M/S Neeldeep Investments
(P) Ltd Vs. The Custodian & Ors  INSC 450 (13 March 2008)
C.K. Thakker & Altamas
Civil Appeal No.1528 of
2005 Altamas Kabir, J.
1. This appeal has been filed under Section 10 of the Special Courts (Trial
of Offences Relating to Transactions in Securities) Act, 1992, challenging the
order passed by the learned Special Judge on 12.01.2005 in Show Cause Notice
No.26 of 2003 in Misc. Appeal No.470 of 1999 arising out of Misc. Petition No.43 of 1995. By his judgment and order dated 12.1.2005 the
learned Special Judge came to a finding that the conduct of the appellant
herein through the noticee, Milan Dalal, son of the Notified Party, Bhupen
Dalal, was such as to repeatedly create difficulties in the way of the Court
and the Custodian, firstly, in passing the decree, and, thereafter, in the
matter of its execution. In the circumstances indicated in the order, the
noticee, Milan Dalal, was sentenced to undergo simple imprisonment for a period
of 3 months and was also directed to pay a fine of Rs.2,000/-. The said order
was suspended for a period of 12 weeks within which period the appeal was filed
in this Court and on 18.3.2005 notice was issued thereupon. While issuing the
notice this Court directed that the stay already granted by the Special Court
would continue for a period of 4 weeks. On 29.4.2005 the stay granted was
directed to continue until further orders.
2. On 5.1.2006 when the appeal was called on for hearing, this Court passed
the following order. "We are prima facie of the opinion that having regard to the facts, the
order under appeal does not need to be interfered with. However, at the
suggestion of the learned Solicitor General we adjourn the matter to enable the
appellant to consider whether the entire decretal due of Rs.1,42,56,000/- can
be paid. The matter is adjourned by two weeks."
3. In order to appreciate the circumstances in which the aforesaid order
came to be passed, the facts leading to the filing of the Civil Appeal in this
Court are briefly set out hereunder.
4. Bhupen Dalal, the father of the noticee Milan Dalal, was declared to be a
Notified Party under the provisions of the Special Courts (Trial of Offences
Relating to Transactions in Securities) Act, 1992, hereinafter referred to as
the '1992 Act'. The Custodian under the said Act filed Misc.
Petition No.43 of 1995 on behalf of the Notified Party, Bhupen Dalal for
recovery of 1,42,65,000/- with interest from M/s Neeldeep Investment Company
Private Limited, the appellant herein. On 8.6.1995 the Special Court passed a
decree on that petition and noted that the Notified Party is a majority
shareholder of the judgment debtor M/s Neeldeep Investment Company Private
Limited, along with noticee Milan Dalal. It was also noted that after Bhupen
Dalal was notified under the said Act the Custodian issued a public notice
calling upon the parties to disclose to him if any money was owed by them to
the Notified Party. Despite such public notice, the judgment debtor which was
practically a family concern of the Notified Party did not come forward to
disclose that the judgment debtor owed huge amounts to the Notified Party. It
was noted that the Custodian came to know of the liability only on account of
information given by the Income Tax Department. It is on the basis of such
information that the Custodian had taken out the Misc. Petition No.45 of 1995.
5. The judgment debtor appeared in those proceedings and admitted the said
liability and on that basis a decree was passed against the judgment debtor by
the learned Special Judge.
6. In order to execute the decree the Custodian filed Misc. Application No.4
of 1999 and on that application on 24.11.1999 the Court passed an interim order
restraining the judgment debtor and its Director from in any manner disposing
of, transferring, alienating or encumbering all of their properties. On behalf
of the judgment debtor, the noticee filed an affidavit disclosing that the
judgment debtor had to recover substantial amounts from six parties namely 1)
M/s Lighthouse Investments Limited, 2) Oceanic Investments Limited, 3)
Kalpvruksha Holdings and Investments Co. Pvt. Ltd., 4) Harisharan Developers
Private Limited, 5) M/s S. Ramdas and 6) M/s Anmol Chemicals (Guj) Limited.
7. On the basis of the information disclosed by the noticee in his said
affidavit on 15.12.1999, the Custodian took out garnishee notices.
Pursuant to notice to the garnishees they appeared and filed affidavits and
the common defence taken was that though they admittedly owed amounts to the
judgment debtor, the said amounts were adjusted on acceptance of shares of
different companies by the judgment debtor towards repayment of the dues. At
that stage the Special Court passed order dated 19.9.2003 where reference was
made to the earlier order dated 24.11.1999. Show Cause Notice was issued
pursuant to the order dated 19.9.2003 under Section 11-A of the said Act
wherein it was stated that the noticee was to be tried for having disobeyed the
order dated 24.11.1999. Although, several defences were taken on behalf of the
noticee, the learned Special Judge held by his order dated 12.1.2005 that the
conduct of the noticee showed that in the instant case attempts had repeatedly
been made to create difficulties in the way of the Court and the Custodian,
firstly, in the passing of the decree and then in the matter of its execution.
The learned Special Judge accordingly felt that it would be appropriate to
impose deterrent punishment on the noticee and sentenced him to undergo simple
imprisonment for a period of three months and to pay a fine of Rs.2,000/- as
8. It is in this background that on 20.1.2006 this Court passed the
"It is proposed by learned counsel appearing on behalf of the appellant
that his client will pay an amount of Rs.1,26,25,000/- (Rupees one crore twenty
six lakhs and twenty five thousands) (being the balance of the decretal amount
of Rs.1,42,00,000 (Rupees one crore and forty two lakhs seventy five thousands)
paid by the garnishee by three instalments in the course of 2006. The first
instalment shal be paid on 3rd April, 2006, the second on 10th July and the
third by 4th December, 2006.
The learned Solicitor General appearing on behalf of the Custodian has
submitted that as far as contempt proceedings are concerned, his client is
willing to accept the offer of the appellant but submits that this should not
in any way affect the ultimate liability of the appellant to pay the decreal
In this view of the matter we adjourn the passing of the order on the basis
of the consent as arrived at between the parties, till 3rd April, 2006 when the
petitioner will bring the first instalment of the amount to Court. In the event
the payment of all the instalments is made as aforesaid, this appeal will stand
allowed and the order of the High Court will stand set aside and the garnishee
notice will be discharged. In default of payment of any one instalment or any portion thereof, the
appeal will stand dismissed and the impugned order of the High Court will
become operative. Adjourned to 3rd April, 2006."
9. Pursuant to the aforesaid order on 3.4.2006 the appellant brought two
cheques towards payment of the first instalment. The matter was directed to
appear after 2 weeks to ensure that the cheques were duly encashed.
Subsequently, on 14.7.2006 it was recorded that the second cheque which was
payable on 10.7.2006 in terms of the order dated 20.1.2006 had also been paid
and that the third instalment was payable by 4.12.2006.
The matter was directed to be listed in the last week of December 2006, and,
in the meantime, the hearing of the garnishee notices before the Special Court,
Mumbai, was stayed.
10. The matter thereafter appeared on 22.1.2007 when it was adjourned for a
period of 4 weeks and then again on 23.2.07 it was adjourned for a further
period of 4 weeks for filing a rejoinder affidavit. A third adjournment of 4
weeks was granted on 30.3.2007 and on 27.4.07 the matter was directed to be
listed for final disposal in September, 2007.
11. The matter thereafter appeared for hearing on 14.11.2007 and on the said
date after hearing the parties the matter was adjourned further to enable the
parties to file the facts relating to the execution proceedings and the actual
amount alleged to be due on account of an error in the decretal amount which
went unnoticed when the decree was passed.
12. Thereafter, an application was filed by the Custodian for modification
of the order passed in this appeal on 20th January, 2006. In the said
application, it was clarified that two separate decrees were passed by the
Special Court against the respondent No.1, one was for recovery of a sum of
Rs.1,42,65,000/- with interest at the rate of 24% per annum from the date of
receipt of amount till payment and the other for a sum of Rs.32,14,500/- with
interest at the rate of 15% per annum from the date of receipt of the amount
till payment. Despite the fact that two decrees had been passed for a total sum
of Rs.1,74,79.500/- in the decree the sum of Rs.1,42,65,000/- was mentioned
together with interest. It has 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 dated 20th January, 2006,
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 in its order
dated 8th June, 1995.
13. The said application was also heard at the time of hearing of the
14. The fact that two separate decrees were passed for the sum of
Rs.1,42,65,000/- and Rs.32,14,500/- is not disputed, though, an attempt was
made to establish that the two were separate and would have to be dealt with
separately. On behalf of the appellant it was submitted that the order dated
20th January, 2006, had been fully implemented as the entire decretal amount of
Rs.1,42,65,000/- had been paid in three instalments, and it is only thereafter
that an attempt was made by the Custodian to claim the further sum of
Rs.32,14,500/- together with interest thereon.
15. We do not see any force in the said submissions since both the decretal
amounts against the appellant have been mentioned in the order dated 19th
September, 2003, passed in Misc.
Application No.470 of 1999 filed by the Custodian. We accordingly allow the said application. The decretal amount shall 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 has
already been recovered by the Custodian.
16. After taking into account the decretal amount as amended, together with
interest as directed by the Special Judge in his order dated 8th June, 1995 in M.P. 43/1995, the appellant is directed to pay the balance decretal amount within 30th June, 2008, in three equal instalments commencing from the month of April, 2008. The
first of such instalments shall be paid by 15th April, 2008, and the next two instalments by the 15th day of May, 2008 and 30th June, 2008. The last instalment shall include any broken amount left over after payment of the first two
instalments. The hearing of the garnishee notices before the Special Court,
Mumbai, shall remain stayed till the said date, and in case of default of such
payment being made, this order will cease to be operative and the order
appealed against will stand revived.
17. There will be no order as to costs.
18. The appeal is disposed of in the above terms.