PREMANAND R SHENOY Vs. CUSTODIAN

JUDGEMENT

(1.) By filing the present appeal the appellant has challenged the judgment and order dated 5.3.2004 passed by the Special Court established under sub-section (1) of Section 5 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as the Act) whereby and whereunder the Special Court allowed the application filed by the Custodian (respondent No. 1 herein) thereby directing the appellant to pay to the Custodian an amount of Rs. 2,83,192/- with interest at the rate of 18% per annum from 22.7.1991 to 29.2.1992 which amount the Custodian would receive for and on behalf of respondent No. 2.

(2.) Shri B. Ratnakar, the father of the appellant was the Chairman and Managing Director of M/s. Fair Growth Financial Services Limited (for short the Company) which is respondent No. 2 herein. There is no dispute with regard to the fact that the father of appellant was the Chairman and also In-charge of the aforesaid Company. He died on 2nd February, 1992. The appellant became the Director of the aforesaid Company immediately after the demise of his father. An order was placed for purchase of a Mahindra Jeep by making payment of a cheque dated 22.7.1991 for Rs. 2,83,192/-. The said order was placed with M/s. Tirupati Balaji Motors, New Delhi. As per the original delivery receipt and letter addressed to the appellant, the vehicle was delivered to the appellant on 15.4.1992. In this connection, reference may be made to the letter dated 12.4.1992 (Annexure R-5 in the paper book) which is addressed to the appellant herein. The subject of the said letter was with respect to the delivery of his vehicle. By the said letter M/s. Tirupati Balaji Motors, New Delhi informed the appellant that despite repeated reminders for the last five months regarding delivery of the aforesaid vehicle, the delivery was not taken. As per the order placed, the said jeep was lying ready for the last five months and was duly registered temporarily in the name of the appellant. Copy of the temporary registration and the bill of the receipt were also enclosed with the said letter.

(3.) Before dwelling further, it would be relevant here to mention that the Reserve Bank of India, in the course of its investigation, found large scale irregularities and malpractices in the transactions in both the Government and other securities indulged in by some brokers in collusion with the employees of the various banks and financial institutions. The said irregularities and malpractices led to the diversion of funds from banks and financial institutions to the individual accounts of certain brokers. To deal with the aforesaid situation and, in particular, to ensure speedy recovery of the huge amount involved, to punish the guilty and restore confidence in, and maintain the basic integrity and credibility of the banks and financial institutions, the Special Court was constituted for trial of offences relating to transactions in securities and in that regard an Act was enacted called "the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992". Section 3 of the said Act reads as follows