Sale of attached shares under the Special Courts Act may proceed before distribution, with court control retained for bulk holdings.

Under the Special Courts Act, the sale of attached shares was treated as a disposal mechanism under section 11(1), distinct from distribution of realised assets under section 11(2). The Court held that sale need not wait for final adjudication of all claims, including tax claims and priority disputes, because those matters arise at the distribution stage. It also clarified that "taxes due" means assessed tax presently payable. The Scheme was approved with safeguards preserving judicial supervision over bulk shares and controlling blocks, including court approval, sealed offers, and public bids where necessary.

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Issues: (i) Whether the Scheme for sale of attached shares could be framed and implemented before the stage of distribution under the Special Courts Act had arrived; (ii) whether section 11(2) governs the proposed sale Scheme or only the subsequent distribution of realised assets; (iii) whether the Scheme required modification by retaining judicial control over bulk shares and controlling block of shares.

Issue (i): Whether the Scheme for sale of attached shares could be framed and implemented before the stage of distribution under the Special Courts Act had arrived.

Analysis: The Scheme was held to be a sale mechanism under section 11(1), whereas section 11(2) governs distribution of realised assets. The stage of distribution, including examination of claims under section 9A and questions of priority among creditors, was held to be distinct from the power to dispose of attached property. The Court held that the Special Court need not postpone sale until all claims and assessment proceedings attain finality.

Conclusion: The Scheme could be framed and implemented notwithstanding that the stage of distribution had not yet arrived.

Issue (ii): Whether section 11(2) governs the proposed sale Scheme or only the subsequent distribution of realised assets.

Analysis: The Court held that section 11(1) authorises sale of attached property, while section 11(2) deals with distribution and priority. The expression "taxes due" was held to mean assessed taxes presently payable, not taxes finally payable after exhaustion of all appeals. The Court also held that sections 11(2)(a), (b) and (c) cover claims arising from the pre-statutory, statutory and post-statutory periods, and that scaling down of tax demand is relevant at the stage of distribution, not sale.

Conclusion: Section 11(2) did not bar the sale Scheme and the expression "taxes due" meant assessed tax presently payable.

Issue (iii): Whether the Scheme required modification by retaining judicial control over bulk shares and controlling block of shares.

Analysis: The Court accepted that routine shares could be disposed of by the Disposal Committee, but bulk shares and controlling block of shares required Court supervision. Norms were laid down to classify shares, require Court approval for bulk sales, invite sealed offers from institutional buyers for bulk shares, and invite public bids for controlling blocks with safeguards against destabilisation of companies and compliance with takeover regulations. The Scheme was otherwise approved, and extended to all notified parties, with a limited exclusion for Apollo Tyres for the time being and private limited company shares.

Conclusion: The Scheme was approved with modifications retaining judicial control over bulk shares and controlling block of shares.

Final Conclusion: The petition succeeded substantially: sale of registered shares was permitted under section 11(1), the Scheme was approved with safeguards, and the Court retained control only for bulk and controlling-block disposals.

Ratio Decidendi: Under the Special Courts Act, sale of attached property under section 11(1) is distinct from distribution under section 11(2), and the power of sale need not await final adjudication of all claims or appeals; however, judicial control may be preserved by prescribing norms for disposal of bulk and controlling shares.

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