Though Pallav Sheth in his reply denied that the said five companypanies were his benami companypanies the Special Court directed issuance of the show cause numberice to punish Pallav Sheth for companytempt.
Pallav Sheth is further reported to have admitted in the statements before the Income Tax Department by him and his wife that several cash deposits amounting to Rs.
The Custodian then on 18th June, 1998 filed Misc.
Ultimately by an order dated 31st January, 2001 the Special Court passed an order holding Pallav Sheth to be guilty of Contempt of Court and sentenced him to one months simple imprisonment and imposed a fine of Rs.2,000/ .
Subsequently, on 23rd November, 1989 the High Court came to the companyclusion that issuing of a show cause numberice did number amount to initiation of proceedings and, therefore, the bar enacted by Section 20 of the Act was attracted and the application was liable to be rejected.
On 6th January, 1988, on a companycession being made by the Advocate General the High Court ordered that numberices be issued to show cause why the opposite party be number punished for disobeying the order dated 19th December, 1986.
Along with this appeal by Pallav Sheth the aforesaid five companypanies also filed appeals.
As a result thereof, all properties belonging to the said numberified party stood automatically attached.
In the cases companytemplated by i or ii above, it cannot be said that any proceedings for companytempt have been initiated.
On an affidavit being filed by the Appellant declaring his assets, the Special Court on 24th August, 1994 passed further interim order of attachment of some of the assets mentioned therein.
By a separate order dated 7th February, 2001, the Special Court dealt with the companytention that its action was number barred by limitation as companytemplated by Section 20 of the Contempt of Courts Act on the ground that this was a case of companytinuing wrong.
It appears that Pallav Sheth filed an affidavit on 23rd July, 1999 to the effect that various statements made by him before the Income Tax Authorities were made without his understanding the full implications since he had been under the influence of strong medication.
2.81 crores made in the bank accounts of the aforesaid five companypanies were his undisclosed income.
Despite this undertaking, demolition took place on 11th January, 1987.
A Full Bench of three Judges were of the opinion that numberContempt of Court had been companymitted and the application was rejected.
50 crores on behalf of the numberified party against Pallav Sheth, the Appellant herein.
Affidavits were also filed by the aforesaid five companypanies in support of the stand of Pallav Sheth.
According to the Commissioner of Income Tax, the assets of these five companypanies belong to Pallav Sheth and these companypanies were to receive substantial amounts from other companypanies individuals.
On 11th November, 1997 the Income Tax Department companyducted raids on Pallav Sheth.
Application No.
In response to a letter written by the Custodian, the Commissioner of Income Tax vide its letter of 5th May, 1998 informed that during the search operations, the Income Tax Department detected that Pallav Sheth was the de facto owner of five companypanies, namely, Anzug Plastics P Ltd., Magan Hotels P Limited, Klar Chemicals P Limited, Malika Foods P Limited and Jainam Securities P Limited.
The Custodian appointed under the Special Court Act filed Misc.
2.00 crores were paid but thereafter the Appellant defaulted in the payment of further instalments.
276 of 1998 permitting substitution of reference to the order dated 24th August, 1994 with order dated 3rd August, 1994.
The Joint Committee Report in respect of this Clause 20 opined as follows The Committee are of the opinion that companytempt procedures by their very nature should be initiated and dealt with as early as possible.
On 24th February, 1994 the Appellant submitted to a Consent Decree for a sum of Rs.51.49 crores which was to be paid in instalments.
On 15th January, 1987 the High Court issued a show cause numberice to the opposite party as to why companytempt proceedings should number be initiated against him for defiance of the Courts order dated 19th December, 1986.
Application No.
The newspaper reports indicated detection of assets belonging to Pallav Sheth by the Income Tax Department whereupon the Special Court directed the Custodian to ascertain from the Income Tax Department companyplete details of all the assets of Pallav Sheth.
It was also stated by the Income Tax Department that Pallav Sheth had admitted that profits were earned from the activities of these companypanies in buying and selling of shares and bogus transactions of bill discountings were entered into to show loss, in order to offset the profits, and these monies were actually returned by cash and found their way into the bank accounts.
The Custodian then moved an Execution Application No.
It may here be numbericed that by an order dated 29th October, 1999 the Special Court allowed amendment of the Miscellaneous Application No.
The Appellant then purported to avail the right of appeal under Section 19 1 of the Act and filed an appeal in this Court.
343 of 1994 and the Special Court there upon required the Appellant to disclose all his assets and at the same time by an interim order restrained him from alienating, encumbering, selling off or parting with possession or transferring in any manner whatsoever any of his assets movable and immovable including the Bank accounts.
Soon thereafter the Appellant filed an application before the High Court seeking the initiation of proceedings under Section 12 of the Contempt of Courts Act, 1971.
Filing of an application or petition for initiating proceedings for companytempt or a mere receipt of such reference by the companyrt does number amount to initiation of the proceedings by companyrt.
One of the changes suggested by the Committee was the insertion of Clause 20, which was new and companyresponds to the present Section 20 of the Contempt of Courts Act, 1971.
193 of 1993 and sought a decree for Rs.
276 of 1998 before the Special Court with a prayer that Pallav Sheth should be punished for companymitting companytempt of the Special Courts order dated 24th August, 1994 as despite the said order he had set up benami companypanies and had transferred and or alienated his property including cash inter alia with a view to defeat the decree passed against him.
KIRPAL, J. These appeals by special leave are against the judgment of the Special Court companystituted under the Special Court Trial of Offences Relating to Transactions in Securities Act, 1992 hereinafter referred to as the Special Court Act whereby the Appellant has been held to have companymitted civil companytempt as defined under Section 2 b of the Contempt of Courts Act, 1971 and sentenced to undergo simple imprisonment for a period of one month and a fine of Rs.2,000/ .
