Date of Payment,Name of the Party Making Payment,Amount Paid [ In Rs.],Name of the Bank,
07.05.1992,Harshad S. Mehta,"3,42,00,000/-",ANZ Grindlays Bank,
07.05.1992,Zest Holdings Pvt. Ltd.,"1,50,00,000/-",ANZ Grindlays Bank,
11.05.1992,Harshad S. Mehta,"1,08,00,000/-",Bank of India,
TOTAL,,"6,00,00,000/-",[Rupees Six Crores only],
Sr.
No",Received From,Amount [In Rs.],Accounted As,"Amount
Utilized [In
Rs.]
1.,"Late Shri Harshad S. Mehta
(ANZ Grindlays Bank) o
07/05/1992","3,42,00,000/- (Rupees
nThree Crores Forty-Two
Lakhs only)","Purchased “Pay Order†in the name of Mazda Industrial & Leasin
Ltd. On behalf of J.H. Mehta (Due credit given to me in the Ledger b
Mehta Group)","g3,47,50,000/
y
2,"Z e s t Holdings Pvt. Ltd
(Applicant No.3)",".1,50,00,000/- (Rupees One
Crore Fifty Lakhs only)",Utilized for funding loss for the positions in Valan No.3 1992-93,"1,50,00,000/
3,"Late Shri Harshad S. Mehta
(Bank of India)","1,08,00,000/- (Rupees One
Crore Eight Lakhs only)",Reconciled completely with the Ledger of Harshad S. Mehta,"1,08,00,000/-
4*,Smt. J.H. Mehta,"2,57,00,000/- (Rupees Two
Crores Fifty Seven Lakh
only)",60 Lakhs towards pay-in of Valan No.2 1992-93,"60,00,000/-
,,,"s
1.97 Crores funding the losses of Valan No.3 of 1992-93","1,97,00,000/-
,TOTAL,"8,57,00,000/-",,"8,77,00,000/-
*Amount not indicated by the Applicants in their application.,,,,
Sr.
No.",Issues,Findings,,
1,Do Plaintiffs prove that money is receivable from Defendant No.1?,Yes,,
1A,"If yes, at what rate of interest ?",18% p.a.,,
2,"Whether the Plaintiffs prove that they are entitled to seek any relief against surplus amounts lying with Defendant No.5, out of sale
proceeds of the Membership Card of Defendant No.1?",Yes,,
3,"Â Whether Defendant No.1 has discharged his onus and obligation to disclose the fact of possession of attached assets belonging to
the Plaintiffs in terms of Section 3(3) and Section 13 of TORTS Act, 1992 ?",No,,
4,"Whether the Bombay Stock Exchange is liable to make good the amount of Rs.49,45,584/- defrayed by it to Income Tax Department
to meet their claim on Defendant No.1?",No,,
5,Whether the Suit is barred by limitation ?,No,,
6,What Order and Decree ?,"A s per
Final Order",,
Sr. No,Received From,Amount [In Rs.],Accounted As,"Amount
Utilized [In
Rs.]
1,"Late Shri Harshad S. Mehta
(ANZ Grindlays Bank) o
07/05/1992","3,42,00,000/- (Rupees
nThree Crores FortyTwo
Lakhs only)","Purchased “Pay Order†in the name of Mazda Industrial &
Leasing Ltd. On behalf of J.H. Mehta (Due credit given to me in the
Ledger by Mehta Group)","3,47,50,000/-
2,"Zest Holdings Pvt. Ltd
(Applicant No.3)",".1,50,00,000/- (Rupees One
Crore Fifty Lakhs only)",Utilized for funding loss for the positions in Valan No.3 1992-93,"1,50,00,000/-
3,"Late Shri Harshad S. Mehta
(Bank of India)","1,08,00,000/- (Rupees One
Crore Eight Lakhs only)",Reconciled completely with the Ledger of Harshad S. Mehta,"1,08,00,000/-
4*,Smt. J.H. Mehta,"2,57,00,000/- (Rupees
Two Crores Fifty Seven
Lakhs only)",60 Lakhs towards payin of Valan No.2 1992-93,"60,00,000/-
,,,1.97 Crores funding the losses of Valan No.3 of 1992-93,"1,97,00,000/-
TOTAL,,"8,57,00,000/-",,"8,77,00,000/-
*Amount not indicated by the Applicants in their application,,,,
37. As per the contention of Defendant No.1, this Pay Order was issued by him for the purchase of the 'Rights Issue' of MILL from his own amount",,,,
towards investment. It is stated by him in paragraph No.13(d) of the Written Statement, that, it was purchased by him on 9th May 1992 as “the",,,,
hedge against falling marketâ€; it was purchased out of his own funds and this Pay Order was delivered to MILL. However, subsequently, he was",,,,
informed that, the said Pay Order has not been encashed by the 'Payee'. It is his contention that, therefore, he has taken up the matter with Defendant",,,,
No.2 and held negotiations and discussions on the matter and, ultimately, he had written a letter to the Board of Directors of the Federal Bank on 27th",,,,
May 2011.,,,,
38. In considered opinion of this Court, if according to Defendant No.1, the Pay Order was issued from his own funds, it becomes difficult to accept",,,,
that for these last 20 years from 1992 till 2011, when the notice was issued for the first time to Defendant No.2, he will maintain silence and will never",,,,
bother to make enquiry about the same. Moreover, though he states that this Pay Order of Rs.4 Crores was issued from his personal funds, this",,,,
amount, as admitted by him, is not reflected in the 'Balance Sheet'. Further, the evidence on record clearly goes to prove that, before this amount of",,,,
Rs.6 Crores was transferred by the Plaintiffs in the account of Defendant No.1, through the cheques, the amount lying in the account of Defendant",,,,
No.1 was hardly Rs.17 lakhs. Hence, it follows that, he could issue these two Pay Orders of Rs.3.47 Crores and Rs.4 Crores only out of the funds",,,,
received from late Harshad Mehta.,,,,
39. Though Defendant No.1 has contended that this amount was given by Harshad S. Mehta to cover-up the losses, which he has incurred in the",,,,
shares business on account of Harshad S. Mehta taking the bullish position; whereas, the market was falling and hence, Harshad S. Mehta has",,,,
sustained the losses towards it, again there is no evidence on record to that effect at all. This case itself is unbelievable, as, during the said period,",,,,
when Harshad Mehta Group of Entities were passing through the critical and difficult situation, it can hardly be accepted that they would invest this",,,,
large amount towards the shares business. Secondly, the 'Contract Notes' of the alleged transactions are neither produced on record and the bills,",,,,
which are produced on record, do not bear the acknowledgment of Harshad S. Mehta or of any one else from his Group Entities to show that these",,,,
bills were received.,,,,
40. As submitted by learned counsel for Defendant No.1, it might not have been legally binding on him to preserve these 'Contract Notes', as per Rule",,,,
15 of the Securities Contracts (Regulation) Rules, 1957, beyond the period of 5 years, but then, in that case, Defendant No.1 should have the",,,,
acknowledgment of receipt of the bills. In his 'Ledgers / Accounts', which are contemporaneous documents, these bill numbers are not mentioned.",,,,
41. Moreover, if, according to him, the accounts were settled with Harshad S. Mehta in the year 1996, there is no explanation as to why Harshad S.",,,,
Mehta has addressed the letter dated 7th September 2001 to Defendant No.1, the copy of which is produced by him also and sent to 'Custodian', in",,,,
which also Harshad S. Mehta has called upon Defendant No.1 to furnish copies of 'Statements of Accounts', containing details of the transactions,",,,,
payments exchanged, contracts and bills. This letter is admittedly not replied by Defendant No.1 contending that accounts were already settled in 1996",,,,
itself. Hence, this letter dated 7th September 2001 establishes that the case of Defendant No.1 that he has settled the accounts with Harshad S.",,,,
Mehta in 1996, is also not acceptable.",,,,
42. Though Defendant No.1 contends that he has sent reply to the said letter on 8th October 2001, there is no explanation why he did not clarify these",,,,
facts to the 'Custodian', since the 'Custodian' had lodged a claim for recovery of the amount of Rs.1,52,000/- on behalf of M/s. Zest Holdings Private",,,,
Limited.,,,,
43. Admittedly, the alleged settling of accounts in 2001 was after the 'Public Notice' dated 10th September 1992 issued by the 'Custodian', calling upon",,,,
the parties to disclose the facts of the transactions undertaken by them with 'Notified Parties'. Neither the 'Custodian', nor the three Firms of the",,,,
Chartered Accountants appointed by this Court were informed about this settlement. In earlier two proceedings, bearing Miscellaneous Application",,,,
No.267 of 1993 filed by Plaintiff No.2-Ashwin Mehta and Miscellaneous Application No.135 of 1994 filed by M/s. Infrastructure Leasing and,,,,
Financial Services, to which Defendant No.1 was a party, he has not disclosed these facts.",,,,
44. It is a matter of record, as disclosed through affidavit-in-reply of Defendant No.1 that the 'Custodian' has, at the behest of the three Firms of the",,,,
Chartered Accountants, written a letter dated 11th September 2001 to Defendant No.1, calling upon him to pay a sum of Rs.1,52,17,000/-, together",,,,
with interest @ 24% p.m. Defendant No.1 has not sent reply to this letter denying the said claim, which liability now he is denying after more than two",,,,
decades. It was the duty of the 'Custodian' to place the matter before this Court, as stated in the letter, but the 'Custodian' has not done so. However,",,,,
the fact remains that, Defendant No.1 has not sent reply to the 'Custodian', but now he is producing the letter dated 8th October 2001, in which he",,,,
allegedly requested Harshad S. Mehta to inform the 'Custodian' about settlement of accounts. The authenticity of this letter is thus in question.,,,,
45. If, according to Defendant No.1, the purported positions of the Harshad S. Mehta and Plaintiffs were squared-up by 7th May 1992, then there",,,,
existed no position, which required any hedging. Moreover, if the money belonged to Defendant No.1, why he has purchased the Pay Order in the",,,,
name of MILL? It is significant to note that, during subsequent period, he has allowed his Firm to be declared as a 'Defaulter', despite having such a",,,,
huge amount to his credit.,,,,
46. If the Pay Order of Rs.3.47 Crores was drawn in the name of the MILL at the behest of M/s. J.H. Mehta, obviously, no credit can be given in the",,,,
account of Harshad S. Mehta for this amount, which Defendant No.1 is doing in the present case. Defendant No.1 admits the receipt of sum of",,,,
Rs.8.57 Crores, which includes the sum of Rs.2.57 Crores paid by M/s. J.H. Mehta on 7th May 1992, for which she has not filed the present claim",,,,
and, therefore, this amount of Rs.2.57 Crores is not the subject matter of the claim. Most importantly, Defendant No.1 has admitted in his Written",,,,
Statement that, his Firm was acting as 'Broker' of Harshad S. Mehta and Plaintiffs.",,,,
47. Moreover, it is pertinent to note that, on 11th September 2011 itself, the 'Custodian' in his letter has called upon Defendant No.1 to explain the",,,,
details of the payment of this amount, which was found receivable by M/s. Zest Holdings Private Limited. However, the said letter was not replied",,,,
and no explanation was given that this amount was towards the losses sustained and it was arrived at after reconciliation of the accounts.,,,,
48. The cross-examination of Defendant No.1 in this respect is self-exposing the falsity of his stand. He has admitted that, he is not having any",,,,
document to show that the 'Contract Notes' were actually delivered to the Plaintiffs. He has further admitted that, none of the bills produced in the",,,,
Suit bear the acknowledgment of Harshad S. Mehta or his Office. It is admitted by him that, till the bills were not settled, the 'Contract Notes' used to",,,,
be maintained in their office. Here in the case, there is no evidence to show that the bills were settled. In view thereof, either the 'Contract Notes'",,,,
should have been produced or the bills should have the acknowledgment. However, as admitted by him, none of the bill is having the acknowledgment",,,,
of Harshad S. Mehta. They are also not mentioned in the 'Ledgers' produced at page Nos.963, 972 and 973. According to him, it was done to avoid",,,,
the payment of taxes. On the advise of 'Tax Consultant', instead of referring to the bills, he has mentioned 'Amount Repaid'. Reliance in this respect is",,,,
placed by learned counsel for Defendant No.1 on the 'Judgment' of the Hon'ble Apex Court in the case ofC ommissioner of Income Tax, Gujarat Vs.",,,,
A. Raman, (1968) 1 SCR 10, holding that, 'avoidance of tax by whatever device available, may be permissible', but here the question is, 'why the bills",,,,
are not produced and not having acknowledgment?',,,,
49. There is also a question as to why these facts were not brought by him to the notice of the 'Custodian', when he has received the notice from the",,,,
'Custodian'. He has also not given reply to the letter dated 20th June 2001 sent by Sudhir Mehta to him. Thus, his entire case about the adjustment of",,,,
this amount towards the alleged losses sustained by Harshad Mehta and Group in the shares business, is put up just as an after-thought to avoid his",,,,
liability. Hence, as regards the Pay Order of Rs.4 Crores, the evidence on record is clinching that the said amount belongs to Harshad S. Mehta and it",,,,
was the money receivable by Plaintiffs from Defendant No.1. It is also pertinent to note that Defendant No.1 has nowhere pleaded in Written,,,,
Statement that, at any time, he has acted on principal to principal basis with Harshad S. Mehta and his Group of Companies. In his Written Statement,",,,,
he has categorically admitted that relationship was of a Broker. He has admitted in his cross-examination that, he was aware that if he had to act as a",,,,
‘principal’, it was necessary for him to obtain the prior permission of Bombay Stock Exchange. That permission is not produced in the case.",,,,
Therefore, it is clear that this is a got up case put up by him to avoid his liability.",,,,
50. Even as regards the amount of Rs.1,08,00,000/-, Defendant No.1 has tried to explain the same by showing the amount of Rs.60,00,000/- as relating",,,,
to third-party payment on his behalf. Neither the name of the third-party is mentioned, nor the details thereof are given even in the 'Audited Accounts'.",,,,
He is unable to state as to how payment was made by third-party to J.H. Mehta; whether by Pay Order, Demand Draft or by Cheque? Surprisingly,",,,,
even after reconciliation of the accounts, he had not informed to Harshad S. Mehta by writing any letter that, after giving effect to the entries, the",,,,
amount at the foot of the account should have been Rs.7,79,250/-. His contention that the amount of Rs.15 lakhs was reflected wrongly in the account",,,,
of Plaintiff No.1-Jyoti Mehta is also unbelievable. What is most surprising to note is that, Valan No.3 of 'A' Group, produced at Page Nos.861 and",,,,
893, and Valan No.3 of 'B†Group does not show that the bill numbers are mentioned therein. A vague entry is made as 'Amount Repaid'. It may",,,,
have been done for the purpose of avoiding the payment of income tax and according to learned counsel for Defendant No.1, there is nothing wrong,",,,,
if such entries are made to avoid the payment of income tax. However, the fact remains that, when those entries are challenged, it was necessary for",,,,
Defendant No.1 to substantiate those entries by proving that this amount was actually incurred towards the bills.,,,,
51. Moreover, if the only amount lying in his account was Rs.17 lakhs, just before receipt of this large amount, there was no reason for the CBI also to",,,,
freeze his account. The fact that he has failed to explain the credit of this amount in his account, made it necessary for the CBI to freeze the",,,,
accounts.,,,,
52. Though much emphasis is laid by learned counsel for Plaintiff No.1 on the fact that the accounts of Defendant No.1 for the material time, which is",,,,
Financial Year 1992-93, are 'Audited Accounts', that fact alone cannot wipe out the liability, if it is otherwise proved on record.",,,,
53. The point to be stressed is that, Defendant No.1 has failed to adduce any probable or reasonable explanation about the utilization or adjustment of",,,,
this amount. Hence, so far as the amount of Rs.4 Crores, for which the Pay Order was issued by Defendant No.1 and which Pay Order is not yet",,,,
encashed and the said amount being lying with Defendant No.2-the Federal Bank, it has to be held that the said amount being of the 'Notified",,,,
Party’ viz. late Harshad S. Mehta, that amount is required to be held as receivable to Plaintiff No.1, his wife Jyoti Mehta. The contention of",,,,
Defendant No.2 that there is no privity of contract between Plaintiffs and Defendant No.2 and neither Defendant No.1, who has issued the Pay",,,,
Order, nor MILL, in whose favour the Pay Order was issued, were 'Notified Parties', may be true. But then, now once it is proved on record that the",,,,
Pay Order was obtained by Defendant No.1 from the amount advanced by Harshad S. Mehta, who was a 'Notified Party, the amount of the Pay",,,,
Order being the asset of 'Notified Party, it stands attached and, therefore, liable to be recovered by the 'Custodian'.",,,,
54. Reliance placed by learned counsel for Defendant No.2 on the 'Judgment' of Tukaram Bapuji Nikam Vs. The Belgaon Bank Ltd., AIR 1976 Bom.",,,,
185, is misplaced, as, in that case, the question raised for consideration was, 'whether the purchaser of a Demand Draft from a Bank, which has been",,,,
made in favour of a third-party, has any right to stop payment of the Demand Draft and if so, at what stage can he do so?' About the contention of",,,,
Defendant No.2 that it has got a lien on this amount, in view of the 'Decree' passed by the 'Debt Recovery Tribunal, Mumbai', the said lien could have",,,,
been exercised, if the amount is proved to be that of Defendant No.1. Now if the amount is proved to be the asset of 'Notified Party â€" Harshad S.",,,,
Mehta', it stands attached with effect from 8th June 1992. Hence, the 'Custodian' alone can exercise the right over it. Whereas, the amount of",,,,
Rs.1,08,00,000/- is receivable to Plaintiff No.1 and Rs.1,52,17,000/- is receivable to Plaintiff No.3 from Defendant No.1.",,,,
Issue No.1A,,,,
55. Plaintiffs had claimed this amount of Rs.4 Crores, with interest @ 18% p.a. at quarterly rests, from Defendant No.2, as, according to Plaintiffs,",,,,
this amount is used by Defendant No.2-the Federal Bank for commercial purposes and earned huge profits thereon. To substantiate this claim, the",,,,
Plaintiffs have relied upon the 'Judgments' of the Hon’ble Apex Court in the case of Renusagar Power Co. Ltd. Vs. General Electric Co., along",,,,
with connected matter, 1994 Supp. (1) SCC 644; Central Bank of India Vs. Ravindra and Ors., (2002) 1 SCC 36;7 and Indian Council for Enviro-",,,,
Legal Action Vs. Union of India and Ors., (2011) 8 SCC 161. It is submitted that, such claim of interest @ 18% p.a., with quarterly rest, is not only",,,,
permitted, but must be awarded to balance the equities also. It is urged that, this amount of Rs.4 Crores, which is now proved to be that of the",,,,
Plaintiffs, is retained by Defendant No.2-the Federal Bank, without disclosing the same, in spite of the 'Public Notice' issued by this Court, calling upon",,,,
all the concerned to disclose the assets of the 'Notified Persons' or to approach the 'Custodian' or RBI, even in case of any doubt as to whether the",,,,
assets in their hands belong to the 'Notified Persons'. It is submitted that, as the said amount is circulated by Defendant No.2 in the market and has",,,,
earned profits thereon, it is necessary to award interest @ 18% p.a. at quarterly rests. Such order alone will do the justice, as, for this period of more",,,,
than 27 years, Defendant No.2 has used the said amount and, therefore, this is a fit case where the interest @ 18% p.a., at the quarterly rest, needs to",,,,
be awarded as against Defendant No.2.,,,,
56. In my considered opinion, this submission on the face of it may appear to be persuasive, but then, on closer scrutiny, it cannot be accepted. As,",,,,
admittedly, Defendant No.2 is a Bank, which has utilized this amount of Rs.4 Crores definitely, to earn the profits, instead of crediting the same to the",,,,
account of Defendant No.1 or to the MILL; hence, Defendant No.2 is liable to pay interest @ 18% p.a. However, the claim of Plaintiffs for interest",,,,
at quarterly rests cannot be granted. During all this period, neither MILL, nor Defendant No.1 has claimed this amount. Hence, as held in the",,,,
'Judgment' of Tukaram Bapuji Nikam (Supra), Defendant No.2 was not expected to go into the search of the rightful claimant of this amount.",,,,
Moreover, neither MILL, nor Defendant No.1 was ever a 'Notified Party'. Hence, Defendant No.2 was not expected to have any doubt that this",,,,
amount can belong to the 'Notified Party'. Only in this proceeding and not at any time earlier, it is proved that the amount belonged to Harshad S.",,,,
Mehta and, therefore, the asset of 'Notified Party'. It is pertinent to note that, in view of the proceedings before the 'Debt Recovery Tribunal,",,,,
Mumbai', Defendant No.2 was also claiming lien over it. Hence, in my considered opinion, no case is made out for grant of interest at quarterly rest,",,,,
as it would operate harsh and inequitable.,,,,
57. As regards the amount of Rs.1,08,00,000/- and Rs.1,52,17,000/- due from Defendant No.1, Plaintiffs are entitled to recover the same with interest",,,,
@ 18% p.a.,,,,
58. In the instant case, therefore, it becomes the duty of the 'Custodian' to recover this amount from Defendant Nos.1 and 2, respectively.",,,,
Issue No.2,,,,
59. As to Defendant No.5-the BSE, it is joined in the light of the fact that Defendant No.5 is, admittedly, holding the substantial amount of Defendant",,,,
No.1 to the extent of more than Rs.6 Crores as surplus, after the sale of the 'Membership Card' of Defendant No.1 and after satisfying all outgoings,",,,,
as per the Rules and Regulations. According to learned counsel for the Plaintiffs, in view of Rule 16 of the Bombay Stock Exchange Rules, By-Laws",,,,
and Regulations, 1957, Plaintiffs are entitled to get this amount, as the liability therein is arising out of contract. Learned counsel for Defendant No.5",,,,
has submitted that, it would abide by any order passed by this Court and, therefore, it has to be directed that the 'Custodian' is entitled to recover the",,,,
said amount from the assets of Defendant No.1, which are lying with Defendant No.5.",,,,
Issue No.4,,,,
60. The Plaintiffs have also made the claim on the amount of Rs.49,45,584/-, which is paid by Defendant No.5 towards the demand of the income tax",,,,
dues made by the Income Tax Authorities. Much reliance is placed by learned counsel for the Plaintiffs on the 'Judgment' of the Hon'ble Supreme,,,,
Court Court in the case of Bombay Stock Exchange Vs. V.S. Kandalgaonkar, (2015) 2 SCC 1, to submit that, this deduction of the amount of",,,,
Rs.49,45,584/- from the dues payable to Defendant No.1, was not legal and correct.",,,,
61. In my considered opinion, as already this amount is deducted by Defendant No.5, in pursuance of the letter issued by the Income Tax Authorities",,,,
dated 24th June 2016 and at that time, no status-quo order was passed by this Court and Defendant No.1 is not challenging the recovery of the said",,,,
amount from the dues, the Plaintiffs cannot lay any claim over the said amount. Hence, issue No.4, framed to that effect, is answered in negative.",,,,
Issue No.5,,,,
62. The last issue and which goes to the root of the matter is of the bar of limitation. According to learned counsel for Defendant No.1, as the claim is",,,,
made in the year 2014 in respect of the amount, which is alleged to be paid in May, 1992, the claim is apparently barred by limitation and, therefore, on",,,,
this very ground itself, it is liable to be dismissed. However, in this respect, the landmark decision of the Hon’ble Apex Court in the case of L.S.",,,,
Synthetics Ltd. Vs. Fairgrowth Financial Services Limited and Anr., (2004) 11 SCC 45,6 clinches the issue. This very question of applicability of the",,,,
provisions of the Limitation Act, 1963, to the proceedings for recovery of the assets of the 'Notified Entities' in the hands of the third-party was raised",,,,
for consideration in the said 'Judgment' and it was held that, “The jurisdiction of the Special Court is of wide amplitude. Sub-section (3) of the Act",,,,
provides for non obstante clause in terms whereof any property movable or immovable belonging to the 'Notified Person' shall stand attached,,,,
simultaneously with the issue of the notification. As the Special Court had the requisite jurisdiction to deal with the attached property, it is immaterial",,,,
whether the factum of the statutory provisions is brought to its notice by the 'Notified Party' himself or by the 'Custodian'. The Court has the requisite,,,,
jurisdiction; nay a duty to apply itself to the said question, once the matter is brought to its notice. Once a statutory attachment comes into force,",,,,
although the properties in question unlike the provisions of some other Acts do not vest in the 'Custodian', but the same evidently remain under the",,,,
control of the Special Court.â€,,,,
63. It was further held that,",,,,
“The Act lays down a responsibility on the Special Court to recover these properties. Therefore, the proceedings before the Special Court is not a",,,,
Suit for recovery of an amount, but they are extra- ordinary in nature and the Special Court is duty-bound to pass appropriate orders in relation",,,,
thereto. It is, therefore, idle to contend that, even in respect thereof, the provisions of the Limitation Act would apply.â€",,,,
64. In paragraph No.33 of the said 'Judgment', it was categorically held that,",,,,
“The Limitation Act, 1963 is applicable only in relation to certain applications and not all applications, despite the fact that the words “other",,,,
proceedings†were added in the long title of the Act in 1963. The provisions of the said Act are not applicable to the proceedings before the Bodies,",,,,
other than Courts, such as a quasi-judicial tribunal or even an executive authority.â€",,,,
65. In this context, it was held that,",,,,
“The proceedings before the Special Court being of extra-ordinary nature and not the civil proceedings or criminal proceedings, Limitation Act will",,,,
have no application therefor.â€,,,,
66. In this 'Judgment' of the Hon'ble Apex Court, the view taken by this Court in the case of A.K. Menon, Custodian, Vs. Modern Chemical",,,,
Corporation, (2002) 1 All MR 180, was approved and relied upon, wherein this Court was pleased to observe as under :-",,,,
“19. It is thus that the said Act lays down a responsibility on the Court to recover the properties. So far as monies are concerned, undoubtedly, the",,,,
particular coin or particular currency note given to a Debtor would no longer be available. That, however, does not mean that the lender does not have",,,,
any right to monies. What is payable is the loan i.e. the amount, which has been lent. The right which the Creditor has is not a 'right to recover' the",,,,
money. The Creditor has the title/right in the money itself. An equivalent amount is recoverable by him and the title in any equivalent amount remains,,,,
with the lender. Thus, the property, which a notified party would have is not the right to recover, but the 'title in the money itself', Thus, under Section",,,,
3(3), what would stand attached would be the title/right in the money itself. Of-course, what would be recoverable would be an equivalent of that",,,,
money. Once the money stands attached, then no application is required to be made by any parties for recovery of that money. It is then the duty of",,,,
the Court to recover the money. No period of limitation can apply to any act to be done by a Court. Therefore, in all such applications, the only",,,,
question which remains is, whether on the date of the notification, the right in the property existed? If the right in the property existed, then irrespective",,,,
of the fact that the right to recover may be barred by limitation, there would be a statutory attachment of that property. Once there is a statutory",,,,
attachment of that property, the Court is duty-bound to recover it for the purposes of distribution. There can be no period of limitation for acts, which a",,,,
court is bound to perform. In this case, since the Court is compulsorily bound to recover the money, there can be no limitation to such recovery",,,,
proceedings. To be remembered that, Section 3(3) as well as Section 13 provide that provisions of the said Act would prevail over any other law. This",,,,
would include the Limitation Act.â€,,,,
67. In the light thereof, in paragraph No.37, it was held that,",,,,
“Distribution of the assets of a 'Notified Person' may take a long time, but till all the claims filed before the Special Court are disposed off, the",,,,
property of the 'Notified Person' stands attached. In other words, the provisions of the Limitation Act would inter alia apply, only when a Suit is filed",,,,
or a proceedings is initiated for recovery of an amount and not where a property is required to be applied towards the claims pending before the,,,,
Tribunal for the purpose of discharge of the liabilities of the 'Notified Person' in terms of Section 11 of the said Act.â€,,,,
68. In paragraph Nos.38 and 39 of the said 'Judgment', it was categorically laid down as follows :-",,,,
“38. A Special Court, having regard to its nature and functions, may be a Court within the meaning of Section 3 of the Indian Evidence Act, 1872",,,,
or Section 3 of the Limitation Act, 1963, but having regard to its scope and object and in particular the fact that, it is a complete code in itself, in our",,,,
opinion, the period of limitation provided in the Schedule appended to the Limitation Act, 1963, will have no application. For the applicability of Section",,,,
29(2) of the Limitation Act the following requirements must be satisfied by the Court invoking the said provision :,,,,
(1) There must be a provision for period of limitation under any special or local law in connection with any Suit, Appeal or Application.",,,,
(2) Such prescription of the period of limitation under such special or local law should be different from the period of limitation prescribed by the,,,,
Schedule to the Limitation Act, 1963.",,,,
39. In terms of the provisions of the said Act, no period of limitation is prescribed, evidently because Parliament thought it to be wholly unnecessary.",,,,
Once the statutory operation relating to the attachment of the property belonging to a notified person comes into being, the duties and functions of the",,,,
Special Court start. In relation to the duties and functions required to be performed by a Court of law, no period of limitation need be prescribed.",,,,
Furthermore, Section 13 of the said Act provides for a non obstante clause, which has been used as a device to modify the ambit of the provisions of",,,,
law mentioned therein or to override the same in the specified circumstances. The said Act does not provide for any period of limitation, the reasons",,,,
wherefor have been noticed here-in-before and in that view of the matter, in our considered opinion, Articles 19, 28 and 55 providing for period of",,,,
limitation prescribed would have no application. Section 13 of the said Act provides for a non obstante clause, which is of wide amplitude. In a case of",,,,
conflict between the said Act and any other Act, the provisions of the former shall prevail.â€",,,,
69. In the ultimate conclusion, it was held that,",,,,
“The provisions of the Limitation Act have no application to the proceedings under the Special Court Act, as in construing a Special Statute, no",,,,
period of limitation must receive a liberal and broader construction and not a rigid or a narrow one. The intent and purport of Parliament in enacting,,,,
the said Act must be given a full effect. We are, therefore, of the opinion that, the provisions of the Limitation Act have no application, so far as",,,,
directions required to be issued by the Special Court relating to the disposal of attached property, are concerned, Till all the claims, as provided under",,,,
Section 11 of the said Act are fully satisfied, the amount belonging to the 'Notified Persons' can be directed to be released in his favour or in favour of",,,,
any other person.â€,,,,
70. Hence, in the light of this categorical and clinching finding recorded by the Hon’ble Apex Court, the submission advanced by learned counsel",,,,
for Defendant No.1, that a 'Notified Person' cannot be placed above the other litigants, so as to exclude the applicability of the Limitation Act to the",,,,
assets of such 'Notified Person', can no more hold the water. The law laid down in this 'Judgment' cannot be distinguished also on the ground that, in",,,,
that case, the liability was admitted; whereas, in this case, it is disputed. Hence, the 'Judgment' relied upon by him in the case of K.B. Nagur MD",,,,
(Ayurvedic) Vs. Union of India, (2012) 4 SCC 483, holding that, even if the Statute does not prescribe the time limit, the claim should be filed within a",,,,
reasonable time, cannot be of any help.",,,,
71. The 'Judgments' of the Hon’ble Supreme Court, relied upon by learned counsel for Defendant No.1, that ofB asawaraj and Another Vs.",,,,
Special Land Acquisition Officer, along with connected matter, (2013) 14 SCC 81, or of this Court in Miscellaneous Application No.86 of 2013, in the",,,,
case of Mr. Ashwin S. Mehta Vs. Smt. Neeta A. Parekh and Others, dated 11th December 2015, wherein the above referred 'Judgment' of the",,,,
Hon‘ble Apex Court in the case of L.S. Synthetics (Supra) was not referred or that of Miscellaneous Application No.79 of 2015, in the case of",,,,
Kamlesh Shroff Vs. The Custodian, dated 11th March 2016, andS tandard Chartered Bank Vs. Andhra Bank Financial Services Limited and Others,",,,,
(2016) 1 SCC 207, cannot have application to the present case.",,,,
72. Moreover, this is not a case where the Plaintiffs have not offered any explanation for the delay in approaching this Court. It is a matter of record",,,,
that, all the accounts of the Plaintiffs were seized during the relevant period and only on receipt of the 'Books of Accounts' in the year 2014 and after",,,,
going through the relevant entries, Plaintiffs could file such application / Suit. Especially, in view of the death of Harshad S. Mehta, during the relevant",,,,
period, Plaintiffs were handicapped and, therefore, they could not bring to the notice of the 'Custodian' the assets of Harshad S. Mehta, which were in",,,,
the hands of Defendant Nos.1 and 2. Therefore, no fault could be found, if there is delay.",,,,
73. As a matter of fact, it was the duty of the 'Custodian' himself to recover these assets and it was also the duty of Defendant No.2 to inform the",,,,
'Custodian' about these assets. Even in case of doubt as to whether they belong to 'Notified Party' or not, as per the 'Circular' issued by the RBI, such",,,,
third-party was required to approach the 'Custodian' to get the doubt clarified. Here in the case, when the amount was suddenly credited into the",,,,
account of Defendant No.1 and two Pay Orders were issued within two days therefrom and one was not encashed, it was necessary for Defendant",,,,
No.2 also, to get the things clarified. Defendant No.2 has not done so on the spacious plea that, the Pay Order was issued in the name of MILL,",,,,
which was not a 'Notified Party', and it was issued by Defendant No.1, who was also not a 'Notified Party'. But then, the amount, which came to the",,,,
account of Defendant No.1 for the issuance of this Pay Order being received from the 'Notified Person', the least expected from Defendant Nos.1",,,,
and 2 was to inform the 'Custodian' about these assets. They have not done so and now, by taking advantage of the said fact, they cannot contend that",,,,
there is delay in filing of this claim. It was for the 'Custodian' to do so and if a 'Notified Party' has done so, then the same explanation is applicable to",,,,
him, as is applicable to the 'Custodian'. It is also the duty of this Court to ensure that the assets, which stood attached immediately on the date on",,,,
which Plaintiffs were declared as 'Notified Entity', should be brought before this Court for distribution to the lawful claimants. Hence, it cannot be held",,,,
that this claim is barred by limitation.,,,,
Issue No.6,,,,
74. To sum up, therefore, it has to be held that, so far as the claim of Plaintiff No.1 towards the Pay Order of Rs.4 Crores, as it is proved on record",,,,
that the said Pay Order was purchased from the amount parked or advanced by Late Harshad S. Mehta with Defendant No.1, the said amount",,,,
becomes the asset of Harshad S. Mehta, who was a 'Notified Party', in the hands of Defendant No.1. Defendant No.1 has failed to explain that the",,,,
said amount was advanced for a particular purpose and it was utilized for the said purpose. Now the said amount is, admittedly, lying with Defendant",,,,
No.2-the Federal Bank and hence, Plaintiff No.1 is entitled to recover this amount of Rs.4 Crores, along with interest @ 18% p.a., from Defendant",,,,
No.1 and from Defendant No.2, with whom the said amount is lying. It is necessary, therefore, to direct the ‘Custodian’ to recover this amount,",,,,
along with the stipulated interest, for its distribution amongst the ‘Debtors’, as per Section 11 of the Special Court Act.",,,,
75. As regards the claim of Plaintiff No.3-M/s. Zest Holdings Private Limited for the amount of Rs.1,52,00,000/-, again the payment of which is",,,,
accepted by Defendant No.1, Defendant No.1 is bound to repay the said amount, as it is proved to be the assets of the 'Notified Party' i.e. Defendant",,,,
No.3-M/s. Zest Holdings Private Limited. The Custodian is to recover this amount from Defendant No.1, along with interest @ 18% p.a., and to",,,,
utilize the same towards the liability of Plaintiff No.3-M/s. Zest Holdings Private Limited.,,,,
76. As regards the amount of Rs.1.08 Crores, again though Defendant No.1 contends that he has settled the accounts thereof with Late Harshad S.",,,,
Mehta, in the absence of convincing evidence on record to that effect, Defendant No.1 is liable to pay the said amount to Plaintiff No.1, with interest",,,,
@ 18% pa., and the Custodian is to recover the said amount and utilize the same towards satisfying the liability of Late Harshad S. Mehta.",,,,
77. This settles the claim of the Plaintiffs, as made in the application / plaint. However, as Defendant No.1 has accepted the receipt of total amount of",,,,
Rs.8,62,50,000/- from M/s. Zest Holdings Private Limited, Late Harshad S. Mehta and Smt. Jyoti H. Mehta in her personal capacity, the Plaintiffs are",,,,
claiming this entire amount. However, once it is held that the Pay Order for the amount of Rs.3,42,000/- was issued by Defendant No.1 and the credit",,,,
thereof was given to the MILL and it was towards satisfying the amount received from Smt. Jyoti H. Mehta in her personal capacity and as Jyoti H.,,,,
Mehta has in her personal capacity has not lodged this claim and the amount of Rs.2,57,000/- is stated to be towards the amount given by her, again in",,,,
her personal capacity, this claim cannot be allowed in this proceeding.",,,,
78. As a result, I proceed to pass the following order :-",,,,
“O R D E Râ€,,,,
(i) Plaintiff No.1’s claim for recovery of the amount of Rs.4 Crores, along with the interest @ 18% p.a. from 9th May 1992 till realization of",,,,
amount, is allowed against Defendant Nos.1 and 2. The Custodian is directed to recover this amount from Defendant No.2 and utilize the same for",,,,
distribution amongst the ‘Debtors’ of late Harshad S. Mehta, as per Section 11 of the Special Court Act.",,,,
(ii) Plaintiff No.1’s claim for the amount of Rs.1.08 Crores and Plaintiff No.3’s claim for the amount of Rs.1,52,17,000/- is decreed, with",,,,
interest @ 18% p.a. from 11th May 1992 till its realization. The 'Custodian' to recover this amount from Defendant No.5-Bombay Stock Exchange,",,,,
with whom the said amount is lying as an asset of Defendant No.1, and utilize the same for distribution amongst the 'Debtors' of Late Harshad S.",,,,
Mehta, as per Section 11 of the Special Court Act.",,,,
(iii) Plaintiff No.3’s claim for recovery of the amount of Rs.49,45,584/-, paid by Defendant No.5-Bombay Stock Exchange to the 'Income Tax",,,,
Department' towards the liability of Defendant No.1, stands rejected.",,,,
79. The Suit stands decreed in the aforesaid terms.,,,,
80. In view of the above, Notice of Motion No.1 of 2018 pending in the Suit does not survive and the same stands disposed off as infructuous.",,,,
81. At this stage, learned counsel for Defendant Nos.1, 2 and 5 seek stay to the execution of this 'Judgment and Order', in order to enable them to",,,,
approach the Hon'ble Supreme Court against the 'Judgment and Order' of this Court.,,,,
82. Considering that this 'Judgment and Order' is subject to challenge before the Hon'ble Supreme Court, Plaintiff No.2, who is present before the",,,,
Court, fairly concedes that he is not opposing the said request.",,,,
83. Hence, the execution of the 'Judgment and Order' passed by this Court is stayed till the Appeal period is over, which is of 30 days, as per Section",,,,
10 of the Special Court Act.,,,,
