SUPREME COURT OF INDIA

Neeldeep Investments (P.) Ltd.

v

Custodian

C. K. THAKKER AND ALTAMAS KABIR, JJ.

CIVIL APPEAL NO. 1528 OF 2005

March 13, 2008

Section 11A of the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 - Power to punish for contempt - One ‘B’, father of noticee ‘M’ was declared to be notified party under Act - Custodian filed petition on behalf of ‘B’ for recovery of certain amount from appellant - Special Court passed two separate decrees against appellant for sum of Rs. 1, 42,65,000 and Rs. 32,14 500 - On execution application, Special Court passed an interim order restraining appellant and its director from disposing of, transferring and alienating their properties -Later custodian took out garnishee notices - Garnishees stated that though they owed amounts to appellant but said amounts were adjusted on acceptance of shares of different companies by appellant towards repayment of dues - Subsequently, show-cause notice was issued to appellant and noticee under section 11A - Although several defences were taken by noticee, Special Court held that conduct of noticee had been to create difficulties in way of Court and custodian and, accordingly, sentenced noticee to 3 months imprisonment along with fine - On appeal, Supreme Court by an order dated 20-1-2006 allowed appellant’s proposal to pay decretal amount of Rs. 1,42,65,000 in three equal installments - Custodian, thus, filed instant application seeking modification of said order contending that since Special Court passed two separate decrees one for Rs. 1,42,65,000 and another for Rs. 32,14,500 , total principal sum should have been mentioned Rs. 1,74,79,500 mines Rs. 15,75,000 which had already been recovered - Appellant raised objection that order of Court had been fully implemented as entire decretal amount of Rs. 1,42,65,000 had been paid in three instalments, and it was only thereafter that an attempt was made by custodian to claim further sum of Rs. 32,14,500 together with interest thereon - Whether there was no force in appellant’s submission since both decretal amounts had been mentioned in order of Special Court - Held, yes - Whether, therefore, custodian’s application was to be allowed and, consequently, appellant was to be directed to pay balance decretal amount within specified period in three equal installments - Held, yes

FACTS

‘B’, the father of the noticee ‘M’ was declared to be a notified party under the Act. The custodian under the Act filed a petition on behalf of ‘B’ for recovery of certain sum with interest from the appellant. The Special Court passed a decree on that petition and noted that the ‘B’ was a majority shareholder of the judgement debtor, i.e., the appellant along with noticee ‘M’. Subsequently the custodian issued a public notice calling upon the parties to disclose to him if any amount was owed by them to ‘B’. The appellant did not come forward to disclose that it owed huge amount to ‘B’. The custodian, however, getting the information from the Income-tax Department that the appellant owed a huge amount to ‘B’ filed a petition on which a decree was passed against the appellant. Thereafter the custodian filed an execution petition during the pendency of which the court passed an interim order restraining the appellant and its director from disposing of, transferring or alienting all of their properties in any manner. On behalf of the appellant, the noticee filed an affidavit disclosing that the appellant had to recover substantial amounts from the six companies. Following the contents of the said affidavit the custodian took out garnishee notices. The garnishees appeared and filed affidavits contending that though they owed amounts to the appellant, the said amounts were adjusted on acceptance of shares of different companies by the appellant towards repayment of the dues. Subsequently a show cause notice was issued to appellant and ‘M’ (i.e., noticee) under section 11A. Although the several defences were taken by the noticee, the Special Judge held that the conduct of the ‘M’ had been to create difficulties in the way of the Court and the custodian and, accordingly, sentenced him for imprisonment for three months. On appeal to the Supreme Court, the appellant proposed to pay the decretal amount in three installments. The Supreme Court allowed the appellant to do so. Thereafter, an application was filed by the custodian for modification of the order passed by the Court alleging that two separate decrees were passed by the Special Court one was for recovery of a sum of Rs. 1,42,65,000 and the other for a sum of Rs. 32,14,500. Despite the fact that two decrees had been passed for a total sum of Rs. 1,74,79500 in the decree the sum of Rs. 1,42, 65,000 was mentioned together with interest. It had been stated in the application that the total principal amount should be mentioned as Rs. 1,74,79,500 together with interest payable thereon instead of Rs. 1,42,65,000 as indicated. By the said application, it was, therefore, prayed that the order of the Court was required to be modified by correcting the principal amount mentioned in the decree to be Rs. 1,74,79,500 minus Rs. 15,75,000 which had already been recovered, together with interest as decreed by the Special Court.

The appellant raised objection the order of the Court had been fully implemented as the entire decretal amount of Rs. 1,42,65,000 had been paid in three instalments, and it was only thereafter that an attempt was made by the custodian to claim the further sum of Rs. 32,14,500 together with interest thereon.

HELD

There was no force in the appellant’s submissions since both the decretal amounts against the appellant had been mentioned in the order passed in the application filed by the custodian. Thus, the custodian’s application was to be allowed. The decretal amount was to be corrected to read as Rs. 1,59,04,500 together with interest as decreed by the Special Court upon credit having been given for Rs. 15,75,000 which had already been recovered by
the custodian. [Para 15]

After taking into account the decretal amount as amended, together with interest as directed by the Special Judge in his order the appellant was directed to pay the balance decretal amount in three equal instalments. [Para 16]

The appeal was disposed of accordingly. [Para 18]