TaxTMI 
TaxTMI 
2004 (9) TMI 384
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....tions in Securities) Act, 1992 (for short "the said Act"). 2.2 The Appellant herein obtained short term loans amounting to Rs. 14.25 lakhs from the notified party during the period 1-4-1991 to 6-6-1992 as specified in the said Act. The Custodian called upon the Appellant herein to furnish particulars of the said loans pursuant to or in furtherance whereof the Appellant herein accepted the same to be outstanding as on 30-6-1992 in the books of Respondent No. 1 payable to him. On the said amount of loan, interest at the rate of 21% per annum was payable. 2.3 The Appellant herein was directed to deposit the principal amount by the Custodian which was not complied with. The concerned Chartered Accountant, however, gave a certificate to the effect that a sum of Rs. 14.25 lakhs was advanced as loan to the Appellant by the Respondent No. 1 with interest at 21% per annum and that the total sum outstanding was Rs. 34,98,967.04. The Respondent No. 1 thereafter initiated a proceeding before the Special Court praying for a direction upon the Appellant herein to pay to the Custodian a sum of Rs. 34,99,900.68 on behalf of his behalf. 2.4 The contentions of the Appellant before the Special Cou....
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....no locus to initiate the proceedings before the Special Court. 4.2 The learned counsel would, in the alternative, submit with reference to Civil Appeal Nos. 4269 and 4270 of 2003 that there being no agreement to pay interest, the Special Court erred in directing such payment of interest without arriving at a finding that any demand in relation thereto was made in terms of the provisions of the Interest Act. 4.3 Mr. Subramonium Prasad, learned counsel appearing on behalf of the Respondent, on the other hand, would argue that as all properties stood attached in terms of the said notification on 22-7-1991 and all amount recovered are required to be utilized towards the dues of the notified person; an application at the instance of the notified person was maintainable. 4.4 The learned counsel would submit that the Special Court could initiate a suo motu proceeding and as it has a duty to issue direction(s) as regards the attached property and in that view of the matter, the provisions of the Limitation Act will have no application. Strong reliance in this connection has been placed on Mt. Laxmibai v. Tukaram AIR 1930 Nag. 206. Attachment : 5. It is not in dispute that the Responde....
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....ng to the notified person shall stand attached simultaneously with the issue of the notification. Jurisdiction of the Special Court : 6. The jurisdiction of the Special Court is of wide amplitude. Subject to a decision in appeal therefrom, its decisions is final. 6.1 In this case, the notified person himself had disclosed that a sum of Rs. 14.25 Lakhs is owing and due to it from the Appellant. The debt at the hands of the Appellant payable to the Respondent being admitted, we have no hesitation to hold that the same would be subject matter of attachment. 6.2 The debt in question is capable of being attached being a property belonging to the notified party and upon such attachment the consequences provided therefrom would ensue and in that view of the matter the Special Court will have jurisdiction to pass an appropriate order in relation thereto by issuing appropriate directions in terms of the provisions of the said Act. As the Special Court had the requisite jurisdiction to deal with the attached property, it is immaterial whether the factum of the statutory provisions is brought to its notice by the notified party himself or by the Custodian. The Court has the requisite juri....
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....e where a third party right is involved as was the case in Kudremukh Iron Ore Co. Ltd. v. Fairgrowth Financial Services Ltd. [1994] 4 SCC 246. The purpose of the said Act is to discharge the liabilities of the Government Banks, financial institutions, mutual funds, etc. and for the said purpose, the statute itself provides that all properties belonging to the notified person shall stand attached. Once a statutory attachment comes into force, although the properties in question unlike the provisions of some other Acts do not vest in the Custodian but the same evidently remain under the control of the Special Court. There is, in our considered opinion, no basis to hold, as has been urged by Mr. Sanghi, that only those properties belonging to the notified person which are subject matter of the transactions in securities would stand attached and for that purpose section 9A of the said Act is not required to be read down. Harshad Shantilal Mehta : 9. Our attention has been drawn by Mr. Sanghi to paragraph 14 of Harshad Shantilal Mehta's case (supra) which reads as follows : "14. It has also been submitted before us by one of the notified parties (Dhanraj Mills v. Custodian) that prop....
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....ached property, thus, if necessary, for the purpose of discharging the claims and liabilities of the notified person indisputably would stand attached and can be applied for discharge of his liabilities in terms of section 11 of the said Act. 9.3 In Harshad Shantilal Mehta's case (supra), it was, inter alia, opined : "28. It was, therefore, expected that the available funds from attached assets would be speedily restored to the banks and financial institutions. It was also expected that even after the discharge of tax liabilities for the relevant period, substantial funds would be left over for being paid to the banks and financial institutions concerned." Canara Bank : 10. In Canara Bank's case (supra) this Court was concerned with transfer of an application pending before the Company Law Board in terms of sub-section (2) of section 9-A of the Act and only in that context, it was observed : "10. Sub-section (1) of section 9-A is divisible into two parts. By the first part, the Special Court is empowered to exercise, on and from the commencement of the Amendment Ordinance, all such jurisdiction, powers and authority as were exercisable before such commencement by any civil cou....
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....M. Joshi v. Life Insurance Corpn. of India AIR 1970 SC 209, Hindustan Times Ltd. v. Union of India [1998] 2 SCC 242 and Mt. Laxmibai's case (supra). Even no period of limitation is prescribed in relation to a writ proceeding. 11.2 S.N. Variava, J. in A.K. Menon, Custodian's case (supra), whereupon the learned Special Court has placed reliance, observed: "19. It is thus that the said Act lays down a responsibility on the Court to recover the properties. So far as monies are concerned, undoubtedly the particular coin or particular currency note given to a debtor would no longer be available. That however, does not mean that the lender does not have any right to monies. What is payable is the loan, i.e., the amount which has been lent. The right which the creditor has is not a "right to recover" the money. The creditor has the title right in the money itself. An equivalent amount is recoverable by him and the title in any equivalent amount remain is the lender. Thus the property which a Notified Party would have is not the right to recover but the "title in the money itself". Thus under section 3(3) what would stand attached would be the title/right in the money itself. Of course w....
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....isions of the Limitation Act would inter alia, apply only when a suit is filed or a proceeding is initiated for recovery of an amount and not where a property is required to be applied towards the claims pending before the tribunal for the purpose of discharge of the liabilities of the notified person in terms of section 11 of the said Act. 11.5 A Special Court having regard to its nature and functions may be a court within the meaning of section 3 of the Indian Evidence Act, 1872 or section 3 of the Limitation Act, 1963 but having regard to its scope and object and in particular the fact that it is a complete code in itself, in our opinion, the period of limitation provided in the schedule appended to the Limitation Act, 1963, will have no application. For the applicability of section 29(2) of the Limitation Act, the following requirements must be satisfied by the Court invoking the said provision : "(1) There must be a provision for period of limitation under any special or local law in connection with any suit, appeal or application. (2) Such prescription of the period of limitation under such special or local law should be different from the period of limitation prescribed b....
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....ruing a special statute providing for limitation, consideration of plea of hardship is irrelevant. A special statute providing for special or no period of limitation must receive a liberal and broader construction and not a rigid or a narrow one. The intent and purport of the Parliament enacting the said Act furthermore must be given its full effect. We are, therefore, of the opinion that the provisions of the Limitation Act have no application, so far as directions required to be issued by the Special Court relating to the disposal of attached property, are concerned. 11.9 Only in the event, all the claims as provided for under section 11 of the said Act are fully satisfied, the amount belonging to the notified person can be directed to be released in his favour or in favour of any other person. Interest : 12. It does not appear from the judgment of the Special Court that any argument was advanced before it that there did not exist any agreement as regard payment of interest. No such contention has even been raised in the Memorandum of Appeal or in the Affidavit filed before the Special Court. In fact, it is admitted that the Custodian and the Appellant exchanged certain corres....