PREMANAND R. SHENOY versus CUSTODIAN AND ORS.

Citation: [2009] 9 S.C.R. 599 · Decided: 26-05-2009 · Supreme Court of India · Bench: MUKUNDAKAM SHARMA · Disposal: Disposed off

Judgment (excerpt)

... 
[2009] 9 S.C.R. 599 
PREMANAND R. SHENOY 
v. 
CUSTODIAN AND ORS. 
(Civil Appeal No. 5524 of 2004) 
MAY 26, 2009 
[DR. MUKUNDAKAM SHARMA AND DR. 8.5. 
CHAUHAN, JJ.] 
Special Court (Trial of Offences Relatingi to Transactions 
A 
B 
in Securities) Act, 1992: s.5 - Respondent company was 
C 
declared notified person of which appellant became the· 
director immediately after demise of his father - Custodian 
concluded that respondent company financed Rs.2.83 lacs 
for purchase of a jeep for appellant - Custodian came to --
finding that appellant, being director of respondent company o 
was aware that jeep was purchased in his name for which, 
consideration was paid by respondent company -
On 
application filed by Custodian, Special Court directed 
appellant to pay Rs. 2. 83 lacs with interest @ 18% p.a. from 
date of purchase of vehicle - Held: Documents on record E 
indicate that the jeep was ordered in the name of appellant 
and it was purchased for him and financed by respondent 
company - Therefore nexus between purchase of jeep and 
involvement of appellant in deal was clearly established - No 
infirmity in the order of Special Court - Order of Special Court 
F 
is upheld however since appellant himself informed 
Custodian about the jeep, order on interest is modified and 
reduced from 18% to 9% p.a. 
The father of appellant was the Chairman and 
lncharge of second respondent-company. He died on 
G 
2.2.1992. Thereafter, appellant became the Director of the 
said company. An order was placed for purchase of a 
jeep by making payment by cheque dated 22.7.1991 for 
Rs. 2.83 lacs. As per the original delivery receipt and a 
599 
H 
600 
SUPREME COURT REPORTS 
[2009) 9 S.C.R. 
A 
letter addressed to the appellant, the vehicle was 
delivered to the appellant on 15.4.1992. 
In terms of Section 53 of the Special Court (Trial of 
Offences Relating to Transactions in Securities) Act, 1992; 
B the respondent company was declared notified person. 
The first respondent, the Custodian issued a public 
-+ 
notice dated 10.9.1992 calling upon all the persons who 
were dealing with the Company to inform him about the 
same. The appellant informed the Custodian that a jeep 
c belonging to second respondent was parked at a 
Panchasheel Park house and that the said vehicle was 
under a hire purchase/lease agreement. Th~ opined that 
the second respondent financed the purchase of the 
vehicle for the appellant. He Custodian filed an 
D application before the Special Judge, which was allowed 
and the appellant was directed to pay to the Custodian 
Rs. 2.83 lacs with interest @ 18% p.a. from 22. 7 .1991. 
Aggrieved by the order of Special Court, appellant filed 
present appeal. 
E 
Disposing of the appeal, the Court 
HELD: 1.1. The office note of respondent company 
indicated that the hire purchase finance was made 
f 
available to the appellant by respondent company and 
F the said amount for purchase of the Jeep vehicle was 
sanctioned by the Chairman verbally. The cost of the said 
vehicle was Rs. 2,83, 192/- and payment for the said 
vehicle was to be made on 22.7.1991 and, therefore, after 
taking approval of the Vice President, a cheque for the 
G said amount was released. There was another letter dated 
11.1.1992 available on record which referred to the 
subject of the Mahindra Jeep to be sold to the appellant. 
In the said letter, respondent company made reference 
to proforma invoice dated 22. 7 .1991 intimating further that 
H the cheque dated 22.7.1991 for Rs. 2,83,192/- was sent for 
PREMANAND R. SHENOY v. CUSTODIAN AND ORS. 601 
supply of the jeep which was subject to a hire purchase 
A 
agreement between respondent company and the 
appellant. The le!ter dated 12.4.1992 was also addressed 
to the appellant at the address of respondent company 
intimating that the jeep was lying ready for the last five 
months and was also duly registered temporarily in the 
B 
name of the appellant. It is an admitted position that 
subsequent thereto the jeep was delivered along with 
Temporary Registration. The name of the appellant 
appears against the name of the registered owner. In fact, 
these documents were sent by the appellant himself to c 
respondent No. 1 (the Custodian) under his letter dated 
4.8.1998 informing the Custodian that Jeep is parked at 
Panchasheel Park house. The appellant also stated that 
the ex-officials of respondent company informed him that 
the vehicle was supposed to be under hire purchase/ D 
lease ag

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