TMI Blog2004 (9) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... 4268 TO 4270 OF 2003 - - - Dated:- 6-9-2004 - N. SANTOSH HEGDE, S.B. SINHA AND A.K. MATHUR, JJ. G.L. Sanghi, Ms. Vibhabar Sawant, Ms. Ranjana Lad, Rajiv Nanda, Ms. Rammi Taneja, Jitheesh Thilak and Mukesh Tyagi for the Appellant. Subramonium Prasad for the Respondent. JUDGMENT S.B. Sinha, J. - These appeals arising out of the judgments and orders dated 21st March, 2003 passed by the Special Court at Bombay in Miscellaneous Petition Nos. 71, 72 and 99 of 1999 involving similar questions of law and fact were taken up for hearing together and are being disposed of by this common judgment. Facts : 2. The fact of the matter, however, is being noticed from Civil Appeal No. 4268 of 2003. 2.1 A notification was issued on 2-7-1992 by the Custodian notifying the Respondent No. 1 as a notified party in terms of the provisions of the Special Courts (Trial of Offences Relating to Transactions 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 App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, an application filed by the notified party was not maintainable. It was submitted that the provisions of the said Act and in particular those contained in section 9A must be read down as to uphold the constitutionality of the said Act. Strong reliance in this connection has been placed on Harshad Shantilal Mehta v. Custodian [1998] 5 SCC 1 11 and Canara Bank v. Nuclear Power Corpn. of India Ltd. 1995 Suppl. (3) SCC 81. 2 4.1 The learned counsel would further submit that by reason of the provisions of the said Act, the plea of limitation which could have been taken by the Appellant, had a suit been filed by the Respondent No. 1 against it, would still be available as the transaction is of civil nature. It was argued that only because a statutory attachment comes into force by reason of section 3(3) of the Act, the property of the notified party does not vest in the Custodian. In any event, Mr. Sanghi would argue that the notified party had 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2 In terms of the provisions of the said Act, the Custodian has three functions to perform : ( i )to notify a person in the Official Gazette, on being satisfied on information received that he has been involved in any offence relating to transactions in securities during the period specified therefor; ( ii )he has the authority to cancel any contract or agreement relating to the properties of the notified persons which, in his opinion, has been entered into fraudulently of for the purpose of defeating the provisions of the Act as specified in section 4. ( iii )he is required to deal with the properties in the manner as directed by the Special Court. 5.3 By reason of sub-section (2) of section 3 of the Act the Custodian who may be appointed under sub-section (1) thereof is entitled to notify a person on satisfying himself that he is involved in any offence relating to transactions in securities, wherefor he may rely upon the information received from any of the sources specified in Rule 2 of 1992 Rules. Sub-section (3) of section 3 provides for a non obstante clause in terms whereof any property movable or immovable belonging to the notified person shall stand at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to a property which was the subject-matter of the transactions in securities. 8.1 Application of all properties belonging to the notified person who, according to the Custodian, might have committed an offence within the meaning of the provisions thereof evidently for the purpose of discharge of such liabilities is obviated by reason of section 11 of the said Act which reads as under: " Discharge of liabilities. (1) Notwithstanding anything contained in the Code and any other law for the time being in force, the Special Court may make such order as it may deem fit directing the Custodian for the disposal of the property under attachment. (2) The following liabilities shall be paid or discharged in full, as far as may be, in the order as under : ( a )all revenues, taxes, cesses and rates due from the persons notified by the Custodian under sub-section (2) of section 3 to the Central Government or any State Government or any local authority; ( b )all amounts due from the person so notified by the Custodian to any bank or financial institution or mutual fund; [and] ( c )any other liability as may be specified by the Special Court from time to time." 8.2 It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the submissions of one of the notified parties. Even a question as to whether all properties of notified persons would be subject to the statutory attachment under sub-section (3) of section 3 of the said Act or not did not arise for consideration therein. 9.1 Therein indisputably this Court was referring to a judgment of the Bombay High Court but did not pronounce finally on the correctness or otherwise thereof. 9.2 In Harshad Shantilal Mehta s case ( supra ) the Bombay High Court appears to have merely held that in appropriate cases the Special Court would have the power to direct the Custodian to release such property from attachment, in the event, it is found that the property which is attached has no nexus with the illegal dealings in securities belonging to banks and financial institutions during the relevant period and or there are no claims or liabilities which have to be satisfied by attachment and sale of such property. Once it is held that a debt can be subject-matter of attachment, the provisions of sub-section (3) of section 3 of the said Act would squarely be applicable in view of the fact that the same was the property belonging to a notified person. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention as regards the applicability of the Limitation Act must be considered having regard to the foregoing findings. 11.1 The Limitation Act, 1963 is applicable only in relation to certain applications and not all applications despite the fact that the words "other proceedings" were added in the long title of the Act in 1963. The provisions of the said Act are not applicable to the proceedings before bodies other than courts, such as quasi-judicial tribunal or even an executive authority. The Act primarily applies to the civil proceedings or some special criminal proceedings. Even in a Tribunal, where the Code of Civil proced- ure or Code of Criminal Procedure is applicable; the Limitation Act, 1963 per se may not be applied to the proceedings before it. Even in relation to certain civil proceedings, the Limitation Act may not have any applica- tion. As for example, there is no bar of limitation for initiation of a final decree proceedings or to invoke the jurisdiction of the Court under section 151 of the Code of Civil Procedure or for correction of accidental slip or omission in judgments, orders or decrees; the reasons being that these powers can be exercised even suo m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould include the limitation Act." 11.3 We respectfully agree with the said view. 11.4 We may, however, add that the attachment of the properties of the notified party being for specific purposes, i.e., for the purpose of discharg-ing his liabilities, the Special Court is bound to pass appropriate orders in relation thereto. A property once attached shall remain under attachment till an appropriate order is passed. It is, therefore, idle to contend that even in respect thereof the provisions of the Limitation Act would apply. The Court while issuing directions to the Custodian in relation to the attached property for the purpose of discharge of the liability of the notified person must pass an appropriate order. So long the claims or other proceedings initiated before the Special Court as regard discharge of liability of the notified person continue, the attachment remains in force. A proceeding before the special Court is not a suit for recovery of an amount. The proceedings before the Special Court are extraordinary in nature. Distribution of the assets of a notified person may take a long time but it would bear repetition to state because all the claims filed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act provides for a non obstante clause which is of wide amplitude. In a case of conflict between the sad Act and any other Act, the provisions of the former shall prevail. 11.7 In Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. 2001 (2) SCALE 1 1 , this Court held : "10. . . . The Legislature being aware of the provisions of section 22 under the 1985 Act still empowered only the Special Court under the 1992 Act to give directions to recover and to distribute the assets of the notified persons in the manner set down under section 11(2) of the 1992 Act. This can only mean that the Legislature wanted the provisions of section 11(2) of the 1992 Act to prevail over the provisions of any other law including those of the Sick Industrial Companies (Special Provisions) Act, 1985. It is a settled rule of interpretation that if one construction ( sic constructions) leads to a conflict, whereas on another construction, two Acts can be harmoniously constructed then the latter must be adopted. If an interpretation is given that the Sick Industrial Companies (Special Provisions) Act, 1985, is to prevail then there would be a clear conflict if it is held that the 1992 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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