The Supreme Court on Tuesday ruled that the special court's decision to permit the Custodian to sell 54,88,850 shares belonging to the family of late stock market scamster Harshad Mehta of Apollo Tyres Ltd was "vitiated" and done in violation of "principles of natural justice."
However, since any decision to quash the entire sale was fraught with serious difficulties, the apex court directed the special court (Trial of Offences Relating to Transactions in Securities) Act, to recover the 4.95% unused shares from Apollo or its management and put them to fresh sale.
A bench of justices D K Jain and A K Ganguly passed the judgement while allowing an appeal filed by Ashwin S Mehta and other family members "Big Bull" Harshad Mehtra who shot into infamy in early 90s.
The family had challenged a Mumbai special court's decision of May 2003 to permit the Custodian to sell 54,88,850 shares of Apollo Tyres Ltd at Rs90/- per share to the same company without making efforts for proper bids.
The shares had earlier been attached by the Custodian.
"Having examined the impugned order in the light of the statutory provisions and the norms laid down for sale of the subject shares, we are of the opinion that there is substance and merit in the submissions made by learned counsel for the appellants to the extent that the special court failed to make a serious effort to realise the highest possible price for the said shares.
"We also feel that the special court overlooked the norms laid down by it in its order dated 17th August, 2000, ignored the afore-extracted directions by this court contained in order dated 23rd August, 2001, and glossed over the procedural irregularities committed by the Custodian," the apex court said.