9911796707
TMI Blog2001 (4) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... Ogra, Jay Savla, B. Krishna Prasad, P. Parmeswaran, S.K. Dwivedi, N. Ganpathy, for the appearing parties. JUDGMENT Hegde, J. - These appeals are filed against the judgment and order dated 20-7-1998 passed by the Special Court at Bombay constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 ('the Act'). Though by the impugned order, the High Court has decided a number of questions raised before it, the appellants before us have confined their argument to the following questions : (a)whether the interest claimed by them is liable to be disbursed under section 11(2)(b) of the Act on a preferential basis or the same is to be distributed under section 11(2)(c) of the Act; (b)do the secured cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the appellants, be it the principal or interest, can be only such amount and interest thereon as became due within the period stipulated in the Act, that is, the notified period being 1-4-1991 and 6-6-1992. Therefore, it is contended that the appellants are not entitled to the interest payable on the amount due to them which falls outside the notified period. It is the case of the Custodian that the interest that becomes payable outside the notified period, can be claimed only under section 11(2)(c). 4. Having considered the arguments of the parties, we are of the opinion that the contention advanced on behalf of the Custodian merits acceptance. It is to be seen that this Court in Harshad Shantilal Mehta v. Custodian 1998 (5) SCC 1 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants had contended that any interest or penalty which became due outside the notified period could only be distributed by the Custodian under section 11(2)(c). We are of the opinion that the stand taken by the appellants in that case is the correct one and the same should apply to their claim in these appeals also. Therefore, so far as the appellants' claim for interest is concerned, in our opinion, if the interest fell due within the notified period, the same shall be distributed on the basis of the priority contemplated under section 11(2)(b), and so far as their claim for interest which fell due outside the notified period is concerned, the same can be entertained by the Custodian only under section 11(2)(c). 7. In regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property is already mortgaged or pledged on the date of attachment to a bank or to any third party. This, however, is subject to the right of the Custodian under section 4 to set aside the transaction of mortgage or pledge. Unless the Custodian exercises his power under section 4, the right acquired by a third party in the attached property prior to attachment does not get extinguished nor does the property vest in the Custodian whether free from encumbrances or otherwise. The ownership of the property remains as it was." 9. Therefore, we are of the opinion that so far as the secured creditors are concerned, subject to the right of the Custodian under section 4 of the Act, they are entitled to recover the amounts due to them (principal and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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