PALLAV SHETH v. CANARA BANK

Case Details & Bench

Court: High Court
Hon'ble Judges: Dipak Misra
Shiva Kirti Singh
Judgment Date: 2016-04-13
Court Decision / Holding: Appeal disposed of accordingly. The appellant shall pay the decretal amount with interest @12% p.a. from 20-06-1992, adjusting Rs.20 lacs paid in 2003, in two installments due within three months and six months; on such payment, the sentence already undergone would be treated as complete and the decree would be satisfied; if the settlement amount is not paid as indicated, after six months this order shall stand recalled and the appellant would surrender to serve out the remaining period of RI for six months; the judgment under appeal stands confirmed by this Court to that extent.
Final Disposition: Appeal disposed of.

Parties to the Case

Appellants / Petitioners

Pallav Sheth

Respondents

Canara Bank

Legal Representation & Advocates

Counsels for Petitioners

• Rajiv Dutta
• Gopal Singh

Counsels for Respondents

• Radhika Gautam
• E.C. Agrawala
• Purnima Bhat

Case Synopsis & Summary

This is an appeal under Section 10 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, by Pallav Sheth against a Special Court judgment convicting him of dishonest misappropriation of shares and imposing a fine. The record shows that Canara Bank claimed Rs 83,00,000 for 20,000 shares not returned; the appellant admitted liability to pay for the shares, but argued that the liability was civil and there was no criminal intent. The cheques issued were not honored, and the Special Court found dishonest intention from the inception of the transaction, noting that 20,000 shares along with blank transfer forms were delivered against post-dated cheques. The appellant contended that the matter was civil and did not involve mens rea, but the court found the conduct to constitute dishonest misappropriation under Section 409 IPC. In the appeal, the Supreme Court did not re-examine evidence in detail but considered the possibility of settlement. It directed that the decretal amount and interest be paid in two instalments within three and six months, with interest reduced from 18% to 12% per annum from 20 June 1992 and Rs.20 lacs already paid to be adjusted. If payment is made as directed, the sentence already undergone would stand as completed and the decree satisfied; otherwise, six months hence the order would be recalled and he would surrender to serve the remaining RI.

Provisions of Law Cited

Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, s.10Indian Penal Code, 1860, s.409

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant admitted liability to pay Rs 83,00,000 for 20,000 shares not returned. He issued cheques that were not honoured. He argued that the liability was civil and there was no criminal intent; the defence that there was no mens rea was rejected by the Special Court. The appellant seeks to avoid criminal liability by portraying the obligation as civil.

Contentions of Respondents

The Canara Bank contends that the delivery of 20,000 shares with blank transfer forms against post-dated cheques, and the failure to honor the cheques, demonstrates dishonest intention from the outset. The Special Court held that the dishonest intention existed and there was criminal liability for dishonest misappropriation.

Extracted Judgment Text

Exact text extracted from official judgment records.

(2016] 2 S.C.R. 272 A ## PALLAV SHETH v. ## CANARA BANK (Criminal Appeal No. 1664 of2005) B APRIL 13,2016 **[DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.]** _Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992: s.10_ - _Dishonest intention of misappropriation_ C _of shares_ - _Special Court convicted appellant uls.409 !PC and ordered fine of Rs.I lac_ - _As per original chart, Rs.58.10 lacs was_ · _the principal decreed against the appellant passed by Special Cour/ in civil suit_ - _Interest was allowed_ @ _18% p.a._ -- _After adjusting Rs.20 lacs paid by appellant in 2003 by way of part settlement, balance a,mount with same rate of interest resulted into an amount_ D _of Rs.286 lacs payable by appellant to the Bank_ - _!11 the course of hearing, this Court noticed that there were good chances of settlement between the parties if a substantial amount could be paid to the bank by appellant so as to virtually meet the entire decretal liability within reasonable period of time_ - _Hence in the special facts and_ E _circumstances of the case, appeal disposed of in the following terms_ - _Appellant shall pay the decretal amount with interest calculated_ @ _12% per annum (in place of 18% per annum) from 20'" June, 1992 with adjustment of Rs.20 lacs already paid in 2003, in two installments payable in three months and six months time respectively_ - _On such payment, the sentence imposed upon the appellant would_ F _stand reduced to the period already undergone along with fine of Rs. I lacs_ - _The decree of the Special Court in Civil Suit would be treated to have been satisfied by the appellant on his making the payment of the seulement amount_ - _In case the selllement amount is not paid by the appellant in the manner and to the extent indicated_ G _then after six months this order shall stand recalled and the appellant would surrender to serve out the remaining period of sentence of RI for six months as per the judgment under appeal which shall then stand confirmed by this Court._ CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1664 of2005 H 272 273 PALLAY SHETH v. CANARA BANK From the Judgment and Order dated 17. l 0.2005 of the Special A Judge, Bombay in Special Case No. 1 of2002 Raj iv Dutta, Sr. Adv., Gopal Singh, Ad vs., for the Appellant. Ms. Radhika Gautam, E.C. Agrawala, Ms. Purnima Bhat, Advs., for the Respondent. B The Judgment of the Court was delivered by **SHIVA KIRTI SINGH, J.** I. This is an appeal under Section 10 of the Special Court (Trial of Offences Relating to Transactions. in Securities)Act, 1992, directed against the final judgment and order dated 17.10.2005 of the Special Judge in Special Case No. 1 of 2002. 2. In view of nature of the order proposed to be passed in this appeal, it is not necessary to go into the details of the evidence. ltwould suffice to notice that there was no serious dispute raised on behalf of the appellant that he was liable to pay the agreed price of Rs.83,00,000/- for 20000 shares which were not returned to the respondent-bank. In fact the appellant had admitted the liability and issued cheques to meet it but the cheques were not honored. The defence of the appellant that such liability was only a civil liability without any criminal intention was not accepted by the learned Special Court. After discussing the relevant materials it held that dishonest misappropriation of those shares on the part of the accused is writ large. While rejecting the defence of the accused that there was no criminal intention on his part in not paying the amountofRs.83,00,000/-, the learned Judge, Special Court in paragraph 23 of the judgment under appeal has given lucid account of relevant facts for reaching at such conclusion. Para 23 runs as follows: "23. In this view of the matter, I do not find merit in the submissions made on behalf of the accused. Dishonest intention is quite clear and it is since beginning of the transaction. It is on the representation of the accused that 20000 shares alongwith blank share transfer forms, duly signed by the Authorised Officer, were delivered to the representative of the accused, against post dated cheques, that was al so as per the market practice. What is pertinent to be noted is that the cheque was post dated, the transaction took place on 2"' April, I 992. The delivery of the shares and blank · share transfer forms against the post dated cheque was made on 5.6. I 992, the cheque was post dated of 20.06. I 992. Before the c 0 E F G H ' 276 SUPREME COURT REPORTS [2016] 2 S.C.R. - A (iv) In case the settlement amount is not paid by the appellant in the manner and to the extent indicated above, then after six months this order shall stand recalled·and the appellant shall surrender to serve out the remaining period of sentence of RI for six months as per the judgment under appeal which shall then stand confirmed by this Court. - B - The Appeal is disposed of accordingly. Devika Gujral Appeal disposed of.