Allowed

Mrs.Sainaba T.K. v. Custodian

Kerala HC12 Oct 2011WP(C)/12126/2006

Case brief

AI extract

What is this about?

In a writ petition under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, the High Court of Kerala quashed an order dismissing the petitioner's application to lift share attachments. Relying on an undisputed stock exchange certificate proving payment, the court directed the appropriate Special Court within six months to reconsider the issue expeditiously.

What did the court decide?

The order of the Special Court dismissing the application was quashed. The appropriate Special Court is directed to reconsider the issue within six months.

Mrs.Sainaba T.K. Vs Custodian — Constitutional and Fundamental Rights | Kerala HC (2011)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE S.SIRI JAGAN

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WEDNESDAY, THE 12TH OCTOBER 2011 / 20TH ASWINA 1933 WP(C).No. 12126 of 2006(R) --------------------------------------

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PETITIONER(S):

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----------------------

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MRS.SAINABA. T.K., KADAMBOT HOUSE, U. BAZAAR, P.O.MADAVANA, ERIYAD - 680 666, THRISSUR DISTRICT, KERALA.

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BY ADV. SRI.V.RAMACHANDRAN, SMT.K.K.VIMALA, SRI.KKM.SHERIF, SRI.LAL K.JOSEPH, SRI.A.A.ZIYAD RAHMAN, SRI.V.R.REKESH.

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RESPONDENT(S):

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--------------------------

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1. CUSTODIAN, SPECIAL COURT (TORTS)ACT, 1992, BANKING DIVISION, DEPARTMENT OF ECONOMIC AFFAIRS, MINISTRY OF FINANCE, 10TH FLOOR, 227, VINAY K.SHAH MARG, NARIMAN POINT, MUMBAI - 400 021.

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2. UNION OF INDIA, MINISTRY OF FINANCE, NEW DELHI.

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3. JAIPRAKASH INDUSTRIES LTD., (NOW M/S.JAIPRAKASH ASSOCIATES), 14, BENI PRASAD ROAD, LUKNOW - 226 001.

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4. ALANKIT ASSIGNMENTS, J.A. ANNEX, 54 VASANTH LOCK, VASANTH VIHAR, NEW DELHI - 110 057.

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WP(C).No. 12126 of 2006(R)

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5. COCHIN STOCK EXCHANGE LTD., M.E.S. BUILDING, KALOOR,

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KOCHI - 682 017.

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6. M/S.SREEKUMAR & CO., NO.24, K.V. COLONY, PANAMPILLY NAGAR, KOCHI - 682 036.

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7. ASWIN S.MEHTA, REPRESENTING HIMSELF RINA SUDHIR MEHTA & SUDHIR MEHTA., 32 MADHULI, DR.ANNIE BESANT ROAD, WORLI, MUMBAI - 400 018.

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R1 & R2 BY ADV. SRI.P. PARAMESWARAN NAIR, ASST. SG. OF INDIA. SRI. AJITH KRISHNAN, ADDL. CGSC. R5 BY ADV. SRI.KOSHY GEORGE.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 12/10/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 12126 of 2006(R)

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXT.P1: COPY OF THE APPLICATION DATED 06/06/2005 FILED BEFORE SPECIAL COURT (TORTS) ACT, MUMBAI.

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EXT.P2: COPY OF THE NOTICE DATED 28/06/2005 FROM SPECIAL COURT (TORTS) ACT, MUMBAI.

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EXT.P3: COPY OF THE NOTICE DATED 10/10/2005 ISSUED TO THE PETITIONER BY THE REGISTRY OF SPECIAL COURT (TORTS) ACT, MUMBAI.

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EXT.P3(a): COPY OF THE ORDER DATED 03/10/2005 OF THE SPECIAL COURT (TORTS) ACT, MUMBAI.

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EXT.P4: COPY OF THE PETITIONER'S LETTER DATED 08/11/2005 ADDRESSED TO THE 1ST RESPONDENT.

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EXT.P5: COPY OF THE CERTIFICATE DATED 09/06/2005 ISSUED BY THE 5TH RESPONDENT.

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EXT.P6: COPY OF THE ORDER DATED 13/12/2005 ISSUED BY THE SPECIAL COURT (TORTS) ACT., MUMBAI.

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EXT.P7: COPY OF THE PETITIONER'S APPLICATION DATED 06/02/2006.

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EXT.P8: COPY OF THE PETITIONER'S LETTER DATED 06/12/2005 ADDRESSED TO THE 1ST RESPONDENT.

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EXT.P9: COPY OF THE NOTIFICATION DATED 29/04/2005 OF THE 1ST RESPONDENT.

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RESPONDENT'S EXHIBITS:-

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EXT.R1(a): COPY OF THE SPECIAL COURT ACT 1992 AND SPECIAL COURT REGULATIONS.

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EXT.R1(b): COPY OF THE ORDER DATED 13/12/2005 ISSUED BY THE SPECIAL COURT BOMBAY.

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EXT.R5(a): COPY OF THE LETTER NO.SE/A/634/2005 DATED 23/11/2005.

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EXT.R5(b): COPY OF THE LETTER NO.5231/CUS/BOM/BOB/CSE/VOT/93 (140-II) DATED 13/12/2005.

//TRUE COPY//

P.A. TO JUDGE

S. Siri Jagan, J.

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W.P(C) No. 12126 of 2011

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Dated this, the 12^th day of October, 2011.

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J U D G M E N T

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This matter arises under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. This Act was enacted pursuant to the securities scam, which rocked the country two decades ago. Section 3 of the Act reads thus:

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“ 3. Appointment and functions of Custodian: - (1) The Central Government may appoint one or more Custodian as it may deem fit for the purposes of this Act.

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(2) The Custodian may, on being satisfied on information received that any person has been involved in any offence relating to transactions in securities after the 1^st day of April, 1991 and on and before 6^th June, 1992, notify the name of such person in the Official Gazette.

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(3) Notwithstanding anything contained in the Code and any other law for the time being in force, on and from the date of notification under sub-section (2), any property, movable or immovable, or both, belonging to any person notified under that sub-section, shall stand attached simultaneously with the issue of the notification.

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(4) The property attached under sub-section (3) shall be dealt with by the Custodian in such manner as the Special Court may direct.

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(5) The Custodian may take assistance of any person while exercising his powers or for discharging his duties under this section and Sec.4.”

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In accordance with the said Section, M/s. Rina Sudhir Mehta and Sudhir Mehta were notified as persons coming within the purview of Section 3 of the Act by the custodian appointed under the Act. The petitioner is a person who purchased certain shares of M/s. Jaiprakash Industries from the said persons. In view of

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W.P(C) No. 12126 of 2011 -: 2 :-

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the notification, the said shares stand attached under the Act. Section 4 of the said Act reads as follows:

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“ 4. Contracts entered into fraudulently may be cancelled:- (1) If the Custodian is satisfied, after such inquiry as he may think fit, that any contract or agreement entered into at any time after the 1^st day of April, 1991 and on and before the 6^th June, 1992 in relation to any property of the person notified under sub-section (2) of Sec. 3 has been entered into fraudulently or to defeat the provisions of this Act, he may cancel such contract or agreement and on such cancellation such property shall stand attached under this Act:

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Provided that no contract or agreement shall be cancelled except after giving to the parties to the contract or agreement a reasonable opportunity of being heard.

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(2) Any person aggrieved by a notification issued under sub-section (2) of Sec. 3 or any cancellation made under sub-section (1) of Sec. 4 or any other order made by the Custodian in exercise of the powers conferred on him under Sec.3 or Sec. 4 may file a petition objecting to the same within thirty days of the assent to the Special Court (Trial of Offences Relating to Transactions in Securities) Bill, 1992, by the President before the Special court where such notification, cancellation or order has been issued before the date of assent to the Special Court (Trial of Offences Relating to Transactions in Securities) Bill, 1992 by the President and where such notification, cancellation or order has been issued on or after that date, within thirty days of the issuance of such notification, cancellation or order, as the case may be; and the Special Court after hearing the parties, may make such order as it deems fit.”

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In view of Section 4, the petitioner filed an application before the special court constituted under the Act for lifting the attachments. In view of the fact that the petitioner did not have copies of the contract relating to the transfer, the petitioner obtained Ext.P5 certificate from the Cochin Stock Exchange Limited in proof of the genuineness of the transaction. Along with the same, the petitioner filed Ext.P1

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W.P(C) No. 12126 of 2011 -: 3 :-

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application before the special court for lifting of the attachment. That application was rejected by Ext.P6 order, which reads as follows:

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“1. The learned counsel for the Custodian submits that the applicant informed them that applicant is not having the relevant documents in support of his claim.

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As such, the application is dismissed with liberty to the applicant to get it restored as and when the applicant is in a position to produce the relevant documents in support of his claim.”

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The petitioner seeks the following reliefs:

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“(i) issue a writ in the nature of mandamus or any other appropriate writ, order or direction, commanding the 1^st respondent to consider and dispose of Ext.P7 in accordance with law duly reckoning Ext.P5 as petitioner's proof of payment of consideration for the shares bought from the 6^th respondent;

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(ii) issue a writ in the nature of mandamus or any other appropriate writ, order or direction, commanding the 1^st respondent to move the Special Court (TORTS) Act, 1992 for restoring the petitioner's application evidenced by Ext.P1.”

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The Custodian appointed under the Act has filed a

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counter affidavit, wherein the stand taken is that the petitioner has a right of appeal before the Supreme Court.

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I have considered the rival contentions in detail.

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It is not disputed before me that the petitioner had produced Exts. P4 and P5. Ext.P5 is a certificate issued by the Cochin Stock Exchange certifying that the shares in question were transacted through the Clearance House of the Cochin Stock Exchange and payment was made by the

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W.P(C) No. 12126 of 2011 -: 4 :-

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Member Broker through the Clearance House of the Exchange. That being so, the submission of the learned counsel for the Custodian before the Special Court that the applicant does not have the relevant documents in support of his claim is patently wrong. In fact, instead of relying on the submission of the learned counsel for the Custodian, the Special Court ought to have looked into the documents produced by the applicant insofar as the production of Ext.P5 is not disputed before me.

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In the above circumstances, I am of opinion that Ext.P6 is unsustainable. Accordingly, Ext.P6 is quashed.

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It is now submitted before me that presently, the Special Court is not by the forum, which passed Ext.P6 order and there is a re-organisation of the same. Whatever that be, I direct the appropriate court constituted under Section 5 of the Act as it obtains now, to re-consider the issue in the light of Ext.P5 certificate produced by the petitioner as expeditiously as possible at any rate within 6 months from the date of receipt of a copy of this judgment. It would be open to the petitioner to produce such other documents as are in her possession to support her contentions.

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The writ petition is disposed of as above.

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Sd/- S. Siri Jagan, Judge.

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Tds/

Mrs.Sainaba T.K. v. Custodian

Case brief

What is this about?

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Mrs.Sainaba T.K. v. Custodian

Case brief

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