PALLAV SHETH versus CUSTODIAN AND ORS.

Citation: [2001] SUPP. 1 S.C.R. 387 · Decided: 10-08-2001 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Dismissed

Judgment (excerpt)

... 
PALLAV SHETH 
A 
v . 
CUSTODIAN AND ORS. 
AUGUST 10, 2001 
(B.N. KIRPAL, RUMA PAL AND BRIJESH KUMAR, JJ.] 
B 
Contempt of Courts Act, 1971-Sections 20 and 22-lnterim order of 
Special Court to appellant not to alienate, encumber, sell or transfer his 
movable or immovable assets, including bank accounts-Appellant set up C 
benami companies and transferred and/or alienated his properties including 
cash in violation of the interim order-Facts detected during income tax raids · 
conducted by Revenue-Application for initiation of contempt proceedings 
filed by Custodian-Period of limitation of action for contempt-Held, on 
facts, fraud had been committed by the appellant-Benefit of /imitation cannot 
be claimed by virtue of fraud-Period of limitation starts from the date of D 
knowledge and not from date of commission of contempt-Hence the application 
is within the period of limitation-Action taken by Special Court to punish the 
appellant for contempt valid-Limitation Act, 1963-Section 17. 
Special Court (Trial of Offences Relating to Transactions in Securities) 
Act, 1992-Section 11-A-Power of Special Court to punish for contempt of" E 
itself-Held, the power is available under the Constitution-Constitution of 
India, 1950-Article 215. 
Constitution of India, 1950-Articles 129 and 215-Power of Supreme 
Court/High Court to punish for contempt of itself-Validity of any provision/ F 
law abrogating or stultifying the power-Held, not a valid provision/law-
Provision regarding quantum of punishment or the various acts of contempt 
or providing for a period of limitation for initiating contempt proceedings-
Held valid. 
Certain company was notified under the provisions of the Special Court G 
constituted under the Special Court (Trial of Offences Relating to Transactions 
in Securities) Act, 1992 and the properties belonging to the company were 
attached under the Act. Respondent-custodian, who was appointed under the 
Act, filed an application seeking a decree for Rs. 50 crores on behalf of the 
notified company against the appellant. The appellant consented to pay the 
387 
H 
388 
SUPREME COURT REPORTS [2001) SUPP. I S.C.R. 
A amount in instalments. and paid Rs. 2 crores but defaulted in payment of 
further instalments. The custodian filed an execution application before the 
Special Court_. The Court directed the appellant to file an affidavit declaring 
all his assets and further restrained the appellant from alienating, 
encumbering, selling off or parting with possession or transferring in any 
B manner whatsoever any of his assets, movable and immovable, including bank 
accounts. Affidavit was filed accordingly. The Special Court passed an interim 
order of attachment of some of the assets. 
Meanwhile, income tax raids were conducted on the appellant On some 
newspaper reports about detection of assets belonging to the appellant by the 
C Revenue, the Special Court directed the respondent-custodian to obtain 
complete details of all the assets of the appellant from the Revenue. The 
custodian found from the Revenue that the appellant had set up five benami 
companies; that the assets of the five companies belong to the appellant; that 
the appellant, along with his wife, had several cash deposits amounting to Rs. 
2.81 crores made in the bank accounts of the five companies, which were his 
D undisclosed income; and that these companies were to receive substantial 
amounts from other companies/individuals. 
The custodian filed an application before the Special Court for initiating 
contempt proceedings on the ground that the appellant had set up benami 
companies and had transferred and/or alienated his property including cash, 
E inter alia, with a view to defeat the decree passed against him by the Special 
Court. The Special court, after issuing a show-cause notice, held the appellant 
guilty of contempt of Court and sentenced him to one month's simple 
imprisonment with a fine of Rs. 2,000. The Special court further held that its 
action was not barred by limitation as contemplated by Section 20 of the 
F Contempt of Courts Act, 1971 on the ground that this was a case of continuing 
wrong. 
In appeal to this Court, the appellant contended that the Special Court 
had initiated proceedings for contempt after the expiry of a period of one 
year from the date on which the contempt was committed; that under Section 
G 20 of the Contempt of Courts Act, 1971, the court is prohibited from taking 
any action at a be

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