Excel & Co vs. A. K. Menon

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

CIVIL APPEAL NO(s). 2014 OF 2004

EXCEL & CO. Appellant (s)

VERSUS

A.K. MENON & ANR. Respondent(s)

(With office report )

Date: 26/10/2005 This Appeal was called on for hearing today.

CORAM :

HON'BLE MRS. JUSTICE RUMA PAL HON'BLE MR. JUSTICE H.K. SEMA

For Appellant(s) Mr. Rajeev B.Masodkar,adv.

Mr. Anil K. Jha,Adv.

For Respondent(s)

Ms. Manjula Gupta,Adv.

Mr. Subramonium Prasad ,Adv

For R.1 Mr. S.Prahalad,adv. Mr. Rahul Kumar,adv. Mr. Jai Kishore Singh,Adv.

UPON hearing counsel the Court made the following

O R D E R

The appeal is allowed without costs.

(Suman Wadhwa) (Madhu Saxena)

Court Master Court Master

Signed order is placed on the file.

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2014 OF 2004

Excel & Co. .. Appellant vs.

A.K.Menon & Anr. .. Respondents

O R D E R

The challenge in this appeal is to an order passed by the Special Courts (Trial of Offences Relating to Transactions under Securities) Act 1992 (hereinafter referred to as 'the Act').

It is not in dispute that the appellant is a notified party under that Act. According to the impugned order, the appellant had made certain statements in his affidavit affirmed on 1.12.1999 from which the Court deduced that the appellant had admitted that an amount of Rs.3,11,75,000/- had been received by the appellant from M/s. Dhanraj Mills Pvt. Ltd.-the respondent No.2 herein, who was also a notified party. The Court went on to consider a subsequent affidavit filed by the appellant to the effect that the appellant had made payment to some third parties who were the associates and sister concerns of the

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respondent No.2. However, the Court rejected the submission on the ground that there was no documentary evidence produced either to show such payments made or to show that those payments were made by the appellant at the command or at the behest of the respondent No.2. The court also rejected the submission of the appellant that the appellant's bank account had been merely credited by an entry by the respondent No.2 as if the appellant had received the aforesaid amount but these credit and debit entries had been made in the appellant's account without his consent. The court was of the view that since the entries had been made over a period of time and that the appellant, who was appearing in person before the Court, had admitted before the Court that he was regularly operating the account, the explanation was not credible. It found that the documentary evidence on record as also the affidavit filed on behalf of the appellant established that the appellant was liable to pay an amount of Rs.3,11,75,000/- to the respondent No.2. Accordingly, a decree was passed in favour of the respondents against the appellant for a sum of Rs.3,11,75,000/- together with interest thereon at 15% per annum from 5th August 1992 till the realization of the sum.

Learned counsel has submitted that the very affidavit on which the Court had relied in the

impugned order, had been considered by the Special Court earlier when the Court had directed that the original cash book, general ledger and bank statements of the respondent No.2 should be produced. As it was submitted that these books were in the custody of CBI, time was granted to produce the originals. The matter was accordingly adjourned. The CBI was also directed to deposit the originals with the Officer on Special Duty attached to the court and the parties were given liberty to inspect the documents so deposited. This order which was passed on 10.3.2003 had not in fact been complied with. No such documents were produced nor did the CBI file the originals with the Officer on Special Duty.

Additionally, it has been submitted by the appellant that the court had initially proceeded according to the stages envisaged in Regulations 14, 16 and in particular Regulation 19 of the Regulations Relating to the Procedure of Civil Cases under Sec.9-A(4) of the Act. These regulations read as under:

"16. In the event of documents being in the possession of some third party including the Custodian or the CBI or the I.T. Dept., the party relying on them should simultaneously with the filing of the pleading make a written Application for production of those documents in Court and for enabling inspection to be given thereof. On such

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Applications appropriate Orders, for inspection by all parties, will be passed. The fact of the documents being in possession of the Custodian and/or the CBI and/or the I.T. Department will under no circumstances excuse a party form filing pleadings, including the Affidavit with lists of

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Documents, within the time aforesaid.

17. After an appearance has been filed on behalf of a counter party and/or at any stage prior in the date fixed for hearing the parties shall call upon all counter parties (except the Custodian) to admit facts and documents and/or to disclose and produce documents. In this behalf the provisions of order XI and XII of the Code of Civil Procedure shall be applicable.

18. On the date fixed for first hearing the Court shall (after framing issues in Suits) ascertain from each party and/or his Advocate what facts and documents are admitted either expressly or by implication. The Court shall then record the admission of fact or legal position and take on record all admitted documents. The Court shall then, either on the same day or on any other adjourned date, proceed to try the Suit/Petition on the disputed points.

19. All examination in chief, in matters where oral evidence is necessary, shall be by way of Affidavit evidence. Such Affidavit evidence to be supplied to all parties to the proceedings at least two week in advance of the date fixed for hearing. The counter party will state, by a letter addressed to the advocate of the other side, at least one week in advance of the date fixed whether they wish to cross examine the witness, the cross examination to be only on disputed and relevant aspect as permitted by Court."

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However the Court subsequently abandoned the procedure so prescribed, mid-way, for no recorded reason. It is also submitted that as a result the appellant was not given a proper opportunity of explaining the so called admissions alleged to have been made in the appellant's affidavit before the Court.

It is also submitted before us that the appellant had as far back as on 4.6.2003 filed an affidavit before the Special Court seeking for the assistance of legal counsel and asking for certain documents. These prayers were not considered by the Special Court. According to the appellant this has

jeopardized the appellant's defence.

Having regard to the circumstances of the case we are of the view that the Special Court should have compelled compliance with the order dated 10.3.2003 and also considered the prayer made by the appellant in the affidavit filed on 4.6.2003 before concluding the matter against the appellant. In the circumstances aforesaid, we set aside the impugned order and allow the appeal. The matter is remanded back to the Special Court for disposal. The Special Court is requested to dispose of the matter as expeditiously as possible preferably with a period of four months. The

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learned counsel appearing for the appellant is giving an undertaking on behalf of his client that he will not ask for any unnecessary adjournment.

The appeal is allowed without costs.

....................J. (RUMA PAL)

....................J. (H.K.SEMA)

New Delhi; October 26, 2005.