TaxTMI 
TaxTMI 
2002 (8) TMI 616
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....al of Offences Relating to Transactions in Securities) Act, 1992. The learned Judge further directed that the exact amount to be paid was to be decided after taking into consideration the available assets and liabilities of FFSL. Ultimately, this Court, on 2-5-1992, heard and disposed of Miscellaneous Application No. 222 of 1996 made by the Custodian for distribution of the assets of FFSL under section 11(2). Consequently, on 2-5-1992, Misc. Petition No. 9 of 1992 came to be disposed of by this Court directing 25 per cent of the claim amount, amounting to Rs. 50 lakhs, to be paid on behalf of FFSL to Murablack (India) Limited - Petitioners in Misc. Petition No. 9 of 1992. This order came to be passed on 2-5-1992 in view of the fact that the Chartered Accountants appointed by the Court gave their Report pursuant to which, interim dividend came to be declared by this Court. No sooner the interim dividend came to be declared, the applicant moved before this Court, Misc. Application No. 453 of 2002, inter alia, stating that they were the assignees of Murablack (India) Ltd. (the Petitioner in Misc. Petition No. 9 of 1992). In other words, Murablack (India) Limited were the decree holder....
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....t of Rs. 1.76 crores. In short, an amount of Rs. 3.76 crores were paid to Murablack (India) Limited out of Rs. 4.63 crores by Growth Techno Projects Limited leaving a balance of Rs. 87.89 lakhs. In short, this is the case of Growth Techno Projects Limited who seek to substitute it's name in place of Murablack (India) Limited under Order XXII, Rule 10 Civil Procedure Code. Arguments 3. When the present application No. 453 of 2002 came before this Court, the Custodian raised a preliminary objection. He submitted that under section 9A of the Special Court (Torts) Act, 1992, this Court has been set up to entertain claims relating to any property standing attached under section 3(3) and that such claims shall arise out of transactions in securi-ties entered into after 1-4-1991 and up to 6-6-1992. It was further submitted that in view of section 9A(4), the procedure laid down under the Civil Procedure Code is not applicable and that the Special Court was guided by the principles of natural justice and that the Special Court is empowered to regulate it's own procedure. It was pointed out by the Custodian that in the present case, there is a dispute between Growth Techno Projects Lim....
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....gnees of debts to execute decrees under Order XXI, Rule 16. He, therefore, contended that even if the Agreement of 27-6-1995 be treated as an assignment of debt and not as an assignment of a decree, even then on grounds of equity, Growth Techno Projects Limited were entitled to seek execution of the decree under Order XXI, Rule 16. Mr. Saxeria further submitted that under section 9A(4), this Court has not evolved the procedure for execution, excluding section 47, Civil Procedure Code. He, therefore, submitted that section 47 was applicable to the facts of this case. He, therefore, submitted that the present Application No. 453 of 2002 was an application for execution. That, Growth Techno Projects Limited was entitled to execute the decree as a transferee under Order XXI, Rule 16. He further submitted that this Court has passed a decree in favour of Murablack (India) Limited. That, the decree was passed against the notified party. That, section 9A(1) was required to be construed in the widest possible terms and if so read, this Court shall decide all disputes regarding validity of assignment and the status of the applicant - Growth Techno Projects Limited to maintain Execution Appli....
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....cts Limited. That, the Agreement dated 27-6-1995 was an agreement to assign on Rs. 10 stamp paper. That, the said agreement was not an assignment. It was merely an agreement to assign. Therefore, it was contended that Order XXI, Rule 16 also did not apply to the facts of the present case. Findings 5. From June 1992, the Special Court has been functioning under Special Court (Torts) Act, 1992. The Special Court was set up for speedy trial of offences relating to transactions in securities. Under section 3(3) of the Act, properties belonging to the notified person stood attached with the issue of the Notification and such properties could be dealt with by the Custodian in such manner as the Special Court may direct. Section 9A was introduced by Amending Act No. 24 of 1994. Section 9A deals with jurisdiction, power, authority and procedure of Special Court in civil matters. Under section 9A, the jurisdiction of this Court in civil matters is in respect of transactions during the statutory period 1st April, 1991 to 6th June, 1992 and in relating to the properties attached. Therefore, the entire operation of the Act revolves around the transaction in securities during the statutor....
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....ct, the Special Court is set up to discharge those liabilities at the earliest possible time to the Revenue, Banks and Financial Institutions and other creditors. But those liabilities should accrue out of security transactions during the statutory period and in relation to the attached properties. The Court is not empowered, therefore, to decide on transactions falling outside the statutory period. Therefore, the Court can adjudicate on claims arising out of security transactions taking place during the statutory period only. This Court cannot adjudicate claims in respect of transactions falling during the post notification period. Otherwise, this Court would be flooded with adjudication of disputes which would stall early discharge of liabilities to the Revenue and to Banks and Financial Institutions under section 11(2). Therefore, in the present case, this Court has no jurisdiction to go into validity of the agreement to assign dated 27th June, 1995. In the case of Kudremukh Iron Ore Co. Ltd. v. Fairgrowth Financial Services Ltd. 14 CLA 249, the Supreme Court has laid down that the notified person has no legal liability to the creditor of his creditor. In that matter, Kudremukh ....
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....o adjudicate upon all questions including the validity of the assignment. It was argued that the alleged assignee was entitled to maintain application under Order 22, Rule 10. That, the assignee under Order 22, Rule 10, could have come on record even in the pending suit/Misc. Petition No. 9 of 1992. That, as a representative of the assignor, therefore, this Court ought to decide on the validity of the agreement to assign dated 27th June, 1995. However, I do not find any merit in this argument. Firstly, as stated hereinabove, the agreement to assign is dated 27th June, 1995. Therefore, that agreement is not within the statutory period. Secondly, as laid down by the Supreme Court, the alleged assignee was a stranger to the consideration respecting transactions between the notified person, in this case - FFSL and Murablack (India) Ltd. Therefore, on both the grounds, Order 22, Rule 10 had no application and the alleged assignee could not have claimed a right to prosecute the suit as an assignee. That, enforcement of the agreement dated 27th June, 1995 by the alleged assignee could be done only by the ordinary Court and not by the Special Court. In the circumstances, it is not necessar....
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....he Special Court can entertain claims relating to property attached under section 3(2) or claims arising out of transactions entered into during the statutory period. Under the above circumstances, it is not open for this Court to decide claims arising out of transactions falling outside the statutory period. Moreover, under sub-section (4) of section 9A of the Act, it is laid down that the Special Court is not bound by Civil Procedure Code. That the Special Court shall be guided by the principles of natural justice. The Act is passed as large scaled irregularities and malpractices were noticed in security transactions entered into by brokers in collusion with Banks and Financial Institutions, leading to diversion of funds from Banks and Financial Institutions into the accounts of the brokers. The Act is enacted to ensure speedy recovery of huge amounts involved in transactions in securities and for distribution of proeprties attached. If these objects are kept in mind along with the scheme of the Act, it is clear that unless the claim falls within the statutory period and that it relates to properties which are attached under section 3(2), the Special Court will have no jurisdicti....