TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether notification of a person under the Special Court Act could be sustained on the basis of the Custodian's satisfaction from material and reports, without a pre-decisional hearing, and whether the post-decisional remedy under Section 4(2) satisfied natural justice; (ii) whether the expression "involved in any offence relating to transactions in securities" was confined to a formally accused person, and whether the complaint and supporting material from Canfina and other reports could be acted upon; (iii) whether the Custodian and Special Court were entitled to proceed against the appellants' properties and also levy maintenance-related charges on the attached flats, and whether interest and penalty could be recovered on such dues.
Issue (i): Whether notification of a person under the Special Court Act could be sustained on the basis of the Custodian's satisfaction from material and reports, without a pre-decisional hearing, and whether the post-decisional remedy under Section 4(2) satisfied natural justice.
Analysis: The statutory scheme permits the Custodian to notify a person upon being satisfied on information received that the person was involved in securities offences during the statutory period. The Act does not provide for a pre-notification hearing, but it does provide an effective post-notification challenge before the Special Court under Section 4(2). The attachment of property follows automatically upon notification, while the Special Court independently examines the material and can grant appropriate relief. The Court also accepted that reports from expert bodies and auditors could be relied upon for forming satisfaction in this special statutory context.
Conclusion: The notification mechanism was upheld, and the absence of a pre-decisional hearing did not invalidate the action.
Issue (ii): Whether the expression "involved in any offence relating to transactions in securities" was confined to a formally accused person, and whether the complaint and supporting material from Canfina and other reports could be acted upon.
Analysis: The phrase "involved in" was construed purposively and contextually, not as a synonym for being formally charged or accused. The Act is a special code designed not only to punish wrongdoers but also to recover public monies, and its language must be read to advance that object. On that construction, third parties with a nexus to the scam could also be notified. The complaint from Canfina was treated as a permissible source of information under the Rules, and the absence of a supporting affidavit did not render the material unusable where the Custodian had sufficient reliable material from other sources.
Conclusion: The expression was held not to be limited to formally accused persons, and the complaint and related material were treated as valid for action under the Act.
Issue (iii): Whether the Custodian and Special Court were entitled to proceed against the appellants' properties and also levy maintenance-related charges on the attached flats, and whether interest and penalty could be recovered on such dues.
Analysis: The Court held that all properties of a notified person stand attached and may be dealt with for discharge of liabilities under Section 11. The appellants' properties were therefore liable to be maintained and kept in repair so that their value was preserved for eventual realization. However, in the circumstances of prolonged litigation and partial payments already made, the Court found that interest and penal charges on the maintenance and repair arrears should not be recovered from the appellants.
Conclusion: The claims for maintenance and repair dues were sustained, but the recovery of interest and penalty on those arrears was disallowed.
Final Conclusion: The challenge to the notification and the related findings against the appellants failed, but limited relief was granted by restricting recovery of interest and penalty on the society dues relating to the attached properties.
Ratio Decidendi: Under the Special Court Act, the Custodian's notification may rest on subjective satisfaction from reliable material, the statutory post-decisional remedy satisfies natural justice, and the phrase "involved in any offence" is broad enough to include persons having a nexus with the securities scam even if they are not formally accused.
TaxTMI 
