2011 Supreme(SC) 494

2011 (4) Supreme 497
SUPREME COURT OF INDIA
P. Sathasivam and Dr. B.S. Chauhan, JJ.
Smt. Rasila S. Mehta — Appellant(s)
versus
Custodian, Nariman Bhavan, Mumbai — Respondent(s)
Civil Appeal No. 2924 of 2008
with
Civil Appeal No. 2915 of 2008,
Civil Appeal No. 3377 of 2009
and
Civil Appeal No. 4764 of 2010
Decided on : 6-5-2011

IMPORTANT POINTS
Attachment of all the properties in terms of Section 3(3) of the Act is automatic.
Provisions of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 prevail over any other law, including the Limitation.
Canfina is a financial institution for the purposes of the Act.

Headnote:(a) Interpretation of statutes – Objects and reasons of the Act are to be taken into consideration in interpreting the provisions of the statute. (Para 12)

        (b) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 – Section 11 – For the purpose of discharging the claims and liabilities of the notified person the attached properties can be applied – Attachment of all the properties in terms of Section 3(3) of the Act is automatic – There is nothing in the Act suggesting that only the properties belonging to the notified party and acquired by the use of tainted funds alone can be attached. (Paras 19, 21 and 25)

        1992 (3) Bomb. C.R. 716; (1998) 5 SCC 1; (2004) 11 SCC 456; (2009) 10 SCC 564; (2006) 2 SCC 386 – Relied upon

        (c) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 – Section 3(3) and 13 – Provisions of the Act prevail over any other law, including the Limitation. (Para 35)

        (2004) 11 SCC 456 – Relied upon

        (d) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 – Sections 9A and 11 – All properties would be liable to be sold to the extent which are needed for redemption and not beyond the same. (Para 30)

        (2004) 11 SCC 456; (2009) 10 SCC 564 – Relied upon

        (e) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 –Section 3(2) – Natural Justice – The provisions of the Act do not provide for a pre-decisional hearing before notification but contains an impeccable milieu for a fair and just post decisional hearing – Absence of a pre-decisional hearing is not contrary to the rules of Natural Justice because the decision of the Custodian to notify does not ipso facto takes away any right of the person thus notified or imposes any duty on him. (Para 30)

        (1981) 1 SCC 664 – Relied upon

        (f) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 –Section 3(2) – Custodian and the Special Court relying on reports of various committees appointed by Government of India for notifying the appellants – Special court allowing Custodian’s petition for appointment of auditors – No infirmity. (Para 34)

        JT 2011(3) SC 750 – Relied upon

        (g) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 –Section 4(2) – Complicity of the appellants prima facie established by materials on records and audit reports – Petition for de-notification rightly rejected. (Para 46)

        (h) Interpretation of Statutes – Noscitur a sociis – Meaning of doubtful words may be ascertained by reference to the meaning of words associated with it – “Involved in the offence” occurring in section 3(2) of the Act – Actual order of these three words in juxtaposition indicates that meaning of one takes colour from the other. (Para 47)

        AIR 2004 SC 1426 – Relied upon

        (i) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 –Section 3(2) – The Act does not create an offence – The phrase “involved in the offence” would therefore not mean “accused of the offence” – Materials on record creating reasonable suspicion of the appellants’ involvement in the offence – No infirmity in notifying the appellants. (Para 48)

        (j) Interpretation of statutes – An Act has to be interpreted in such a manner so as to achieve the purpose of the Act – In interpreting a statute the rule ut res magis valeat quam pereat should also be employed – A machinery must be so construed as to effectuate the liability imposed by the charging section and to make the machinery workable. (Paras 48 and 49)

        (2006) 2 SCC 386; (2009) 10 SCC 564 – Relied upon

        (k) Words and Phrases – Financial Institution – The Act was a consequence of investigations into large scale siphoning of funds from financial institutions and Banks – Janakiraman Committee investigated into Canfina also – Canfina therefore is a financial institution for the purposes of the Act. (Para 52)

        (l) Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 –Section 11(2)(b) and rule 2(b), Special Court (Trial of Offences Relating to Transactions in Securities) Rules, 1992 – Claim of Canfina is valid u/s 11(2)(b) – Complaint of Canfina is an appropriate complaint u/r 2(b). (Para 53)

       Facts of the case:

        These appeals are filed by family members of late Harshad S. Mehta challenging the orders passed by the Special Court in respect of his properties.

       Finding of the Court:

        There is no infirmity in the impugned order.

       Result : Civil Appeal Nos. 2924 of 2008 and 2915 of 2008 dismissed. Civil Appeal Nos. 3377 of 2009 and 4764 of 2010 disposed of.