Special Courts Act attachment and recovery scheme held to cover all notified assets and exclude limitation law.

Under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, a notified person could bring to the Special Court's notice that a debt was due from a third party, and that debt could be recovered for application towards the notified person's liabilities. The Court further held that notification attached all properties belonging to the notified person, not only assets linked to securities transactions, and those assets could be applied under section 11 in the statutory order. It also ruled that the Limitation Act, 1963 did not apply to proceedings under the special statute because the Court's functions in dealing with attached property and distribution of assets were governed by the overriding scheme of the Act.

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Issues: (i) Whether a notified party had locus to bring to the Special Court's notice that a sum was due from a third party and seek recovery for application towards liabilities of the notified person; (ii) whether all properties belonging to a notified person stood attached under section 3(3) of the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, and could be applied under section 11; (iii) whether the Limitation Act, 1963 applied to proceedings under the said Act.

Issue (i): Whether a notified party had locus to bring to the Special Court's notice that a sum was due from a third party and seek recovery for application towards liabilities of the notified person.

Analysis: The Act does not confine initiation of proceedings to the Custodian alone. Once an attached asset or debt belonging to the notified person is brought to the Court's notice, the Special Court may direct its application for discharge of liabilities. The notified party can therefore bring the existence of the debt to the Court's notice, and the proceeding may then be pursued for recovery and distribution in accordance with the Act.

Conclusion: The issue was answered in favour of the Revenue and it was held that the notified party had the requisite locus.

Issue (ii): Whether all properties belonging to a notified person stood attached under section 3(3) of the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, and could be applied under section 11.

Analysis: Section 3(3) was construed literally. On that construction, all properties belonging to the notified person stood attached on notification and remained under the control of the Special Court for being dealt with under section 11. The Court rejected the contention that attachment was confined only to properties having a nexus with transactions in securities, and held that the attached property could be used for discharge of the notified person's liabilities in the order contemplated by the Act.

Conclusion: The issue was answered in favour of the Revenue and it was held that all properties of the notified person were subject to attachment and liable to be applied under section 11.

Issue (iii): Whether the Limitation Act, 1963 applied to proceedings under the said Act.

Analysis: The proceedings under the Act were held to be special in nature and not ordinary suits for recovery. The Court reasoned that no period of limitation was prescribed in the Act for the Court's duty to deal with attached property and that the special statute, by virtue of its overriding scheme, displaced inconsistent general law. The Court approved the view that limitation does not govern acts which the Court is bound to perform in dealing with attached property and distribution of assets.

Conclusion: The issue was answered in favour of the Revenue and it was held that the Limitation Act, 1963 had no application.

Final Conclusion: The appeals failed on all substantive grounds. The Special Court's direction for recovery and application of the attached debt towards the notified person's liabilities was upheld.

Ratio Decidendi: Under the Special Courts Act, notification results in attachment of all properties of the notified person, the Special Court may direct their application for discharge of liabilities, and proceedings for such disposal are not governed by the Limitation Act, 1963.

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