2004 (4) TMI 297

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....se shares were sold and the Respondent No. 2 is liable to collect the sale proceeds and pay the same to Appellant. The payment was, however, not made. In the meanwhile, Custodian appointed under section 3 of Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (the Act) notified Respondent No. 2, whereby all properties belonging to him stood attached. Appellant filed a Petition before the Special Court for a declaration that the sum of Rs. 2.90 crores received by Respondent No. 2 on behalf of Appellant was not property 'belonging to' him and hence the attachment of that amount is void. There was also a plea to release the said sum in favour of the Appellant. 2. Special Court dismissed these prayers vide its ....

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....v. Custodian [1998] 5 SCC 1 this Court clarified that if any person other than the notified person has any interest, share, title or right in the attached property it cannot be extinguished. It was clarified that the Special Court cannot dispose of property, which does not belong to notified person. 6. In this case, it is the admitted position that the Respondent No. 2 was asked to sell shares for and on behalf of Appellant. Thus the proceeds of such sale cannot be treated as property belonging to him. It belongs to Appellant and Respondent No. 2 was only holding the same in trust. The relationship between a share broker and customer is one of trust. In this view of the matter, the attachment under section 3 of the Act cannot extend to A....

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....ith he attached a contract note dated 3 March, 1992 indicating that 10 lakh shares of Reliance Petro was sold to Harshad Metha at the rate of Rs. 29 per share. By this he answers first point. 10. Though sufficient time and liberty to verify relevant records was given, he failed to answer queries (b) to (e) on one ground or another not tenable in law and hence adverse inference has to be drawn against him. On August 6, 2001 brother of Respondent No. 2 Harshad Metha filed an affidavit stating that he is not claiming any set off against Appellant regarding his claims. 11. Even in Reply to the application filed by the Appellant before the Special Court Respondent No. 2 submitted as follows: ". . . I say that it is correct that some tim....