IMPORTANT POINTS
Properties of the notified persons, do not vest in the Custodian.
Although the Special Court is bound to follow CPC, it must comply with principles of natural justice.

JUDGMENT

D.K. Jain, J.:

1. This appeal under Section 10 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (for short “the Special Court Act”) is directed against the order dated 30th April, 2003, as corrected vide order dated 2nd May, 2003, passed by the Special Court at Bombay, in Misc. Petition No. 64 of 1998. By the impugned orders, the Special Court has permitted the Custodian to sell 54,88,850 shares of Apollo Tyres Ltd. (for short “Apollo”), respondent No. 3 in this appeal, at Rs.90/- per share.

2. The material facts giving rise to the appeal are as follows:

The appellants, one late Harshad S. Mehta, their other family members and the corporate entities belonging to the family members had purchased more than 90 lakh shares in Apollo. Except for the holding of two family members, the entire holding came to be attached by a notification on 6th June, 1992. Under the said notification, 29 entities both individual and corporate were notified under Section 3(2) of the Special Court Act. Prior to the issue of notification about 15 lakh shares of Apollo stood registered in the name of the notified parties and the balance shares were unregistered. About 39.16 lakh unregistered shares were disclosed by the late Harshad S. Mehta to the office of the Custodian, which were subsequently handed over to the Central Bureau of Investigation (hereinafter referred to as “the CBI”). The CBI seized about 7 to 8 lakh un-registered shares in 1992, which also were handed over by them to the Custodian. The Custodian was also authorised to deal with a few lakh shares, identified as benami shares. Thereafter, the Custodian moved an application before the Special Court seeking orders for effecting registration of unregistered shares in the name of the Custodian and for recovery of lapsed benefits that accrued on the said unregistered shares. The management of Apollo objected to the proposed registration, alleging violation of the takeover code and raised the question of ownership. However, the Special Court, vide order dated 19th November, 1999, allowed the registration of the un-registered shares in the name of the Custodian.

3. By order dated 11th March, 1996, in Civil Appeal No.5225 of 1995, this Court, in a suo motu action, directed the Custodian to draft a scheme for sale of shares of the notified parties, which constituted bulk of the attached assets. Accordingly, a scheme was drafted by the Custodian in consultation with the Government of India and thereafter, presented to this Court. Vide order dated 13th May, 1998, in Civil Appeal No. 5326 of 1995, this Court directed that the said scheme may be considered by the Special Court, with further modifications, if any. In furtherance of the said direction, the scheme was presented to the Special Court for its approval. The notified parties strongly opposed the said scheme on several grounds. All the objections of the notified parties were overruled and the Special Court, vide order dated 17th August, 2000, categorised the shares into three classes - (i) routine shares; (ii) bulk shares and (iii) controlling block of shares. The Special Court constituted a Disposal Committee for disposal of shares as per the norms laid down in the said order. Norms in respect of sale of controlling block of shares read as follows:

“NORMS FOR SALE OF CONTROLLING BLOCK OF SHARES:

After completion of demat procedure for registered shares, the Custodian will give public advertisement in the newspapers inviting bids for purchase of Controlling Block of shares. The offers should be for the entire block of registered shares. The offers should be accompanied by a Demand Draft/Pay Order/Bankers’ cheque representing 5% of the offered amount in cases of thinly traded shares of companies like Killick Nixon whereas in cases of highly valued shares like Apollo Tyres, the offers shall be accompanied by Demand Draft/Pay Order/Bankers’ cheque representing 2% of the offered amount. The said Pa