Uttam Dutta Vs the Custodian and Ors.

Mr. Gandhar Raikar with Ms. Shilpa Bhate (through VC), with Ms. Aditi Pandey, Mrs. Payal Mehta, for Custodian. Mr. Ashwin Mehta, for Notified parties.

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Ms. Kinjal Kakkad i/by Mr. Vipul Shukla, for Respondent No.2.

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CORAM: N.J.JAMADAR, J. JUDGE, SPECIAL COURT

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DATE : 10 APRIL 2026

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ORDER :

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SPMA(L) No.94 of 2025 :

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Heard the Applicant in person and the learned Counsel for the parties.

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This application is preferred seeking recall of the order dated 27

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September 2013 dismissing Misc. Application No.32 of 2009 for want of prosecution.

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The Applicant had preferred Misc. Application No.32 of 2009 for certification of 100 shares of Reliance Petrochemicals Limited (R2) and for

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lifting the attachment qua the said shares. This Court was persuaded to dismiss the said application for want of prosecution, as it was submitted on behalf of the Custodian (R1) that, despite several communications, the Applicant did not respond and the envelopes were returned back with the remarks “Applicant not found”.

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The Applicant has filed this application in person. In this Application, the applicant has ascribed justifiable reasons for condonation of delay in seeking setting aside of the said order. In view of the decision of the Supreme Court in the case of L.S.Synthetics Ltd. V/s. Fairgrowth Financial Services Ltd. and Anr.1, the provisions contained in the Limitation Act, do not apply to the proceeding before the Special Court. Thus, as the Applicant appears in person, and to advance the cause of substantive justice, this Court is inclined to condone the delay in seeking setting aside of the dismissal order and also set aside the order dated 27 September 2013 and restore Misc. Application No.32 of 2009 for decision on merits.

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The Misc. Application (L) No.94 of 2025 stands allowed.

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The order dated 27 September 2013 in Misc.Application No.32 of 2009 stands recalled.

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Misc. Application No.32 of 2009 stands restored to file.

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1 (2004) 11 SCC 456

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Misc. Application No.32 of 2009

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This is an application for certification of 100 shares of Reliance Petrochemicals Limited (R2), bearing Folio No.5889183, Certificate No.05132866 and having distinctive Numbers 234730050 to 234730149, lifting attachment of the subject shares, and to direct the Custodian (R1) and RPL (R2) to release the subject shares along with all the accruals and dividend thereon.

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The Applicant avers that, on 4 March 1992, the applicant had purchased 100 shares of RPL (R2) through Mr. Nagar Mull Kejriwal, a member of the Calcutta Stock Exchange for a consideration of rs.2,400/-. The Applicant has submitted the original share certificates and the transfer deeds. The original share certificates stand in the name of Ms. Deepika Ashwin Mehta and Mr. Ashwin S. Mehta – the notified parties (R6 and R5, respectively).

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The Applicant claims that the applicant had lodged the shares for transfer with Reliance Consultancy Services Limited, the then Registrar and Transfer Agent of RPL (R2). However, vide communication dated 14 August 1992, the original share certificates and the transfer deed were returned on the ground that the subject shares were under attachment by the Custodian / Income Tax Department.

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The Custodian has filed a Certification Report. It is contended, inter

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alia, that the application was examined in accordance with the criteria laid down in Misc. Application Nos.1, 2 and 3 of 1992. Apart from the original share certificates and the photocopy of the bill/receipt issued by the stock broker, the Applicant has not produced other requisite documents, namely, the contract note, proof of payment of consideration, proof of delivery in stock exchange and proof of price not being lower than the lowest ruling price on the date of purchase in the Calcutta Stock Exchange. Since the applicant claims that he had paid the price of the shares in cash, it cannot be said that the applicant has submitted the proof of payment.

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The Applicant in person submitted that, the transaction was genuine and he is a bonafide purchaser of the subject shares for valuable consideration. Reliance was placed on the transfer deeds to demonstrate that the notified Parties had transferred the subject shares and the said fact is evident from the names of the successive brokers, which find mention on the transfer deeds. The Petitioner in person also banked upon the bill issued by Mr. Nagar Mull Kejriwal, the stock broker, which evidences the receipt of consideration by the stock broker.

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In opposition to this, Mr. Raikar, learned Counsel for the Custodian, would submit that the documents produced by the Applicant are not sufficient to certify the applicant as a bonafide purchaser of the subject shares. It was urged that, mere production of share certificates and share transfer forms, in

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the absence of contemporaneous documents, like the contract note, bill / receipt issued by the stock broker, and more importantly, proof of payment is of no assistance to the applicant. Mr. Raikar laid emphasis on the fact that the absence of proof of payment dents the claim of the applicant as proof of payment is sacrosanct.

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Under the Scheme of the Trial of Offences Relating to Transactions in Securities Act, 1992 (“the TORT Act, 1992”), with the notification of a party under sub-Section (2) of Section 3, the entire property of such notified party stands attached, simultaneously and automatically, under sub-Section (3) of Section 3 of the Act, 1992. The attachment of the property of the notified party is by operation of law. No formal order of attachment is necessary. Neither the situs of the property nor the identity of the person who holds the property, has any bearing on the statutory attachment. The entire property of the notified party stands attached and, once attached, can only be dealt with in the manner ordained by the Act, 1992 and by the orders of the Special Court.

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The procedure of certification was necessitated as the attachment of the property of a notified party, which also comprised genuine and bona fide share holdings of small investors, was causing enormous hardship to such small investors. To ameliorate the hardship of genuine and bona fide small time investors, by its order dated 27 July 1997 passed in MA Nos.1 of 1992, 2 of 1992 and 3 of 1992, this Court had delineated the parameters for

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certification of securities as bona fide and genuine acquisitions, and release the same from attachment.

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This Court has further clarified that the process of certification was to be followed in respect of settlement dated 6 June 1992 onwards. The case at hand falls within the window period as the applicant claimed to have purchased the subject shares on 4 March 1992. Indeed, this Court had delineated the procedure for certification of shares and the documents which are required to be submitted to substantiate the claim of being a bona fide purchaser of the attached shares for value. The absence of the contract note, bills/receipts and proof of payment, was sought to be accounted for by asserting that the Applicant had lost those documents.

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The veracity of the aforesaid claim may be debatable. However, the Court would be required to be examine whether the documents which have been produced by the Applicant make out a case that the Applicant appeared to be a bona fide purchaser of the subject share.

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Mr. Raikar was justified in canvassing a submission that, mere possession of the original share certificate and the transfer forms, may not, by itself, substantiate the claim of a party who seeks a declaration that he has a bonafide purchaser of the shares, to which the certificate relates.

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In the case at hand, however, there are contemporaneous documents

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and concomitant circumstances, which deserve to be taken into account. The

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communication dated 14 October 1992 addressed by Reliance Consultancy Services Limited – the Registrar and Share Transfer Agent, indicates that the applicant had lodged 100 shares of RPL (R2) for transfer and those shares were returned to the applicant with the remarks “the subject shares were the subject matter of the attachment by Custodian / Income Tax department”.

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It is imperative to note that, all the particulars of the shares in respect of which the applicant had sought transfer, namely, the certificate number, number of shares, distinctive numbers and number of transfer deed correspond with the numbers which find mention on the original share certificates and the transfer deed. The aforesaid communication dated 14 October 1992, which has an element of contemporaneous value, in my considered view, cannot be brushed aside lightly. The aforesaid communication establishes, three facts. First, the Applicant had lodged the original share certificate, along with the transfer deed for transfer of the subject shares. Second, the share certificate and the transfer deed were then in existence. Third, the entries in the transfer deed, the number of which finds mention in the letter dated 14 October 1992, vouches for the execution of the transfer deed by the erstwhile holder of the shares – notified parties (R5 and R6). In a sense, the letter dated 14 October 1992, constitutes a formidable dyke against the applicant not being a bona fide purchaser of the subject shares. It does not appear that the applicant has lodged the claim for the

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mere reason that the applicant is in possession of the subject shares.

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The contemporaneous correspondence indicates that, after the acquisition of the subject shares, the applicant had sought transfer of shares, within a reasonable time, and, at that point of time, Reliance Consultancy Services Limited had informed the applicant that the subject shares were under attachment. I am, therefore, persuaded to hold that the said communication dated 14 October 1992 singularly vouches for the genuineness of the transaction and the bonafide of the applicant.

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The aspect of delay is, indeed, relevant. However, it is also necessary to note that the applicant had initially filed the application in the year 2009, which was dismissed for want of prosecution. Therefore, it cannot be said that the claim of the Applicant was then decided on merits.

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The transfer deed also lends credence to the claim of the applicant. It appears that the original allottees of the shares – notified parties (R5 and R6) had executed the transfer deed. The shares changed the hands on a couple of occasions, before the name of Mr. Nagar Mull Kejriwal, the stock broker, through whom the applicant claimed to have purchased shares, came to be endorsed as the last delivery broker. Mr. Nagar Mull kejriwal has issued a bill dated 4 March 1992 acknowledging the receipt of the said amount. Cumulatively, the transfer deed and the receipt lend support to the claim of the applicant.

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Thus, this court is satisfied that the applicant is a bonafide purchaser of

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the subject shares. The application, therefore, deserves to be allowed.

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Hence, the following order :

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ORDER

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(i) The prayer for certification of 100 shares bearing Certificate Nos.05132866, Distinctive Numbers 2347300500 to 234730149 under Folio No.58891983 of the Reliance Petrochemicals Limited (R2) stands allowed.

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(ii) The Custodian (R1) shall take necessary steps to transfer the subject 100 shares standing in the name of the notified parties along with all accruals and dividends, as indicated in paragraph No.14 of the Certification

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Report, in favour of the Applicant, within a period of eight weeks from today.

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(iii) The Application stands disposed.

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(iv) Interim application No.8 of 2025 also stands disposed.

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( N.J.JAMADAR, J. )

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Uttam Dutta v. the Custodian and Ors.

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