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custodian sold the shares less than the market price to the appollo management instead of inviting them after the final bid giving an opportunity- – bid was set aside as it is arbitrary- Harshd Mehatha case= the Special Court Act which is a special statute, is a complete code in itself. The purpose and object for which it was enacted was not only to punish the persons who were involved in the act of criminal misconduct by defrauding the banks and financial institutions but also to see that the properties, moveable or immovable or both, belonging to the persons notified by the Custodian were appropriated and disposed of for discharge of liabilities to the banks and financial institutions, specified government dues and any other liability. Therefore, a notified party has an intrinsic interest in the realisations, on the disposal of any attached property because it would have a direct bearing on the discharge of his liabilities in terms of Section 11 of the Special Court Act. It is also clear that the Custodian has to deal with the attached properties only in such manner as the Special Court may direct. The Custodian is required to assist in the attachment of the notified person’s property and to manage the same thereafter. The properties of the notified persons, whether attached or not, do not at any point of time, vest in him, unlike a Receiver under the Civil Procedure Code or an official Receiver under the Provincial Insolvency Act or official Assignee under the Presidency Insolvency Act (See : B.O.I. Finance Ltd. Vs. Custodian & Ors.13). The statute 13 (1997) 10 SCC 488 2

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 IN THE SUPREME COURT OF INDIA

 CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NO. 4263 OF 2003

 ASHIWIN S. MEHTA & ANR. -- APPELLANTS

 VERSUS

 UNION OF INDIA & OTHERS -- RESPONDENTS

 J U D G M E N T

D.K. JAIN, J.:

1. This appeal under Section 10 of the Special Court (Trial of Offences 

 Relating to Transactions in Securities) Act, 1992 (for short "the 

 Special Court Act") is directed against the order dated 30th April, 

 2003, as corrected vide order dated 2nd May, 2003, passed by the 

 Special Court at Bombay, in Misc. Petition No. 64 of 1998. By the 

 impugned orders, the Special Court has permitted the Custodian to sell 

 54,88,850 shares of Apollo Tyres Ltd. (for short "Apollo"), 

 respondent No. 3 in this appeal, at Rs.90/- per share. 

2. The material facts giving rise to the appeal are as follows:

 The appellants, one late Harshad S. Mehta, their other family 

members and the corporate entities belonging to the family members had 

purchased more than 90 lakh shares in Apollo. Except for the holding of 

two family members, the entire holding came to be attached by a 

notification on 6th June, 1992. Under the said notification, 29 entities both 

individual and corporate were notified under Section 3(2) of the Special 

Court Act. Prior to the issue of notification about 15 lakh shares of 

Apollo stood registered in the name of the notified parties and the balance 

shares were unregistered. About 39.16 lakh unregistered shares were 

disclosed by the late Harshad S. Mehta to the office of the Custodian, 

which were subsequently handed over to the Central Bureau of 

Investigation (hereinafter referred to as "the CBI"). The CBI seized 

about 7 to 8 lakh un-registered shares in 1992, which also were handed 

over by them to the Custodian. The Custodian was also authorised to deal 

with a few lakh shares, identified as benami shares. Thereafter, the 

Custodian moved an application before the Special Court seeking orders 

for effecting registration of unregistered shares in the name of the 

Custodian and for recovery of lapsed benefits that accrued on the said 

unregistered shares. The management of Apollo objected to the proposed 

registration, alleging violation of the takeover code and raised the 

question of ownership. However, the Special Court, vide order dated 19th 

 2

November, 1999, allowed the registration of the un-registered shares in 

the name of the Custodian. 

3. By order dated 11th March, 1996, in Civil Appeal No.5225 of 1995, 

 this Court, in a suo motu action, directed the Custodian to draft a 

 scheme for sale of shares of the notified parties, which constituted 

 bulk of the attached assets. Accordingly, a scheme was drafted by the 

 Custodian in consultation with the Government of India and 

 thereafter, presented to this Court. Vide order dated 13th May, 1998, in 

 Civil Appeal No. 5326 of 1995, this Court directed that the said 

 scheme may be considered by the Special Court, with further 

 modifications, if any. In furtherance of the said direction, the 

 scheme was presented to the Special Court for its approval. The 

 notified parties strongly opposed the said scheme on several grounds. 

 All the objections of the notified parties were overruled and the 

 Special Court, vide order dated 17th August, 2000, categorised the 

 shares into three classes - (i) routine shares; (ii) bulk shares and (iii) 

 controlling block of shares. The Special Court constituted a Disposal 

 Committee for disposal of shares as per the norms laid down in the 

 said order. Norms in respect of sale of controlling block of shares 

 read as follows:

 3

 "NORMS FOR SALE OF CONTROLLING BLOCK OF 

 SHARES:

 After completion of demat procedure for registered shares, the 

 Custodian will give public advertisement in the newspapers 

 inviting bids for purchase of Controlling Block of shares. The 

 offers should be for the entire block of registered shares. The 

 offers should be accompanied by a Demand Draft/Pay 

 Order/Bankers' cheque representing 5% of the offered amount 

 in cases of thinly traded shares of companies like Killick Nixon 

 whereas in cases of highly valued shares like Apollo Tyres, the 

 offers shall be accompanied by Demand Draft/Pay 

 Order/Bankers' cheque representing 2% of the offered amount. 

 The said Pay Order/Demand Draft/bankers' cheque should be 

 drawn in favour of the Custodian, A/c - name of the notified 

 parties say Dhanraj Mills. The offers can be made by 

 individuals as well as by corporate and other entities. The 

 offerer, whose offer is accepted by the Court, will be required 

 to make payment within 15 days from the date of acceptance of 

 the offer by the Court. Here also, the Court reserves its 

 rights to accept or reject any of the highest offer or bid that 

 may be received by the Court without assigning any reason 

 whatsoever. Once the highest offer is ascertained, the 

 management of the company should be given an option to 

 buy the shares. This is to avoid destablization of the company. 

 The purchaser(s) shall comply with all regulations including the 

 Take Over Regulations of SEBI. In cases where the Custodian 

 finds that as on the relevant date, he does not possess shares of 

 a company to the extent of 5% or above, but he anticipates that 

 in near future, the limit is likely to reach with the other shares 

 coming in, then the Custodian shall submit his report to the 

 Court for keeping aside such shares of a notified party for 

 future disposal. However, public financial institutions will not 

 be required to make any deposit along with their offer(s)."

 (Emphasis 

 supplied)

4. The Special Court approved the scheme, propounded by the Custodian 

 for sale of Controlling Block of Shares in toto and ordered sale of all 

 registered shares, except the shares of Apollo because their objection 

 4

 regarding registration of unregistered shares in the name of 

 Custodian/notified parties, was pending adjudication by this Court.

5. The order of the Special Court was challenged both by the notified 

 parties and Apollo. By order dated 23rd August, 2001 in Civil Appeal 

 No.7629 of 1999 [connected C.A. Nos. 7630 of 1999 and 5813 to 

 5814 of 2000], this Court, while approving the basic structure of the 

 scheme and the directions given by the Special Court for disposal of 

 shares, disposed of the appeal with the following directions insofar as 

 the sale of controlling block of shares, was concerned:

 "In respect of the sale of controlling block of shares the only 

 method laid down by the Special Court is to offer the sale of 

 shares in a composite block. It is not known whether such a 

 sale will get the best price in respect thereof. We, therefore, 

 direct that it will be open to the Special Court to decide 

 whether to have the sale of the controlling block of shares 

 either by inviting bids for purchase of controlling block as 

 such or by selling the said shares according to the norms 

 fixed for the sale of bulk shares or by the norms fixed in 

 respect of routine shares. The object being that the highest 

 price possible should be realised, it is left to the Court to 

 decide what procedure to adopt.

 If the Court thinks that it is best to adopt the norms laid 

 down by it for sale of controlling block of shares (the 3rd 

 method) then when highest offer is received and the 

 Management of the Company is given an option to buy those 

 shares at that price, then if the Management so desires the Court 

 should give the Company an opportunity to buy back the shares 

 at the highest price offered by complying with the provisions of 

 Section 77A of the Companies Act. In other words, on the 

 receipt of the offer for the sale of the controlling block, the 

 Court will give an opportunity, if it chooses to consider the 

 offer, to the Management to buy or to the Company to buy back 

 5

 under Section 77A of the Companies Act. No other change in 

 the Scheme as formulated by the Special Court is called for.

 It is made clear that in respect of the controlling block 

 of shares the third method will first be adopted, namely, the 

 norms for sale of controlling block of shares; and it is only if 

 the Court is satisfied that by adopting that method the 

 highest price is not available then it will have an option to 

 follo
 w the 2nd
 method relating to sale of bulk shares. 

 Further, if the Court is satisfied that by following any of the 

 above two methods the highest price is not available, then it 

 will have an option to follow the norms as laid down for 

 routine shares
 (the 1st
 me
 thod).

 These appeals are disposed of in the aforesaid terms." 

 (Emphasis supplied by us)

In compliance with the aforesaid orders/directions, the Custodian drafted 

the `terms and conditions of sale' for sale of 54,88,850 shares of Apollo. 

Some of the terms and conditions, relevant for this appeal are as follows :

 "...... .......... ........ ......... ......... .........

 ...... .......... ........ ......... ......... .........

 5. Even after acceptance of the offer/identification of 

 the highest bidder by the Disposal Committee, the 

 approval of sale will be subject to the sanction of 

 Hon'ble Special Court.

 ...... .......... ........ ......... ......... .........

 7. The Bids are to be submitted for the 

 entire lot of shares of the said Company viz. 

 54,88,850 shares. Bids in part (less number of shares 

 than total) shall not be considered.

 ...... .......... ........ ......... ......... .........

 ...... .......... ........ ......... ......... .........

 14. The Custodian will obtain directions of the 

 Hon'ble Court for approval of the offer of the highest 

 bidder so identified by the Disposal Committee. The 

 6

 Hon'ble Special Court after ascertaining the highest 

 offer may give an opportunity to the management of 

 the said Company to buy or to the Company to buy-

 back as per provisions of the Companies Act, 1956, 

 the said "Controlling Block" of shares if it so desires.

 15. The sale as stated herein above is subject to the 

 sanction of Hon'ble Special Court. The Hon'ble 

 Special Court reserves the right to accept or reject any 

 of the offer or bids that may be received for purchase 

 of the shares.

 ...... .......... ........ ......... ......... ............"

6. Pursuant thereto, the Custodian invited bids from individuals as well 

 as from the corporate and other entities. The offers were to reach the 

 office of the Custodian by 3.00 p.m. on or before 25th April 2003. In 

 response, only two bids were received, the highest being Rs. 80/- per 

 share given by Punjab National Bank. The Disposal Committee 

 evaluated the bids so received and vide its minutes dated 25th April 

 2003, recommended that in addition to the aforesaid 54,88,850 shares, 

 additional 8,15,485 benami shares also be sold to the highest bidder 

 subject to sanction by the Special Court. Accordingly, the Custodian 

 submitted a report to the Special Court for consideration and 

 appropriate orders. By the impugned order, dated 30th April, 2003, 

 corrected vide order dated 2nd May, 2003, the Special Court directed 

 sale of 54,88,850 shares to Apollo and its management at Rs.90/- per 

 7

 share. Being dissatisfied with and aggrieved by the order indicated 

 hereinbefore, the appellants have preferred this appeal. 

7. At the time of admission of this appeal on 29th May, 2003, the 

 following interim order was made:

 "Appeal admitted.

 Mr. A.D.N. Rao, Ms. Manik Karanjawala and Ms. Pallavi 

 Shroff, learned counsel accept notice on behalf of 

 respondent Nos.1, 3 and 7 respectively. Learned counsel 

 appearing for the Management - Respondent No.7 submits 

 that as on date only 4.95% of the shares purchased alone are 

 in existence. In regard to these existing shares, the learned 

 counsel undertakes not to further alienate them. We record 

 the said undertaking."

8. Ms. Kamini Jaiswal, learned counsel appearing on behalf of the 

 appellants, while assailing the impugned orders on several grounds, 

 strenuously urged that the sale of 54,88,850 shares of Apollo ought to 

 be rescinded, particularly because, the said sale was in conscious 

 breach of the scheme as also the terms and conditions laid down for 

 the sale of these shares and was also in violation of the principles of 

 natural justice. 

9. Elaborating her contention that the sale was in contravention of the 

 scheme framed by the Custodian and duly approved by the Special 

 Court by order dated 17th August, 2000 and with modifications by this 

 Court vide order dated 23rd August, 2001, learned counsel argued that 

 8

 Condition No.14 in the `terms and conditions for sale' had been 

 violated on three counts: viz. (i) Apollo and/or its management could 

 be invited to bid only after the Special Court had ascertained the 

 highest offer and satisfied itself about the inadequacy of the other 

 bids. But the Custodian vide letter dated 28th April 2003, invited 

 Apollo to bid for purchase of the said shares on his own volition, even 

 before the bids received were placed before the Special Court; (ii) the 

 offer to bid was to be made either to Apollo `OR' its management and 

 not to both as was done in the present case and (iii) the buy back 

 effected by Apollo was in complete violation of Section 77A of the 

 Companies Act, 1956 (for short "the Companies Act") as well as 

 SEBI (Buy back of Securities) Regulations, 1998. It was also urged 

 that by accepting the bids of Apollo and respondent Nos.5 to 8, who 

 were the investment companies of the promoters of Apollo, Condition 

 No.7 of the said terms and conditions was also violated because each 

 bid had to be for the entire lot of shares and not for a part of shares.

10.Alleging collusion between the Custodian, Apollo and its 

 management, learned counsel submitted that, though the appellants 

 and their relatives and corporate entities promoted by them were 

 together holding approximately one crore shares in Apollo, which 

 were ready and available for sale, yet, the Custodian proposed sale of 

 9

 only 54,88,850 shares. Further, the Custodian never explained the 

 rationale behind breaking up the controlling block of shares to only 

 15.1% of the equity capital when the total share holdings were easily 

 more than 25% of the capital of the company. It was asserted that, the 

 offer for sale of 15.1% shares was deliberately resorted to by the 

 Custodian only to ensure that no other bid came forward as such a 

 prospective bidder would have been bound to make a further public 

 offer for purchase of 20% of the capital under SEBI (Substantial 

 Acquisition of Shares and Takeovers) Regulations, 1997. It was 

 strenuously urged that the Custodian, with ulterior motive, had made 

 the conditions very stringent and onerous to restrict and for that 

 matter, practically deny participation of any other institution or 

 individual in the bidding process. 

11. It was contended that the impugned sale was in complete violation of 

 the order of this Court dated 23rd August, 2001, wherein it was stated 

 that the object for laying down the norms was to realise the highest 

 possible price for the shares. It was urged that in the instant case, 

 instead of maximising the price, the shares were sold at a discount of 

 25% of the then prevailing market price, thereby defeating the very 

 purpose of the scheme. It was thus, contended before us that the 

 Disposal Committee and the Custodian ought not to have 

 1

 recommended the acceptance of the bid at Rs.90/- per share since both 

 the offers received were way below the then prevailing market price as 

 well as the book value of shares. Under the given circumstances, 

 according to the learned counsel, the Special Court should have opted 

 for the 2nd method relating to sale of bulk shares, as stipulated in the 

 order of this Court dated 23rd August 2001. It was urged that the 

 Special Court also failed to follow its past precedents, particularly in 

 the case of M/s Ranbaxy Laboratories Ltd., when 8,04,777 shares 

 were ordered to be sold @ Rs.565/- per share. In that case, the bid was 

 received under the Bulk Category @ Rs.540/- per share but on the 

 insistence of the Special Court, the offer was improved to bring it at 

 par with the prevailing market price. In support of the proposition that 

 the Custodian as also the Special Court having committed material 

 irregularities, resulting in substantial injury to the appellants, the 

 subject sale of shares is liable to be set aside, learned counsel placed 

 reliance on the observations of this Court in Desh Bandhu Gupta Vs. 

 N.L. Anand & Rajinder Singh1 and Gajadhar Prasad & Ors. Vs. 

 Babu Bhakta Ratan & Ors.2

12. Learned counsel strenuously contended that the impugned order was 

 also arbitrary and in violation of the principles of natural justice in as 

1 (1994) 1 SCC 131

2 (1973) 2 SCC 629

 1

much as the Special Court not only outrightly rejected the prayer made 

by the notified parties during the course of proceedings on 30th April, 

2003 for grant of 48 hours time to secure a better offer in the same 

manner as was done to secure a better offer for the Bulk category 

shares of M/s Ranbaxy Laboratories Ltd., it also failed to consider the 

objections raised by them in their written submissions filed on 2nd 

May, 2003. It was stressed that the Special Court rejected the 

legitimate request of the appellants without any justification and 

showed undue haste in ordering the sale of shares, even ignoring the 

direction of this Court, i.e., to explore the possibility of selling the 

shares either under the Bulk Category or as Routine Shares to secure 

maximum price for the shares. On the contrary, the Special Court 

granted Apollo and its management two days to bring their proper 

offer and earnest money on 2nd May, 2003, which fact is duly recorded 

in the impugned order dated 30th April, 2003. In order to bring home 

her allegation of discriminatory treatment at the hands of the 

Custodian as also by the Special Court, learned counsel referred to the 

two letters dated 28th April, 2003 and 29th April, 2003, addressed to the 

notified parties by the Custodian intimating them about the date when 

the Special Court would consider the bids received in response to the 

advertisement for sale of subject shares. While letter dated 28th April, 

2003 allowed the notified parties to submit offers independently 

 1

 received by them for purchase of the said shares, letter dated 29th 

 April, 2003, made it clear that no offers brought by the notified parties 

 to the Court would be considered. As regards the reasoning of the 

 Special Court that any delay in finalisation of the bid would have 

 resulted in a crash in the market price of the shares because of break in 

 the news of purchase of huge quantity of shares by one party, it was 

 submitted that the said reasoning was again erroneous in as much as 

 the news of sale of 54,88,850 shares of Apollo was already in public 

 domain when advertisement for sale of these shares was published. It 

 was thus, pleaded that the impugned order be set aside and the entire 

 sale of 54.88 lakhs shares be rescinded in public interest and to 

 achieve the object of the Special Court Act. 

13. Per contra, Mr. Joseph Vellapally, learned senior counsel appearing 

 for Apollo, supporting the order of the Special Court, at the outset, 

 submitted that the said order had been passed by the Special Court in 

 exercise of wide discretionary powers conferred on it by the Special 

 Court Act as also by this Court and that such discretion can be 

 interfered with only if it is shown to have been exercised in violation 

 of the statutory provisions or contrary to the well established judicial 

 principles. It was argued that in the present case the decision of the 

 Special Court was based on the recommendation of the Disposal 

 1

 Committee, which consisted of experts in the field of securities and 

 shares, and therefore, it cannot be said to be perverse so as to warrant 

 interference by this Court. In order to highlight the role of the 

 Disposal Committee and the probative value of its advice and 

 recommendations, learned senior counsel commended us to a decision 

 of this Court in Sudhir S. Mehta & Ors. Vs. Custodian & Anr.3 In 

 support of his submission that the Appellate Court should not lightly 

 interfere with the discretion exercised by the Trial Court, learned 

 counsel placed heavy reliance on the decisions of this Court in Ramji 

 Dayawala And Sons (P) Ltd. Vs. Invest Import4 and Wander Ltd. 

 And Anr. Vs. Antox India P. Ltd.5, wherein it was held that the 

 Appellate Court would not ordinarily substitute its discretion in the 

 place of the discretion exercised by the Trial Courts, save and except 

 where the Trial Court had ignored the relevant evidence, sidetracked 

 the approach to be adopted in the matter or overlooked various 

 relevant considerations. The Appellate Court would normally not be 

 justified in interfering with the exercise of discretion under appeal 

 solely on the ground that if it had considered the matter at the trial 

 stage it would have come to a contrary conclusion. It was strenuously 

 urged that the Special Court having acted reasonably and in a 

3 (2008) 12 SCC 84

4 (1981) 1 SCC 80 at page 96

5 1990 (Supp) SCC 727

 1

 judicious manner, this Court should not interfere with the decision of 

 the Special Court in approving the sale of shares to Apollo.

14. It was further contended by Mr. Vellapally that the appellants have no 

 locus standi to assail the entire sale of 54.88 lakh shares as their 

 shareholding was only 1,49,570 shares, as stated in the affidavit of the 

 Custodian. It was pointed out that there was no averment in the appeal 

 to the effect that the same was being filed in a representative capacity 

 on behalf of other members of Harshad Mehta Group. At best, the 

 appellants could impugn sale of 1,49,570 shares. 

15. It was also contended by Mr. Vellapally that in terms of the order of 

 the Special Court dated 17th August, 2000 and the order of this Court 

 dated 23rd August, 2001, the management of Apollo had the right to 

 buy and Apollo had the right to buy back its own shares under Section 

 77A of the Companies Act, once the highest offer is received from 

 those entities who participated in the bid. Since the purchase of shares 

 by Apollo was akin to an auction sale, its interests as a bonafide 

 purchaser in the shares are saved, having no connection with the 

 underlying dispute between the Custodian and the notified parties. In 

 support of the contention, reliance was placed on Ashwin S. Mehta 

 Vs. Custodian6 wherein, according to the learned counsel, (albeit 

6 (2006) 2 SCC 385 at para 67-72

 1

 dealing with sale of commercial properties) in a similar situation, the 

 interests of bona fide purchasers were protected. 

16. Refuting the claim of the appellants that the said sale of shares of 

 Apollo was at a loss, it was submitted by Mr. Vellapally that it is a 

 matter of common knowledge that transactions in the stock market 

 are speculative in nature and cannot be predicted with accuracy. It was 

 submitted that this Court in the matter of Sudhir S. Mehta (supra), 

 while dealing with the notified parties' objections to a sale of shares of 

 Reliance Industries Ltd. had observed that the sale of shares between 

 the period `12.12.2000 to 1.11.2007' (said period covering the sale of 

 shares of Apollo) could not be said to be at a loss, especially because 

 of the fact that the said sale had been approved by the Disposal 

 Committee, a committee of experts. 

17.Lastly, learned senior counsel submitted that pursuant to the buy back 

 of shares and on due compliance with the provisions of Section 77A 

 read with Section 77A (7) of the Companies Act, Apollo had already 

 extinguished 36.90 lakh shares so bought-back and therefore, to that 

 extent, prayer of the appellants to rescind the purchase of shares is 

 rendered infructuous. It was asserted that any order at this juncture, 

 setting aside the impugned order, would not result in resurrection of 

 the extinguished shares but entail a fresh issue of shares under 

 1

 Sections 79 and 81 of the Companies Act, which is fraught with 

 statutory restrictions and difficulties, resultantly affecting the rights of 

 third party shareholders, who are not parties to the present dispute. 

18. Mr. Arvind Kumar Tewari, learned counsel appearing on behalf of the 

 Custodian (respondent No. 2), supporting the impugned order, 

 vehemently argued that the Special Court had not only followed all the 

 norms settled by this Court, it was also successful in obtaining a price 

 higher by Rs.10/- per share as compared to what was offered by the 

 highest bidder, viz. Punjab National Bank. It was alleged that in spite 

 of being informed by the Custodian in advance, vide letter dated 28th 

 April, 2003, the appellants had failed to arrange for a purchaser who 

 could bid higher than Apollo and had frivolously sought another two 

 days time to arrange for a higher bid. 

19. Dr. A. M. Singhvi, learned senior counsel appearing for respondents 

 Nos. 3, 6 and 8, the co-bidders with Apollo, while adopting all the 

 submissions made on behalf of Apollo, reiterated that the said 

 respondents being bonafide bidders, having no concern with the 

 procedure adopted by the Custodian for sale of shares, any 

 interference by this Court with a well reasoned and equitable order 

 passed by the Special Court would cause extreme hardship to them. In 

 support of the submission that having regard to the nature of 

 1

 controversy sought to be raised by the appellants notified parties under 

 the Special Court Act, this Court will be loath to interfere with the 

 discretion exercised by the Special Court, learned senior counsel 

 commended us to the decisions of this Court in Employees' State 

 Insurance Corpn. & Ors. Vs. Jardine Henderson Staff Association 

 & Ors.7, State of M.P. & Ors. Vs. Nandlal Jaiswal & Ors.8, Ramana 

 Dayaram Shetty Vs. International Airport Authority of India & 

 Ors.9; Sesa Industries Limited Vs. Krishna H. Bajaj & Ors.10 and on 

 a decision of the House of Lords in Susannah Sharp Vs. Wakefield 

 & Ors.11. In the alternative, learned counsel submitted that if for any 

 reason, this Court was to come to a conclusion that the price realised 

 for sale of said shares was at a discount and/or less than the market 

 price then the relief granted to the appellants ought to be confined to 

 their shareholding and the promoters may be directed to pay the 

 difference between the price paid by them for the purchase of shares 

 i.e. Rs. 90/- per share and the then prevailing market price i.e. Rs. 

 120/- per share. In support of his proposition that this Court had 

 sufficient powers under Article 142 of the Constitution of India to 

 balance the equities between the parties and render complete justice 

 by moulding the relief, learned senior counsel placed reliance on the 

7 (2006) 6 SCC 581

8 (1986) 4 SCC 566

9 (1979) 3 SCC 489

10 (2011) 3 SCC 218

11 (1891) A.C. 173

 1

 observations made by this Court in Rajesh D. Darbar Vs. 

 Narasingrao Krishnaji Kulkarni12. 

20. Before addressing the contentions advanced on behalf of the parties, it 

 will be necessary and expedient to notice the overarching 

 considerations behind the enactment of the Special Court Act, which 

 came into force on 6th June, 1992. It replaced the Special Court (Trial 

 of Offences Relating to Transactions in Securities) Ordinance 1992, as 

 promulgated on 6th June 1992, when large scale irregularities and 

 malpractices pertaining to the transactions in both Government and 

 other securities, indulged in by some brokers in collusion with the 

 employees of various banks and financial institutions were noticed. 

 The Special Court Act provides for establishment of a Special Court 

 for speedy trial of offences relating to transactions in securities and 

 disposal of properties attached thereunder. Section 3 of the Special 

 Court Act relates to the appointment and functions of the Custodian. 

 Sub-section (2) thereof clothes the Custodian with the power to notify 

 in the official gazette, the name of a person, who has been involved in 

 any offence relating to transactions in securities during the period as 

 mentioned therein. Sub-sections (3) and (4) of Section 3 stipulate that 

 with the issue of the aforesaid notification, properties, movable or 

 immovable or both, belonging to the notified person shall stand 

12 (2003) 7 SCC 219

 1

attached, and such properties are to be dealt with by the Custodian in 

such manner as the Special Court may direct. Section 9A of the 

Special Court Act deals with the jurisdiction, power, authority and the 

procedure to be adopted by the Special Court in civil matters. In 

short, on and from the commencement of the Special Court Act, the 

Special Court exercises all such jurisdiction etc. as are exercisable by 

a Civil Court in relation to any matter or claim relating to any property 

that stands attached under sub-section (3) of Section 3 and it bars all 

other courts from exercising any jurisdiction in relation to any matter 

or claim referred to in the said Section. Sub-section (4) of Section 9A 

of the Special Court Act contemplates that the Special Court shall not 

be bound by the procedure laid down by the Code of Civil Procedure, 

1908 and shall have the power to regulate its own procedure, but shall 

be guided by the principles of natural justice. The other provision, 

which is relevant for our purpose is Section 11 of the Special Court 

Act, which exclusively empowers the Special Court to give directions 

in the matter of disposal of the property of a notified person, under 

attachment. Sub-section (2) of Section 11 lists the priorities in which 

the liabilities of the notified person are required to be paid or 

discharged. 

 2

21. It is plain that the Special Court Act which is a special statute, is a 

 complete code in itself. The purpose and object for which it was 

 enacted was not only to punish the persons who were involved in the 

 act of criminal misconduct by defrauding the banks and financial 

 institutions but also to see that the properties, moveable or immovable 

 or both, belonging to the persons notified by the Custodian were 

 appropriated and disposed of for discharge of liabilities to the banks 

 and financial institutions, specified government dues and any other 

 liability. Therefore, a notified party has an intrinsic interest in the 

 realisations, on the disposal of any attached property because it would 

 have a direct bearing on the discharge of his liabilities in terms of 

 Section 11 of the Special Court Act. It is also clear that the Custodian 

 has to deal with the attached properties only in such manner as the 

 Special Court may direct. The Custodian is required to assist in the 

 attachment of the notified person's property and to manage the same 

 thereafter. The properties of the notified persons, whether attached or 

 not, do not at any point of time, vest in him, unlike a Receiver under 

 the Civil Procedure Code or an official Receiver under the Provincial 

 Insolvency Act or official Assignee under the Presidency Insolvency 

 Act (See : B.O.I. Finance Ltd. Vs. Custodian & Ors.13). The statute 

13 (1997) 10 SCC 488

 2

 also mandates that the Special Court shall be guided by the principles 

 of natural justice. 

22. At this juncture, it would also be profitable to briefly note the salient 

 features of the scheme formulated by the Custodian for sale of shares 

 in terms of the directions issued by this Court in its order dated 11th 

 March 1996 (CA No.5225/1995); the norms laid down by the Special 

 Court vide order dated 17th August 2000 and the modification of these 

 norms by this Court vide order dated 23rd August, 2001 (CA 

 No.5326/1995). What clearly emerges from the scheme/orders is that 

 the underlying object of the procedure/norms laid down in the scheme 

 is to ensure that highest possible price on sale of shares is realised. It 

 is manifest that with this end in view, this Court vide order dated 23rd 

 August, 2001, left it to the Special Court to decide what procedure to 

 adopt in order to realise the highest price for the shares. The 

 scheme/norms had been further modified by the Special Court and this 

 Court in a way to inject flexibility in the scheme in order to secure the 

 highest price for the shares. 

23. Having examined the impugned order in the light of the Statutory 

 provisions and the norms laid down for sale of the subject shares, we 

 are of the opinion that there is substance and merit in the submissions 

 made by learned counsel for the appellants to the extent that the 

 2

Special Court failed to make a serious effort to realise the highest 

possible price for the said shares. We also feel that the Special Court 

overlooked the norms laid down by it in its order dated 17th August 

2000; ignored the afore-extracted directions by this Court contained in 

order dated 23rd August 2001 and glossed over the procedural 

irregularities committed by the Custodian. As stated above, Condition 

No.14 of the terms and conditions of sale, clearly stipulated that it was 

only after the Special Court had ascertained the highest offer that 

Apollo or its management was to be given an option to buy back the 

shares. However, the letter of the Custodian dated 28th April, 2003, 

addressed to Apollo clearly divulges the fact that the Custodian had, 

without any authority, invited Apollo and its management `to bid' on 

30th April, 2003, the settled date, when the report of the Disposal 

Committee was yet to be considered by the Special Court. It is evident 

from Condition No.15 of terms and conditions of sale, that the Special 

Court has the discretion to accept or reject any offer or bid that may be 

received for purchase of shares. Therefore, the stand of the Custodian 

that inviting Apollo to make the bid was necessarily in compliance of 

the scheme/condition of sale, cannot be accepted inasmuch as it was 

for the Special Court to take such a decision at the appropriate time 

and not the Custodian. The Custodian could not have foreseen that the 

Special Court would not accept the bid of the sole bidder viz. Punjab 

 2

 National Bank. As aforesaid, so far as issue of notification in terms of 

 Section 3(2) is concerned, the Custodian derives his power and 

 authority from the Special Court Act but his jurisdiction to deal with 

 property under attachment, flows only from the orders which may be 

 made by the Special Court constituted under the said Act. It is 

 obligatory upon the Custodian to perform all the functions assigned to 

 him strictly in accordance with the directions of the Special Court. In 

 the present case, although we do not find any material on record which 

 may suggest any malafides on the part of the Custodian yet we are 

 convinced that by inviting Apollo to bid, vide letter dated 28th April, 

 2003, the Custodian did exceed the directions issued to him by the 

 Special Court. However, we feel that this being in the nature of a 

 procedural omission, the alleged violation is not per se sufficient to 

 nullify the sale of shares.

24.The next question for determination is whether or not the impugned 

 decision of the Special Court is in breach of the principles of natural 

 justice, thereby vitiating its decision to sell the subject shares to 

 Apollo and the companies managed by their promoters? 

25. It is true that rules of "natural justice" are not embodied rules. The 

 phrase "natural justice" is also not capable of a precise definition. The 

 underlying principle of natural justice, evolved under the common 

 2

 law, is to check arbitrary exercise of power by any authority, 

 irrespective of whether the power which is conferred on a statutory 

 body or Tribunal is administrative or quasi judicial. The concept of 

 "natural justice" implies a duty to act fairly i.e. fair play in action. As 

 observed in A.K. Kraipak Vs. Union of India14, the aim of rules of 

 natural justice is to secure justice or to put it negatively to prevent 

 miscarriage of justice.

26. In Swadeshi Cotton Mills Vs. Union of India15, R.S. Sarkaria, J., 

 speaking for the majority in a three-Judge Bench, lucidly explained 

 the meaning and scope of the concept of "natural justice". Referring to 

 several decisions, His Lordship observed thus: (SCC p. 666)

 "Rules of natural justice are not embodied rules. Being 

 means to an end and not an end in themselves, it is not 

 possible to make an exhaustive catalogue of such rules. But 

 there are two fundamental maxims of natural justice viz. (i) 

 audi alteram partem (ii) memo judex in re sua. The audi 

 alteram partem rule has many facets, two of them being (a) 

 notice of the case to be met; and (b) opportunity to explain. 

 This rule cannot be sacrificed at the altar of administrative 

 convenience or celerity. The general principle--as 

 distinguished from an absolute rule of uniform application--

 seems to be that where a statute does not, in terms, exclude 

 this rule of prior hearing but contemplates a post-decisional 

 hearing amounting to a full review of the original order on 

 merits, then such a statute would be construed as excluding 

 the audi alteram partem rule at the pre-decisional stage. 

 Conversely if the statute conferring the power is silent with 

 regard to the giving of a pre-decisional hearing to the person 

 affected and the administrative decision taken by the 

14 (1969) 2 SCC 262

15 (1981) 1 SCC 664

 2

 authority involves civil consequences of a grave nature, and 

 no full review or appeal on merits against that decision is 

 provided, courts will be extremely reluctant to construe such 

 a statute as excluding the duty of affording even a minimal 

 hearing, shorn of all its formal trappings and dilatory 

 features at the pre-decisional stage, unless, viewed 

 pragmatically, it would paralyse the administrative process 

 or frustrate the need for utmost promptitude. In short, this 

 rule of fair play must not be jettisoned save in very 

 exceptional circumstances where compulsive necessity so 

 demands. The court must make every effort to salvage this 

 cardinal rule to the maximum extent possible, with 

 situational modifications. But, the core of it must, 

 however, remain, namely, that the person affected must 

 have reasonable opportunity of being heard and the 

 hearing must be a genuine hearing and not an empty 

 public relations exercise." 

 (emphasis supplied by us)

27.It is thus, trite that requirement of giving reasonable opportunity of 

 being heard before an order is made by an administrative, quasi 

 judicial or judicial authority, particularly when such an order entails 

 adverse civil consequences, which would include infraction of 

 property, personal rights and material deprivation for the party 

 affected, cannot be sacrificed at the alter of administrative exigency 

 or celerity. Undoubtedly, there can be exceptions to the said doctrine 

 and as aforesaid the extent and its application cannot be put in a 

 strait-jacket formula. The question whether the principle has to be 

 applied or not is to be considered bearing in mind the express 

 language and the basic scheme of the provision conferring the power; 

 the nature of the power conferred; the purpose for which the power is 

 2

 conferred and the final effect of the exercise of that power on the 

 rights of the person affected. 

28. In the backdrop of the aforenoted legal principles and the requirement 

 of sub-section 4 of Section 9A of the Special Court Act, we are of the 

 opinion that in the present case the Special Court failed to comply 

 with the principles of natural justice. As noted above, the Special 

 Court rejected the prayer of the appellants to grant them 48 hours' 

 time to secure a better offer. In fact, by his letter dated 29th April, 2003 

 addressed by the Custodian to the notified parties, including the 

 appellants, the right of the appellants to bring better offer was 

 foreclosed by the Custodian, which evidently was without the 

 permission of the Special Court. Furthermore, the Special Court also 

 ignored its past precedents whereby it had granted time to the parties 

 to get better offers for sale of shares of M/s Ranbaxy Laboratories Ltd. 

 There is also force in the plea of learned counsel appearing for the 

 appellants that the reason assigned by the Special Court in its order 

 dated 30th April, 2003, for declining further time to the appellants, that 

 deferment of decision on the sale of shares would have resulted in the 

 share market falling down is unsound and unfounded. As stated above, 

 the share market was already aware of the sale of a big chunk of 

 shares of Apollo in view of the advertisement published by the 

 2

 Custodian and therefore, there was hardly any possibility of further 

 volatility in the price of said shares. We are thus, convinced that the 

 appellants have been denied a proper opportunity to bring a better 

 offer for sale of shares, resulting in the realisation of lesser amount 

 by way of sale of the subject shares, to the detriment of the appellants 

 and other notified parties. Therefore, the decision of the Special Court 

 deserves to be set aside on that short ground.

29. We shall now advert to the plea strenuously canvassed on behalf of 

 the respondents that the Special Court having exercised the discretion 

 vested in it under the Special Court Act, keeping in view all the 

 parameters relevant for disposal of the shares, this Court may not 

 interfere with the impugned order. There is no quarrel with the 

 general proposition that an Appellate Court will not ordinarily 

 substitute its discretion in the place of the discretion exercised by the 

 Trial Court unless it is shown to have been exercised under a mistake 

 of law or fact or in disregard of a settled principle or by taking into 

 consideration irrelevant material. A `discretion', when applied to a 

 court of justice means discretion guided by law. It must not be 

 arbitrary, vague and fanciful but legal and regular. (See : R. Vs. 

 Wilkes16 ).

16 (1770) 4 Burr 2527

 2

30.We have therefore, no hesitation in agreeing with Mr. Vellapally to 

 the extent that same principle would govern an appeal preferred under 

 Section 10 of the Special Court Act. However, since we have come to 

 the conclusion that the Special Court has exercised its discretion in 

 complete disregard to its own scheme and `terms and conditions' 

 approved by it for sale of shares and above all that the impugned 

 order was passed in violation of the principles of natural justice, we 

 think that the facts in hand call for our interference, to correct the 

 wrong committed by the Special Court.

31.For the view we have taken above, we deem it unnecessary to deal 

 with the other contentions urged on behalf of the parties on the merits 

 of the impugned order. 

32. This brings us to the question of relief. In view of our finding that the 

 decision of the Special Court is vitiated on the afore-stated grounds, it 

 must follow as a necessary consequence that in the normal course, the 

 impugned order must be struck down in its entirety. However, bearing 

 in mind the fact that the sale of 54,88,850 shares was approved and all 

 procedural modalities are stated to have been carried out in the year 

 2003, we are inclined to agree with Mr. Vellapally and Dr. Singhvi 

 that at this stage, when 36.90 lakh shares of Apollo are claimed to 

 have been extinguished, the relief sought for by the appellants to 

 2

 rescind the entire sale of 54,88,850 shares will be impracticable and 

 fraught with grave difficulties. In our opinion, therefore, the relief in 

 this appeal should be confined to 4.95% of the shares, subject matter 

 of interim order, dated 29th May, 2003, extracted above.

33. In the result, we allow the appeal partly; set aside the impugned order 

 to the extent indicated above and remit the case to the Special Court 

 for taking necessary steps to recover the said 4.95% shares from 

 Apollo or its management, as the case may be, and put them to fresh 

 sale strictly in terms of the aforenoted norms as approved by this 

 Court vide order dated 23rd August, 2001. The shareholders who will 

 be affected by this order shall be entitled to the sale consideration paid 

 by them to the Custodian alongwith simple interest @6% p.a. from the 

 date of payment by them upto the date of actual reimbursement by the 

 Custodian in terms of this order.

34.However, in the facts and circumstances of the case, the parties are 

 left to bear their own costs.

 ........................................J.

 (D.K. JAIN)

 ........................................J. 

 (ASOK KUMAR GANGULY)

 NEW DELHI;

 NOVEMBER 8, 2011.

RS 3

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