JUDGMENT :

Mehta, J.

1. The factual and legal issues involved in these appeals are common and hence the same have been heard together and are being decided by this common judgment.

2. The instant appeals under Section 10 of the Special Court (Trial of Offences relating to transactions in Securities) Act, 1992 (hereinafter being referred to as the ‘Act of 1992’) arise out of the final judgments passed by the Special Court, Bombay constituted under the Act of 1992 of even date i.e. 11th March, 2011, in MA Nos. 162 and 184 of 2008 in MA No.343 of 1994 in MA No. 193 of 1993.

3. Before proceeding to consider the appeals on merits, it would be apposite to consider the broad scheme of the Act of 1992.

4. The Act was promulgated as large-scale irregularities committed by some share brokers in collusion with the employees of Banks and Financial Institutions(in short ‘FIs’) came to light in relation to transaction in Government/other securities leading to diversion of funds from the banks/FIs to the individual accounts of certain brokers.

5. The Act provided a mechanism to deal with the above situations and in particular, to ensure speedy recovery of the huge amounts illegally diverted, punish the guilty and restore the confidence of public at large in the security transactions and also to uphold and maintain the basic integrity and credibility of banks and FIs. The period of transactions in securities under the purview was from 1st April, 1991 to 6th June, 1992. A Special Court headed by a sitting Judge of the High Court was established for speedy trial of offences relating to transactions in securities and disposal of properties attached. The Act also provided for appointment of one or more custodians under Section 3 so as to attach the property/properties of the offenders with a view to preventing diversion of such properties by the offenders.

6. Section 3(2) stipulates that the Custodian may, on being satisfied on information received that any person has been found involved in any offence relating to transactions in securities after 1st April, 1991 and on or before 6th June, 1992, notify the name of such person in Official Gazette.

7. Section 3(3) provides that any property, movable or immovable or both, belonging to the notified persons would stand attached simultaneously with the date of issuance of the notification.

8. Section 3(4) mandates the Custodian to deal with the attached properties in such manner as the Special Court may direct.

9. Section 11(1) empowers the Special Court to pass appropriate order(s) directing the Custodian for disposal of the attached property.

10. Under Section 11(2), liabilities of notified persons are required to be paid or discharged in full by distributing monies so realized after disposal of the attached assets.

11. Having taken into account the relevant provisions of the statute, the brief facts arising for consideration in the present appeals may be noted as below:-

(i) On 2nd July, 1992, Fairgrowth Financial Services Limited (hereinafter being referred to as the ‘FFSL’) was notified under Section 3(2) of the Act and all its properties stood attached. In 1993, the Custodian filed Miscellaneous Application No. 193 of 93 in the Special Court for the recovery of various sums of money belonging to FFSL from respondent No. 2-Pallav Sheth.

(ii) The Special Court passed a consent decree on 24th February, 1994 directing respondent No. 2-Pallav Sheth to pay a sum of Rs.51,49,07,417.92/- to the Custodian on behalf of FFSL. Respondent No. 2-Pallav Sheth committed default and as a consequence, the Custodian initiated attachment of his assets to recover the decretal amount.

(iii) During the years 1996-1997, the appellant-Suman L. Shah had borrowed a sum of Rs.50 lakhs from respondent No. 6-Klar Chemicals(P) Ltd. and a sum of Rs. 25 lakhs from respondent No. 7-Malika Foods (P) Ltd. (original respondent Nos. 5 and 6 before the Special Court) whereas appellant- Laxmichand Shah had borrowed Rs.45 lakhs from respondent No. 8-Ja