Holding

The Special Court’s order directing the appellant to pay Rs.2,92,400 with interest is correct as the shares were attached under s.3(2) and the appellant obtained duplicate shares by misrepresentation.

Summary

The appellant, Maghendra Pal Tyagi, claimed loss of 200 shares of Hero Honda Company and obtained duplicate share certificates by misrepresenting that the originals were lost. He transferred these duplicate shares to the first respondent, Jayant Davar, who later sought recovery of the purchase price, asserting ownership. The shares were attached by the CBI because they belonged to the late Harshad S. Mehta, a notified person under Section 3(2) of the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992. The Special Court held that the appellant obtained the duplicate shares fraudulently and ordered him to pay Rs.2,92,400 with interest to the first respondent. On appeal, the Supreme Court affirmed that the attachment was automatic under the Act, the appellant’s misrepresentation made him liable, and the Special Court’s order was legally sound. Consequently, the appeals were dismissed.

Issues considered

Whether shares belonging to a notified person under s.3(2) of the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, stand attached and cannot be transferred.
Whether the appellant’s procurement of duplicate share certificates by misrepresentation renders him liable to pay the amount received by the first respondent.
Whether the Special Court’s order directing payment with interest is valid and free of legal infirmity.
Whether the appellant can be penalised for the acts of a third‑party notified person.

Legislation cited

Companies Act, 1956
Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992s. 3(2), s. 3(3), s. 9-A

Subjects

securities lawshare transferattachment of propertynotified personduplicate share certificatemisrepresentationSpecial Courts ActCBI attachmentcivil appeal

Judgment

[2008] 9 S.C.R. 1096
'(

A MAGHENDRA PAL TYAGI
..
v.
JAYANT DAVAR AND ORS.
(Civil Appeal Nos.3034-3036 of 2005)
JUNE 5, 2008
B
[C.K. THAKKER AND LOKESHWAR SINGH PANTA, .,
JJ.]

Special Courts (Trial of offences relating to transactions
r-
c in Securities) Act, 1992: s. 3(2) - Transfer of shares to notified
person - Appellant held shares of the Company - He applied
for issue of duplicate shares on the pretext that these shares
were lost - Consequently duplicate share certificate was is-
sued- These shares were then sold to first respondent- When
first respondent sold these shares in open market, they were ~
D
returned to him as bad delivery- It was found that these shares ..
were kept in abeyance as they were seized by CBI at the time
of Share Transfer Scam -Application by First respondent that
he is owner of these shares and entitled to corporate benefits
-Allowed by Special Judge - Justification of- Held: Justified
E - These shares were attached by CBI in proceedings initiated
against the notified party and hence could not be transferred
to any party - Appellant got the duplicate shares on the basis
of misrepresentation - Therefore Special Judge was right in ~
directing the appellant to pay to first respondent the amount ..
F received from him along with interest@ 18% p.a. - Share
Transfer Scam.
The appellant held 200 shares of fourth respondent
company, which purportedly were lost. He applied to the
fourth respondent company for issue of duplicate certifi-
G
cates in lieu of his lost shares. Pursuant to this, Fourth
respondent company issued public notice in newspaper
calling for objections if any against issue of duplicate
shares to the appellant. Having not received any objec-

H 1096
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1097
y AND ORS.
.. tions, duplicate share certificates were issued to him. A
On 8th July 1994, the appellant transferred these
shares in favour of first respondent. The first respondent
sold/transferred 200 shares which he got from the appel-
lant and 50 Bonus Shares consequently acquired by him,
but the fourth respondent-company did not register the B
said transfer. This was done on the asking of the CBI,
which was investigating the Share Transfer Scam, and
~- advising the first respondent and the transferee to ap-
proach the Custodian-second respondent.
c
The transfer agent received a letter from second re-
spondent-Custodian regarding stop transfer of shares in
favour of any person without permission of the custodian
and also held in abeyance all the benefits accruing on
those shares as the said shares were seized by the CBI
t 0
~ at the time of raid laid on the places of deceased Harshad
S. Mehta. The letter also revealed that deceased Harshad
S. Mehta and his group were notified by custodian on
8.6.1992 under the provisions of the Act and all proper-
ties belonging to them stood attached simultaneously
with the issue of notification and fourth respondent was E
informed not to deal with those shares including trans-
fer, pledge, issue of duplicate shares. The letter of 8th
October, 1997 revealed that the list furnished by the sec-
,, ~
ond respondent-Custodian regarding properties of noti-
tied person included original shares of the appellant which F
he allegedly lost. The fourth respondent-company, there-
fore marked "stop transfer" against the duplicate shares
which were transferred in the name of the first respon-
dent and advised him to approach the stock exchange
through whom those shares were purchased so that G
through proper channel, the introducing broker as well
as the share holder, i.e. the appellant could be asked to
" replace the said shares with good shares.
Before the Special Judge, the first respondent filed
H
1098 SUPREME COURT REPORTS [2008] 9 S.C.R.

A an application claiming that he is the real and only owner ..
of these shares and, the shares were registered in his
name accordingly, all corporate benefits accrued thereon
since the date of registration of the 250 shares in his name,
be paid to him in the interest of justice. The principal
s prayer in the application was for lifting of attachment on
these 250 shares.
The Special Judge allowed the application filed by
first respondent holding that appellant sold the shares t9
the notified party and that taking advantage of fact that
C the notified party because of notification could not apply
-
for transfer of the shares, appellant applied for the dupli-
cate shares by making a misrepresentation that he had
lost the shares and received the duplicate shares and then
sold them to first respondent for Rs.2,92,400/-. The Spe-
D cial Judge further held that the question of lifting of at-
tachment of 250 shares did not arise, however applicant-
first respondent was entitled to recover from appellant
the value of the shares. Accordingly appellant was di-
rected to pay to first respondent an amount of Rs.2,92,400/
E - with interest @ 18% p.a. from 6th July 1994 till realiza-
tion. The appellant filed review petition which was dis-
missed.
In appeal to this Court, appellant contended that the
shares came in the hands of the notified person in illegal ..
F and wrongful manner and were never transferred in his
name in accordance with law and as such appellant could
not be penalized for the acts and deed of a third person.
Dismissing the appeal, the Court
G HELD: 1. Indisputably, deceased Harshad Mehta was
a notified person under sub-Section (2) of s.3 of the Spe-
cial Courts (Trial of offences relating to transactions in -r
Securities) Act, 1992. The appellant transacted the said
shares with the deceased Harshad S. Mehta, after the
H first day of April, 1991 and on or before 1st June, 1992,
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1099
AND ORS.
y
6' the stipulated period covered under the Act. Claim sub- A
mitted by the first respondent before the Special Judge
arose out of the transaction of the said 250 shares be-
tween deceased Harshad S. Mehta and the appellant dur-
ing the aforesaid period. The entire properties belonging
to the notified party on the day of notification was attached 8
... " in terms of s.3(2) of the Act. The appellant knowing fully
well that he has already sold the shares to deceased
Hashad S. Mehta, made a false representation to the fourth
respondent-company that as he had lost original shares,
therefore, duplicate shares were allotted to him which c
stood in his name since late Harshad S. Mehta had not
applied for change of the name. The whole exercise was
done by the appellant on the basis of his mis-representa-
tion. [Para 15] [1108-B,C,D & E]

I'
L. S. Synthetics Ltd. v. Fairgrowth Financial Services Lim- D
~ ited & Anr (2004) 11 SCC 456; Tejkumar Balakrishna Ruia v.
A.K. Menon (1997) 9 SCC 123; Ashwin S. Mehta & Ors. v.
Union of India & Ors. (2006) 2 sec 385 - relied on.
2. The Special Court has rightly concluded that 200
duplicate shares were obtained by the appellant by mis- E
representation. The said 200 shares plus 50 Bonus shares
were attached by the CBI in proceedings initiated against
deceased Harshad S. Mehta, therefore, the attached
, .>- shares of the fourth respondent-company could not be
transferred to any party. The record of second respon- F
dent-Custodian would reveal that 250 shares were sold
by the appellant in the month of June, 1994 and payment
of Rs.2,92,400/-was made by cheque dated 6th July, 1994.
In these circumstances, the Special Judge directed the
appellant to pay to the first respondent an amount of Rs. G
2,92,400/- with interest at the rate of 18% per annum from
"T
6th July, 1994 till the date of realization. In the backdrop
of the facts and circumstances and in the light of the pro-
visions of law, the orders of the Special Judge do not suf-
fer from any infirmity or illegality warranting interference H
1100 SUPREME COURT REPORTS [2008] 9 S.C.R.

A in exercise of appellate power. [Para 18] [1109-C,D,E & F]
..
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
3034-3036 of 2005

From the final Judgment and Order dated 10.10.2003,
B 14.7.2004 and 18.8.2004 of the Special Court (TORTS) at
Bombay in Misc. Appln. No. 186 of 2000, Mies Appln. No. 178 r ...
of 2004 in M.A. No. 186 of 2000 and Misc. Appln. No. 263 of
2004 in M.A. No. 186 of 2000 respectively.

Abhishek Vikas Singh, Yunus Malik, Ravi Kishore,
C Ravindra Tyagi and Himinder Lal for the Appellant.

T.V.S. Raghavendra, Nikhil Nayyar, RohitAggarwal, Jagjit
Singh Chhabra and Subramanium Prasad for the Respondents.

The Judgment of the Court was delivered by
D
LOKESHWAR SINGH PANTA, J. 1. These appeals are
directed against the judgment and order dated 10.10.2003 in
Misc. Application No.186 of 2000 (impugned order-1 ); order
dated 14.07.2004 in Misc. Application No.178 of 2004 in M.A.
No. 186/2000 (impugned order-2) and order dated 18.08.2004
E in Misc. Application No.263 of 2004 in M.A. No.186/2000 (im-
pugned order-3) passed by the Special Court constituted un-
der The Special Courts (Trial of Offences Relating to Transac-
tions in Securities) Act, 1992 [hereinafter referred to as "the
Act"] at Bombay. •
F
2. The short facts leading to the present proceedings are
as under:-
The appellant herein held 200 shares of Hero Honda Com-
pany - fourth respondent-company herein. In and around Sep-
G tember 2003, the appellant desired to dispose of the said 200
shares, but he allegedly lost the same. On 21.09.1993, the
appellant got a police report registered in the Sihani Gate Po-
lice Station, Ghaziabad. On or about 22.09.1993, the appel-
lant approached and requested the fourth respondent-company
H for issue of duplicate Certificates in lieu of his lost shares along
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1101
AND ORS. [LOKESHWAR SINGH PANTA, J. ]

with all supporting documents, indemnity bonds and affidavits, A
etc.
3. On 05.01.1994, the fourth respondent-company got an
Advertisement/Public Notice published in Newspapers calling
upon to file objections, if any, against issue of duplicate Share
Certificates to the appellant and also striking a note of caution B
to the public at large not to deal with the shares so specified in
the advertisement. Having not received any objection from any
one, the fourth respondent-company on 03.02.1994 issued du-
plicate Share Certificates to the appellant. The appellant trans-
ferred his shares in favour of Jayant Davar - the first respon- C
dent herein, which were registered in his name by the fourth
respondent-company on 18.10.1994. The first respondent had
been offered 50 Bonus Shares by the fourth respondent-com-
pany, which offer was profitably availed by him. The first re-
spondent sold/transferred 200 shares which he got from the D
appellant and 50 Bonus Shares consequently acquired by him,
but the fourth respondent-company did not register the said
transfer. This was done on the asking of the CBI, who was in-
vestigating the Share Transfer Scam, and advised the first re-
spondent and the transferee to approach the Custodian - sec- E
ond respondent herein. The fourth respondent-company asked
the appellant to enforce indemnity bond, but the appellant did
not agree as the fourth respondent-company had not suffered
any loss, etc. as a result of the transaction.
4. The case of the first respondent before the Special Court F
was that he purchased 800 shares of fourth respondent- com-
pany through its broker M/s. Jamnadas Morarjee & Co. during
the months of July-August, 1994 and thereafter the said shares
were sent for transfer to the Registrar and Share Transfer Agent
of respondent No. 3, i.e. MCS Limited. The shares were finally G
transferred in his name on the basis of valid instruments of trans-
~ fer and, accordingly, a ledger folio No. 141982 has been allot-
ted to him. The second respondent filed Miscellaneous Appli-
cation No. 186/2000 before the Special Court claiming 200
shares which were transferred in his name from the appellant H
1102 SUPREME COURT REPORTS (2008] 9 S.C.R.

"' ..
A and 50 bonus shares in the ratio of 1:4 as issued by third re-
spondent against those 200 shares. The first respondent stated
before the Special Court that he had sold 250 shares in the
open market through his share broker M/s. TRC Securities Pvt.
Ltd. in the month of May/June, 1997. Upon lodgment of the
B said 250 shares with MCS Limited, they, vide their letter dated ....
26.06.1997 refused to transfer/register the shares in the name
of the lodger i.e. Morgan Stanley Assets Management Inc., A/c ""'
Morgan Stanley Institutional Fund Inc. Emerging Markets Port-
folio. Subsequently, the 250 shares were returned to first re-
spondent as 'Bad Delivery' under two different covering letters
c dated 26.06.1997 and 10.07.1998 respectively. MCS Limited
received a letter bearing No. 5696/Cus/Mob/UR-CBl/96 (5338)
dated 29.02.1996 from the second respondent-Custodian re-
garding stop transfer of the shares in favour of any person with-
out permission of the Custodian. The MCS Limited also en-
D
closed copy of transfer deeds, share certificates and "' ..
Custodian's letter dated 29th February, 1996 along with their
letter to the second respondent who on going through the same,
came to know that 117335 shares of fourth respondent-com-
pany belonged to the Notified Persons of the group of Late
E Harshad S. Mehta which were seized by CBI and remained in
their custody. The letter also revealed that Late Harshad S.
Mehta and his group were notified by the Custodian on 8.6.92
under the provisions of the Act and all properties belonging to .4.
~
them stood attached simultaneously with the issue of the notifi-
F cation and the fourth respondent-company was informed not to
deal with those shares in any manner including transfer, pledge,
issue of duplicate etc. and all corporate benefits admissible on
these shares may be held in abeyance till the orders passed by
the learned Special Judge.
G
5. In view of the above stated circumstances, the first re-
spondent requested the fourth respondent-company to transfer ,..
the shares in the name of the buyer who purchased the same in
the open market. The fourth respondent-company vide their
letter dated 8th October, 1997 informed the first respondent that
H
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1103
AND ORS. [LOKESHWAR SINGH PANTA, J. ]

,. )'
one Mr. Mahendra Pal Tyagi - appellant herein was holding the A
said 200 shares under Ledger Folio No. 128027 bearing Share
Certificate Nos. 58193, 46706, 179855 which he claimed hav-
ing been lost and requested the fourth respondent-company to
issue duplicate shares in lieu of the aforesaid original lost share
certificates. The appellant also submitted the Police Report, B

- 'r
indemnity bond, affidavit along with the request letter to the fourth
respondent-Company who issued duplicate shares to the ap-
pellant under Share Certificate Nos. 191549-191552. The du-
plicate shares subsequently were lodged by the first respon-
dent for transfer in his name and, accordingly, the fourth respon- c
dent-company transferred the said shares on 18th October, 1994
in the name of the first respondent.
6. The fourth respondent-company thereafter received a
letter dated 29th February, 1996 from the office of the second
respondent-Custodian whereby the Custodian asked the fourth D
~
I-
respondent-company to "stop transfer" of certain shares includ-
ing the shares which are the subject matter of these proceed-
ings and also held in abeyance all the benefits accruing on those
shares as the said shares were seized by the CBI at the time of
raid laid on the places of Late Harshad S. Mehta. The letter of E
8th October, 1997 revealed that the list furnished by the second
respondent-Custodian includes original shares of the appellant
which he allegedly lost. The fourth respondent-company, there-
fore marked "stop transfer" against the duplicate shares which
.>
were transferred in the name of the first respondent and ad- F
' vised the first respondent to approach the stock exchange
through whom the first respondent purchased those shares so
that through proper channel, the introducing broker as well as
the share holder, i.e. the appellant could be asked to replace
the said shares with good shares. The first respondent admit-
G
ted that he purchased 200 shares from the open market through
their share broker and paid the consultation thereof and there-
• after the shares were also registered in his name by the fourth
respondent-company as per the provisions of the Companies
Act, 1956 and he had absolutely no knowledge about the dupli-
H
1104 SUPREME COURT REPORTS [2008] 9 S.C.R

A cate shares being issued in the name of the appellant by the '( ..
fourth respondent-company. He claimed that in the facts and
circumstances narrated in the application, first respondent is
the real and only owner of these shares and, accordingly, all
corporate benefits accrued thereon since the date of registra-
B tion of the 250 shares in his name, be paid to him in the interest
of justice. By reasons of the impugned order dated 10.10.2003,
the learned Special Judge allowed Misc. Application 186 of 2000 .,. ...
filed by the first respondent. It was directed:-

"This application relates to 250 shares of respondent no.3
c company. It appears that the respondent no.4 who was
holding these :;hares had sold the shares on the Stock
Exchange which were purchased by the notified party.
Taking advantage of the fact that the notified party because
of the notification could not apply for transfer of the shares,
D the respondent no.4 applied for duplicate shares by making
a misrepresentation that he has lost the shares and _,
received from the Company the duplicate shares. Those
duplicate shares were again sold and they were now
purchased by the applicant. The principal prayer in the
E application is for lifting of attachment on these 250 shares.
It is obvious that these 250 duplicate shares have been
issued by the Company because of misrepresentation
made by the respondent no.4. By an order dated 15th· July,
2003, the respondent no.4 was directed to deposit in this
F Court an amount of Rs.6,00,000/-. The respondent no.4 t \.
has not obeyed this order. In the affidavit filed by the
respondent no.4, the explanation that has been given by
him is incapable of being accepted. There are no
documents produced in support of that explanation.. It is
thus clear that there is no question of attachment of 250
G
shares of the respondent no.3 company being lifted. The
relief to which the applicant would be entitled is to recover
from the respondent no.4 the value of the shares. It is clear .,.
from the report submitted by the Custodian. that these
shares were purchased by the Applicant in the month of
H
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1105
AND ORS. [LOKESHWAR SINGH PANTA, J. ]

June 1994 and payment for it was made by cheque dated A
5th July 1994 and the amount was Rs.2,94,400/-. The
applicant therefore would be entitled to a decree against
the respondent no.4 in this amount. The application
therefore is disposed off in the following terms.

The respondent no.4 is directed to pay to the applicant an B
amount of Rs.2,92,400/- with interest at the rate of 18%
p.a. from 5th July 1994 till realization. Application is
disposed off."

7. Being aggrieved, the appellant filed Review Applica- c
tion being Misc. Application No.178 of 2004 under clause (f) of
sub-section (5) of Section 9-A of the Act before the learned Spe-
cial Judge. The said application came to be rejected on
14.07.2004 vide order, which reads as under:-

"Called for hearing and Final Disposal D

> None for the applicant

Mr. Modi i/b Yoges1 Thakur for Respondent No.1

Mr. J. Chandran i/b M/s P.M. & Mithi & Co. forthe Custodian/
E
Respondent No.2

Mr. V.M. Singh i/b Arun Mehta for Respondent No.4
Coram D.K. Deshmukh, J.
Judge, Special Court
> F
Dated 141h July, 2004

P.C.

Matter called twice. None present for the applicant.
Application rejected."
G
8. Again, the appellant preferred Misc. Application No.253
of 2004 for restoration of the Review Petition, which was dis-
missed and the following order came to be passed on
18.08.2004:-
H
1106 SUPREME COURT REPORTS [2008] 9 S.C.R

A "Even assuming that due to mistake of the lawyer, lawyer .
could not remain present and therefore, the review petition
was rejected, after having heard the learned counsel
appearing for the Applicant on the review application, I
find that there is no reason to review the order dated 1oth
B October, 2003. Applicant was Respondent No.4 in Misc.
Application No.186 of 2000. By order dated 15th July,
2003, he was directed to deposit an amount of Rs.6 lakh
in the court. He rlid not obey that order. Therefore, the
Applicant is not entitled to any indulgence from this court.
C Misc. Application disposed of."

9. Hence, the appellant has assailed the above-said three
orders before this Court in these appeals preferred under Sec-
tion 10 of the Act.

D 10. During the pendency of the appeals in this Court, the ~
legal representatives of late Harshad Mehta are substituted as ~
respondents Nos. 3(i}, (ii) and (iii).

11. Mr. Abhishei< Vikas Singh, learned counsel appearing
E on behalf of the appellant, in assailing the orders of the learned
Special Judge, inter alia, contended that the learned Special
Judge did not appreciate the fact that the original shares were
not valid and legal and had come to the hands of the notified
person (deceased Harshad Mehta) in illegal and wrongful man-
ner and were never transferred and registered in his name in
F accordance with law and as such, the appellant could not have
been penalized for the acts and deeds of a third person, who
had acquired the shares in illegal and clandestine manner. He
submitted that the action of the appellant being bona fide and
reasonable, he had faced loss at last stage, even when the
G duplicate shares were already stood transferred in his name in
due course after following all legal procedures and due appli-
cation of law. The learned counsel then contended that the or-
ders of the learned Special Judge impugned in these appeals
have resulted in manifest error and miscarriage of justice to the
H appellant, which deserve to be set aside.
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1107
AND ORS. [LOKESHWAR SINGH PANTA, J. )

, }'
12. Mr. RohitAggarwal, learned counsel appearing on be-
half of the first respondent, on the other hand, would inter alia
A

submit that the learned Special Judge passed an order based
upon the material on record which would reveal that the appel-
Ian! had committed a fraud of selling 200 shares on the Stock
Exchange and thereafter applying to the fourth respondent-com- B
pany for duplicate shares on the plea that the said shares had
- • "., been stolen. He also submitted that the learned Special Judge
had not burdened the appellant with payment for the entire
amount of 800 shares as alleged, but in fact has directed pay-
ment of Rs.2,92,400/- with interest thereon, which is the value c
of 250 shares only:
13. Mr. Subramanium Prasad, learned counsel appear-
ing on behalf of second respondent-Custodian, would contend
that the appellant had sold the shares in question to late Harshad
Mehta, a notified person under Section 3(2) of the Act and de- D
~ ceased Harshad Mehta could not apply for transfer of those
~ shares, the appellant, on a misrepresentation that he had lost
the shares, applied for and got duplicate shares from the fourth
respondent-company, which were also sold by the appellant to
first respondent. Learned counsel for the respondents, in nut- E
shell, supported the orders of the learned Special Judge which,
according to them, cannot be found faulty or invalid on any
grounds whatsoever as alleged by the appellant.

.,. 14. We have given our thoughtful and anxious consider-
> ation to the respective contentions of the learned counsel for F
the parties and perused the material on record. The conten-
tions of the learned counsel for the appellant at the first blush
sound attractive, yet we are afraid to accept the same.
15. The undisputed facts are that the first respondent pur-
G
chased 800 shares including 200 shares (the subject matter of
the proceedings) of fourth respondent-company in open mar-
~
ket in the months of July and August, 1994 through its share
broker Mis. Jamnadas Morarjee & Co., C-4 Defence Colony,
l
New Delhi-24. The fourth respondent-company allotted 50 bo-
H
1108 SUPREME COURT REPORTS [2008] 9 S.C.R.

"f

A nus shares to him against the said 200 shares in the ratio of ~

1:4. In all, the dispute before the learned Special Judge was
limited to 250 shares. Late Harshad S. Mehta, who was a party
- third respondent herein, is represented through his legal rep-
resentatives Nos. 3(i), (ii) and (iii) respectively. Indisputably,
B deceased Harshad Mehta was a notified person under sub-
Section (2) of Section 3 of the Act and the appellant transacted
the said shares with the deceased Harshad S. Mehta entered "!
after the first day of April, 1991 and on or before 1st June, 1992,
the stipulated period covered under the Act. Claim submitted
c by the first respondent before the learned Special Judge would
arise out of the transaction of the said 250 shares between Late
Harshad S. Mehta and the appellant during the aforesaid pe-
riod. The entire properties belonging to the notified party on
the day of notification would stand attached in terms of Section
3(2) of the Act. The appellant knowing fully well that he has al-
D 1
ready sold the shares to late Hashad S. Mehta, he made a false
~
representation to the fourth respondent-company that as the
appellant had lost original shares, therefore, duplicate shares
were allotted to him which stood in his name since late Harshad
S. Mehta had not applied for change of the name. The whole
E exercise was done by the appellant on the basis of his mis-
representation. This Court in LS. Synthetics Ltd. v. Fairgrowth
Financial Services Limited & Anr. (2004) 11 SCC 456, held
that Section 3(3) of the Act should be literally construed and all
properties belonging to the notified party on the date of notifi- .. ~
,,
F cation would stand attached.
16. In terms of the provisions of sub-section (3) of Section
3 of the Act, the properties belonging to deceased Harshad S.
Mehta being a notified person stood attached. Such attach-
ment being automatic, no finding was required to be arrived at
G
that the same had been acquired during the notified period. In
Tejkumar Balakrishna Ruia v. A.K. Menon (1997) 9 SCC 123,
">
this Court held that the terms of sub-section (3) Section 3 are
clear that the property that belongs to a notified person stands
attached simultaneously with the issue of notification that makes
H
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 1109
AND ORS. [LOKESHWAR SINGH PANTA, J. ]
,r him a notified party. It is said that the words 'on or from the date A
of notification' indicate the point of time at which the attachment
takes effect; this is reiterated by the words 'shall stand attached
simultaneously with the issue of the notification'. Further that
this also indicates that no special notification or order in regard
to the attachment is necessary. In the latest judgment of this B

- r
Court in Ashwin S. Mehta & Ors. v. Union of India & Ors. (2006)
2 SCC 385, this Court reiterated that property, be it shares,
dividends and bonus and rights shares that belongs to a noti-
fied person would also be attached property.

17. In this view of the matter, learned Judge of the Special c
Court has rightly concluded that 200 duplicate shares were
obtained by the appellant by misrepresentation. The said 200
shares plus 50 Bonus shares were attached by the CBI in pro-
ceedings initiated against deceased Harshad S. Mehta, there-
t fore, the attached shares of the fourth respondent-company could D
~ not be transferred to any'Party. The record of second respon-
dent-Custodian would reveal that 250 shares were sold by the
appellant in the month of June, 1994 and payment of
Rs.2,92,400/- was made by cheque dated 61h July, 1994. In
these circumstances, the learned Special Judge directed the E
appellant to pay to the first respondent an amount of Rs.
2,92,400/- with interest at the rate of 18% per annum from 6~
July, 1994 till the date of realization.
>-
~ 18. In the backdrop of the facts and circumstances and in
the light of the provisions of law, in our view, the orders of the F
learned Special Judge impugned in these appeals do not suf-
fer from any infirmity or illegality warranting interference in exer-
cise of appellate power.

19. For the reasons aforementioned, we do not find any
G
merit in these appeals which are dismissed, accordingly. Par-
"T'
ties are left to bear their own costs.
D.G. Appeal dismissed.

H