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SUPREME COURT OF INDIA
Dhananjaya Y Chandrachud, J.
Manjit Singh Sodhi – Appellants
Vs.
The Custodian & Ors. – Respondents
Civil Appeal No 5126 of 2022 (Arising out of SLP(C) No 10572 of 2020)
Decided On : 04-08-2022
For the Petitioner(s): Mr. Huzefa Ahmadi, Sr. Adv. Ms. Lalita Kohli, Adv. Ms. Shahrukh Alam, Adv. Mr. Manoj Shukla, Adv. Mr. Abhishek Swarup, Adv. M/S. Manoj Swarup And Co., AOR
For the Respondent(s): Mr. Arvind Kumar Tewari, AOR Mr. Abhishek Tewari, Adv. Mr. Tushar Upreti, Adv. Yosha Dutt, Adv. Mr. Anupam Upreti, Adv.
IMPORTANT POINT
Provisions of Limitation Act, 1963 have no application in relation to a petition under Section 4(2) of Special Court (Trial of Offences Relating to Transactions in Securities) Act 1992.
Headnote:
Special Court (Trial of Offences Relating to Transactions in Securities) Act 1992 – Section 4(2) – Limitation Act, 1963 – Sections 18 and 29(2) – Execution application – Provisions of Act of 1963 would apply only when a suit is filed or a proceeding is initiated for recovery of an amount – Act of 1963 would have no application towards claims pending before Special Court for the purpose of discharge of liabilities of a notified person in terms of Section 11 of Act of 1992 – An “interlocutory order” denotes an interim or temporary order which does not decide important rights or liabilities of parties – Determination of issue of limitation affects rights and liabilities of parties – Section 29(2) of Limitation Act is not applicable to Act of 1992 since in terms of provisions of the Act, no period of limitation is prescribed. (Paras 7, 13 and 15)
Facts of the case:
Present appeal arises from a judgment dated 6 March 2020 of the Special Court constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act 19921. The decision of the Special Court arises out of an execution application filed by the Custodian, the first respondent.
Findings of Court:
Appellant is granted four weeks to file his disclosure of assets subject to his right to urge his submissions in the execution application. In the meantime, the Court has been apprised of the fact that an application has been filed for the arrest of the appellant. Conditional on the appellant making the disclosure of assets within four weeks as directed above, the application for arrest shall not be pursued until the Execution Application is decided.
Result : Appeal disposed of with directions.
JUDGMENT :
Dhananjaya Y Chandrachud, J.
1. Leave granted.
2. The appeal arises from a judgment dated 6 March 2020 of the Special Court constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act 1992 [“Act of 1992”]. The decision of the Special Court arises out of an execution application filed by the Custodian, the first respondent, being Execution Application No 1 of 2019.
3. Fairgrowth Financial Services Ltd. [“FFSL”], the second respondent, is a company registered under the provisions of the Companies Act 1956. Raviraj Housing Corporation, the third respondent, had availed a short term loan of Rupees Twenty five lakhs from FFSL and agreed to repay it after 180 days with interest at the rate of 20 percent per annum. The first respondent is the custodian appointed by the Central Government under the provisions of the Act of 1992. The custodian notified the second respondent as a “notified person” under the provisions of Section 3(2) of the Act of 1992. 3[Section 3(2) “The custodian many, on being satisfied on information received that any person has been involved in any offence relating to transactions in securities after the 1st day of April 1991 and on and before the 6th June, 1992, notify the name of such person in the Official Gazette.”] The assets of FFSL stood attached with effect from 2 July 1992. The case of FFSL was that the third respondent had executed a promissory note on 14 October 1991 for the repayment of the loan and a letter of undertaking-cum-indemnity reiterating its commitment to repay Rupees twenty five lakhs. FFSL instituted Miscellaneous Petition No 15 of 2000 against the third respondent for the recovery of an amount of Rupees twenty five lakhs, together with interest at the rate of twenty per cent. On 28 March 2003, the Special Court directed the third respondent to pay to FFSL a sum of Rs 63.86 lakhs, together with interest at twenty per cent on the principal sum of Rupees twenty five lakhs from the date of the institution of the petition till payment and/or realization.
4. On 28 April 2003, a notice was issued by FFSL to the third respondent for the payment of the decretal amount. This was followed by a notice dated 16 December 2011 by the first respondent. On 22 February 2018, the appellant addressed a communication to the first respondent stating that the erstwhile trustee of Raviraj Housing Corporation, who was looking after its affairs, died in 2004 and that the appellant became a trustee after his death. By the said communication, the appellant offered to pay the principal amount of Rupees twenty five lakhs and sought a waiver of the interest. By a communication dated 10 July 2018 the first respondent stated that the decision on waiver of interest on the decretal sum rests with the Special Court under the Act of 1992. The Custodian stated that pending the filing of an application before the Special Court seeking a waiver of interest, the principal amount be sent to FFSL expeditiously. Pursuant to his offer, the appellant admittedly paid an amount of Rupees one lakh. However, the advocate for Raviraj Housing Corporation sent another communication on 19 October 2018 stating that since the appellant became a trustee only in 2005 after the death of Mr. LV Whabhi who used to conduct the affairs of the Corporation, he is not liable to pay the dues of the third respondent. It was also stated that the third respondent trust does not have any income. A copy of a nil annual income tax return for the year 2002-2003 was furnished to substantiate the claims.
5. The first respondent moved an execution application [Execution application no. 1 of 2019] before the Special Court. The Execution Application was contested by the appellant on the ground that it was barred by limitation. The appellant submitted that though the decree was made in 2003, the first demand by the custodian was made sixteen years later on 16 December 2011 and the delay has not been explained. On 14 June 20
