Special Courts Act, 1992: Exclusive Jurisdiction on Properties of Notified Persons Upheld

The Supreme Court upheld the decision of the Division Bench of the Bombay High Court, confirming that the Special Courts Act, 1992, as amended in 1994, has an overriding effect and exclusive jurisdiction over matters involving the properties of a notified person. The appeal was dismissed, affirming that the Special Court alone has authority to handle the attached properties of the notified person, including discharging liabilities to banks and financial institutions.

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Issues Involved:
1. Jurisdiction of Debts Recovery Tribunal (DRT) versus Special Court under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992.
2. Overriding effect of the Special Courts Act, 1992 versus the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
3. Priority of claims under the Special Courts Act, 1992.

Detailed Analysis:

1. Jurisdiction of Debts Recovery Tribunal (DRT) versus Special Court under the Special Courts Act, 1992
The primary issue was whether the Debts Recovery Tribunal (DRT) had jurisdiction to grant a declaration regarding the properties of a notified person under the Special Courts Act, 1992, or whether such matters fell exclusively within the jurisdiction of the Special Court. The respondent was declared a notified party under the Special Courts Act, 1992, on 6-10-2001, leading to the attachment of all his properties. The Division Bench of the Bombay High Court held that since the respondent was a notified party, all properties stood attached under Section 3 of the Special Courts Act, 1992, and the Special Court had exclusive jurisdiction under Section 9A of the same Act. Consequently, the DRT had no jurisdiction.

2. Overriding effect of the Special Courts Act, 1992 versus the Recovery of Debts Due to Banks and Financial Institutions Act, 1993
The appellant argued that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, being a subsequent legislation, should override the Special Courts Act, 1992. However, the court noted that Section 9A of the Special Courts Act, 1992, was introduced by an amendment in 1994, which postdates the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Therefore, the court held that the Special Courts Act, 1992, as amended in 1994, would have an overriding effect over the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The court emphasized that the Special Courts Act was enacted to deal with specific fraudulent transactions in securities during a defined period, thus having a special purpose.

3. Priority of claims under the Special Courts Act, 1992
The court analyzed Section 11 of the Special Courts Act, 1992, which outlines the order of priority for discharging liabilities from the attached properties of a notified person. The first priority is given to revenues, taxes, cesses, and rates due to the government, followed by amounts due to banks or financial institutions, and lastly, any other liabilities as specified by the Special Court. The court highlighted that Section 13 of the Special Courts Act, 1992, provides it with an overriding effect over any other law, including the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Conclusion
The Supreme Court upheld the decision of the Division Bench of the Bombay High Court, affirming that the Special Courts Act, 1992, as amended in 1994, has an overriding effect and exclusive jurisdiction over matters involving the properties of a notified person. The appeal was dismissed, and the court confirmed that the Special Court alone has the authority to deal with the attached properties of the notified person, including the discharge of liabilities to banks and financial institutions.

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