LexSUDHIR S. MEHTA & ORS. versus CUSTODIAN & ANR.
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[2008] 8 S.C.R. 1099 "~ SUDHIR S. MEHTA & ORS. A v. CUSTODIAN & ANR. (Civil Appeal Nos. 5690-5697 of 2007) MAY 16, 2008 B t [S.B. SINHA AND V.S.SIRPURKAR, JJ.] •· Special Courts (Trial of Offences Relating to Transac- tion in Securities) Act, 1992 Sections 3, 9 and 11: Jurisdiction of Special Court - Shares and securities - c Scam case - Special Court directing the custodian for selling of share held by notified parties, appellants, as per advise of Disposal Committee by way of auction - Challenged on ground of non-division of shares in groups, not giving adequate time >- for making offer, not selling of shares at the Stock Exchange D • and the'sale was not ordered at .right time- Held: - In tt;rms of the directions of Special Court, it was certain that shares in question were not to be sold unless directions so given com- plied with by the custodian/Disposal Committee - Appellants, without even waiting for compliance of the direction by Custa- E ' dian/Disposal Committee, preferred to file appeals before Su- <I( preme Court - Moreover appellants insisting before Supreme Court for the first time that shtires in question not to be sold at ~ i all - Since scheme of selling of shares in discharge of liability of the appellants was affirmed by Supreme Court in its earlier F order, shares were bound to be sold - Since against notifica- tions for attachment of property belonging to the appellants, no application for denotification pending, it is not open to them to say that shares in question should not be sold as their chances of denotification alive - Notification covers certain G ·~ properties including shares and securities of notified persons as comes in the hands of custodian - Under the circumstances question regarding determination of individual liability of ap- pellants could not be raised, particularly when liabilities of no- 1099 H 1100 SUPREME COURT REPORTS [2008] 8 s~ C.R. A tified persons does exceeds assets - No objection to form and treat the relatives as group was raised before the Special Court - Unless it is shown that some prejudice would be caused by treating them as group, such a contention is with- out any basis - In terms of earlier order ot Supreme Court, B majority of shares have been sold and only in respect of cer- tain specified shares present sale was contemplated but ap- pellants did not prefer to challenge the order - Challenging the same at this stage is without any basis- Since, no malafide alleged against Disposal Committee, stopping of sale of the c share on apprehension of loss is not justified - Disposal Com- mittee to suggest about proper time and manner to execute sale of share in question and Special Court to decide on such issues and Supreme Court need not go into such questions - Directions issued. D After the scam broke out in respect of the shares and securities, the Central Government enacted the Special Courts (Trial of Offences Relating to Transactions in Se- curities) Act. A Special Court was constituted under the provisions of the Act. A notification in terms of Section 11 E of the Act was issued notifying the appellants and some other persons and as per the mandatory need of the pro- vision on and from that date any property movable or im- movable or both, belonging to the notified persons simul- taneously and automatically stood attached. The prop- F erties so attached included vast number of shares held by one of the economic offender late Sh. Ha rs had S. Mehta as also his close relatives. Appellants filed Miscellaneous application. Disposing of the application, the Special Court directed the custodian under the Act to refer cer- G tain questions for opinion of the Disposal Committee. Against the order of the Special Court, appellants filed the present appeals. In the meantime, respondent No.1 issued an advertisement dated 28.10.2007 for the sale of certain shares. In terms of the advertisements these shares would be sold in bulk categories before the specified H + ·• +. • SUDHIR S. MEHTA & ORS. v. CUSTODIAN &ANR. 1101 dates. Accordingly, the offers were received by the Cl.is- A todian and the same were considered by the Disposal Committee. The Custodian submitted his report for sale of the shares in favour of the Life Insurance Corporation of India as it had offered the highest price. The appellant raised the objections by way of the Miscellaneous Appli- B cations before the Special Court
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