The Supreme Court has upheld attachment of over Rs. 1,500-crore property of stock broker Harshad Mehta and his family members in Maharashtra.
A Bench of Justices P. Sathasivam and B. S. Chauhan dismissed appeals filed by Harshad Mehta's wife Jyoti and two daughters against a Mumbai special court judgment upholding the order of attachment of the various properties involved in the stock market scam.
Writing the judgment, Justice Sathasivam said: “From the material placed, it is clear that the appellants are nothing but front benamidars of Harshad Mehta, and there is no acceptable material such as income-tax returns to show that the appellants were having sufficient funds in their hands due to the purchase and sale of shares. The important aspect is that the appellants have not explained the source of their income.”
The Bench said: “The appellants are housewives having no independent source of income. It is impossible for such persons to have such huge amounts of money unless they were beneficiaries of monies diverted by the late Harshad Mehta and his other family members, who were notified, and firms belonging to the Harshad Mehta Group.”
The Bench said it could reasonably be suspected that the appellants were involved in the offence, considering the various reports of the Janakiraman Committee, the Joint Parliamentary Committee, and the Inter-Disciplinary Group (IDG), and also the fact that 28 members of the Harshad S. Mehta group including his family members/entities were notified under the Special Act Ordinance itself.
The Bench said: “The object of the Special Court (Trial of Offences Relating to Transactions in Securities) Act is not merely to bring the offender to book but also to recover what are ultimately public funds. Even if there is a nexus between a third party, an offender and/or property, the third party can also be notified. The purpose of the law is not to allow the offender to sneak out of the meshes of law. Reducing the legislation to futility shall be avoided and in a case where the intention of the legislature cannot be given effect to, the courts would accept the bolder construction for the purpose of bringing about an effective result.”
The Bench pointed out that the Act provided for stringent measures. It was enacted for dealing with an extraordinary situation — in the sense that any person who was involved in any offence of transaction of any security could be notified, whereupon all his properties stood attached. “There is nothing in the Act which suggests that only such properties which belong to the notified party and which have been acquired with the use of tainted funds alone can be attached for purposes of distribution under Section 11 of the Act.”