of the Act of 1963 has to be within the period of
limitation and in the present case this test is not satisfied. On the
other hand, it has been urged on behalf of the first respondent
that the premise of the judgment of the Special Court that the
Act of 1963 would stand attracted would run contrary to the decision
of this Court in L S Synthetics Ltd. Based on the decision of this
Court in L S Synthetics Ltd, the ultimate directions which have
been issued by the Special Court cannot be interfered with. The
observations contained in the impugned order were for the
purpose of issuing the directions for a disclosure of assets and
would not preclude the Custodian from urging that the Act of
1963 had no application to the Execution Application which was
filed for enforcement of the decree dated 28 February 2003. The
directions for th

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