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TMI Blog1996 (7) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the main Petition, it is absolutely essential that the Custodian, who issued the impugned Notifications and who thereafter filed an Affidavit in reply in the main Petition, be sum-moned as a witness. 3. Mr. Jaisinghani submitted that under section 3(2) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1962 ('the said Act'), the Custodian may, on being satisfied on information received that any person has been involved in any offence relating to transaction in securities after 1-4-1991 and before 6-6-1992, notify the name of such person. Mr. Jaisinghani submitted that before a person could be notified, the Custodian had to be satisfied that there was an involvement. He submitted that in all the main Petitions, the alleged satisfaction of the Custodian is in question. He submitted that since the alleged satisfaction is in question it is absolutely essential that the Custodian makes himself available for cross-examination. He submitted that unless this is allowed, there could not be any just and effective determination. He submitted that there would be serious miscarriage of justice if this is not permitted. 4. Mr. Jaisinghani pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly affected by the Notification, it is absolutely essential that the party must have a hearing and that principles of natural justice must be followed. 8. He fairly pointed out that the Division Bench of the Bom bay High Court in its judgment dated 24-7-1992 has held that there was no necessity for a pre-decisional hearing. He submitted that the Division Bench had, however, made it clear that there must be a post-decisional hearing. He submitted that this post-decisional hearing must be as if it is a pre- decisional hearing. He submitted that this post-decisional hearing must, therefore, be on the basis of facts and circumstances available on 8-6- 1992, i.e., the date on which all the Petitioners were notified. 9. Mr. Jaisinghani also points out that the Custodian has now informed the Court that his alleged satisfaction was based on a letter dated 8-6-1992 received by him from the Ministry of Finance. He points out that the said letter was received by the Custodian along with the Preliminary Report of the Jankiraman Committee and an FIR dated 29-5-1992. Mr. Jaisinghani submits that if the Interim Report of Jankiraman Committee is looked at, except for one person, nobody e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir opportunity to explain it. He submitted that an opportunity to explain includes full opportunity of cross-examination. In support of this, Mr. Jaisinghani cited authorities in the cases of State of Madhya Pradesh v. Chintaman Sadashiva Waishampavan AIR 1961 SC 1623, Khem Chand v. Union of India AIR 1958 SC 300, Sur Enamel Stamping Works Ltd. v. The Workmen AIR 1963 SC 1914, Bareilly Electricity Supply Co. Ltd v. The Workmen AIR 1972SC330, State of Kerala v. K.T. Shaduli Grocery Dealer AIR 1977 SC 1627, Union of India v. T.R. Verma AIR 1957 SC 882, K.I. Shephard v. Union of India AIR 1988 SC 686 and Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holdings Ltd. AIR 1981 SC 1298. Based on the above, Mr. Jaisinghani submitted that the Petitioners must be given an opportunity to cross-examine the Custodian. He submitted that no prejudice can be caused to the Custodian if he is called for cross-examination whereas grave prejudice will be caused to the Petitioners and principles of natural justice will be violated if this is not granted. 12. On the other hand, Mr. Setalwad submitted that under section 3(2) of the said Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not justified. 14. Mr. Setalwad submitted that the de-Notification Petitions are in effect a judicial review of the decision taken by the Custodian. He submitted that in such cases, there is no question of any cross-examination. In support of this submission, he relied upon the following observations in Halsbury's Laws of England, 4th Edn., Vol.1, para 60 on page 91 and para 176 on page 286: "60. The nature of judicial review- Judicial review is the process by which the High Court exercises its supervisory jurisdiction over the proceedings and decisions of inferior Courts, Tribunals and other bodies or persons who carry out quasi-judicial functions or who are charged with performance of public acts and duties. This jurisdiction was originally derived from the common law, and was exercised by the issue of the prerogative writs of mandamus, certiorari and prohibition, but it is now conferred and regulated by statute and rules of Court. Judicial review concerned with reviewing not the merits of the decision in respect of which the application for judicial review is made, but the decision-making process itself." "176. Cross-examination and oral evidence- Unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. I have heard the rival submissions. In my view, these applications are necessarily under section 4(2). What is really in question is the scope of section 4(2). In my view, the Division Bench of the Bombay High Court by its judgment dated 24-7-1992 in Writ Petition No. 1547 of 1992 clarifies the scope of such an application. Whilst considering the constitutional validity of the Special Court Ordi-nance and the Notification dated 8-6-1992 issued by the Custodian, the Division Bench of the Bombay High Court in its judgment dated 24-7-1992 in Writ Petition No. 1547 of 1992 has held as follows : "6. The main thrust of the argument advanced on behalf of the Petitioner is relating to the provisions of section 3 under which the Custodian may, on being satisfied on information received that any person has been involved in any offence relating to transactions in securities after the 1st day of April, 1991 and on and before the promulgation of this Ordinance, notify the name of such person in the Official Gazette. Under section 3, sub-section (3), on and from the date of notification under sub-section (2), any property, movable or immovable or both belonging to any person notified un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim or liabilities which have to be satisfied by attachment and sale of such property, in our view, the Special Court would have the power to direct the Custodian to release such property from attachment. In the same way, if ultimately, the Special Court, after looking at all the relevant circumstances comes to the conclusion that the entire property should be released from attachment, we do not see any reason why such a direction also cannot be given by the Special Court under section 3, sub-section (4). In such a situation, if the entire property is required to be released from attachment, the Special Court, in our view, can also direct the Custodian that the name of the notified person should be de-notified. This would be a necessary consequence of the power of the Special Court to give proper directions in connection with the property which the Custodian seeks to attach. If sub-section (4) is read in this light, the grievance of the petitioner relating to the validity of powers granted to the Custodian under section 3 would not survive. 9. It is undoubtedly true that a hearing has not been given under the Ordinance to the person whose name is being notified prior to notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd must be read independently of section 3(4) which deals with an earlier stage where the properties are initially attached. 11. It was urged that section 3 is widely worded. Under it, if the Custodian is satisfied that a person is 'involved' in an offence as specified there, he may notify such a person with the accompanying consequences. Hence, a person who has not committed any offence can also be notified. It is submitted that such a provision is unjust and unreasonable. The purpose, however, of the Ordinance is not merely to bring the guilty to book but to track the property acquired by the offenders whenever it may be found, and in whoso ever's hands it may be found. Because the property is in a broad sense, public money invested with banks or financial institutions. The power to attach such property is therefore conferred on the Custodian, even when the property is in the hands of a third party, if there is a nexus between such third party, an offender and the property. The submission of the petitioner must therefore be rejected." 18. To be seen that even though in the Ordinance there was no provision similar to the present section 4(2) the Division Bench has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eems fit." 19. Thus, under section 4(2) if a person is aggrieved by a Notification or by any order made by the Custodian, such a person may file a Petition objecting to the same before the Special Court. After hearing the party the Special Court may make such orders as it deems fit. 20. As seen earlier, it has been the submission of Mr. Jaisinghani that an application for de-notification would be justified if it could be shown that there was no real satisfaction by the Custodian at the time he notified the party. On a question from Court, Mr. Jaisinghani submitted that if the Court comes to the conclusion that there was adequate satisfaction by the Custodian on adequate material then available, then the Court would be bound to sustain the Notification. He submitted that in that event the Petition of the notified party would necessarily have to be dismissed. On the other hand, it has been the submission of Mr. Setalwad that in such a Petition for de-notification, the Court is not at all concerned with the satisfaction or otherwise of the Custodian. According to Mr. Setalwad, it is the Court which has to apply its own mind on the facts, circumstances and materials available t ..... 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