Case: Bank Of India Vs. Ketan Parekh

found to be valid. Therefore, this case cannot provide any assistance. Our attention was invited to another decision of this Court in Tax Recovery Officer, Central Range-I v. Custodian & Ors. [(2007) 7 SCC 461] . In that case it was held that that the property of any person notified under section 3(2) & (3) of the Act can be attached and the jurisdiction of the Special Court is confined to that property of the notified person only. It was found that the Company D which was notified as a party under section 3(2) of the Act of 1992 and not the Company K. Company D owed money from Company K and its subsidiaries and it was in execution of the decree passed in the favour of Company D, the property of Company K was put to auction. Thus, the Special Court could not have entertained the application moved by the Income-Tax Department for realization of its income tax dues from the Company K and therefore, it was held that the application moved by the Income Tax Department was rightly rejected by the Special Court. Our attention was invited to a decision of this Court in Life Insurance Corporation of India v. D.J. Bahadur & Ors. [(1981) 1 SCC 315] . In this case, the question was whether the provisions of the Industrial Disputes Act will prevail or the provisions of the Life Insurance ( Alteration of Remuneration and other Terms and Conditions of Service of Employees) Order, 1957 framed under the Life Insurance Corporation Act, 1956. In that context, their Lordships after dealing with the provisions of Life Insurance Corporation Act and the Rules framed thereunder held that the case will be covered by the Industrial Disputes Act. It was observed per Krishna Iyer, J as follows: "In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purpose it may be special. Vis-`-vis ` industrial vists at the termination of the settlement as between the workmen and the Corporation the ID Act is a special legislation and the LIC Act a general legislation. So the ID Act, being a special law, will prevail over the LIC Act which is a general law." Pathak, J. concurring with Krishna Iyer, J observed as follows " "Law declared by the court in respect of an award holds true in the case of a settlement. Not only are the statutory provisions pertaining to a settlement and an award comparable in this regard but, if anything the observations if read in respect of a settlement, which after all is a voluntary agreement between the parties, would seem to hold more strongly. " Our attention was invited to a decision of this Court in L.S. Synthetics Ltd. v. Fairgrowth Financial Services Ltd. & Anr. [(2004)11 SCC 456] . In this case it was held that the contention that only those properties belonging to the notified person which are the subject-matter of the transactions in securities would stand attached and for that purpose Section 9-A of the Act must be read down was not sustainable. Our attention was also invited to a decision of this Court in Allahabad Bank v. Canara Bank & Anr. [(2000) 4 SCC 406] . In this case there was a question of jurisdiction whether the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 will prevail or the provisions of the Companies Act, 1956. In that context their Lordships observed as follows: "Alternatively, the Companies Act, 1956 and the RDB Act can both be treated as special laws, and the principle that when there are two special laws, the latter will normally prevail over the former if there is a provision in the latter special Act giving it overriding effect, can also be applied. Such a provision is there in the RDB Act, namely Section 34. Therefore, in view of Section 34 of the RDB Act, the said Act overrides the Companies Act, to the extent there is anything inconsistent between the Acts." 8. In the present case, both the two Acts i.e. the Act of 1992 and the Act of 1993 start with the non- obstante clause. Section 34 of the Act of 1993 starts with non-obstante clause, likewise Section 9-A of the Act of 1992. But incidentally, in this case Section 9-A came subsequently, i.e. it came on 25.1.1994. Therefore, it is a subsequent legislation which will have the over-riding effect over the Act of 1993. But cases might arise where both the enactments have the non-obstante clause then in that case, the proper perspective would be that one has to see the subject and the dominant purpose for which the special enactment was made and in case the dominant purpose is covered by that contingencies, then notwithstanding that the Act might have come at a later point of time still the intention can be ascertained by looking to the objects and reasons. However, so far as the present case is concerned, it is more than clear that Section 9-A of the Act of 1992 was amended on 25.1.1994 whereas the Act of 1993 came in 1993. Therefore, the Act of 1992 as amended to include Section 9-A in 1994 being subsequent legislation will prevail and not the provisions of the Act of 1993.9. Apart from this, in the present case both the Acts can be read harmoniously. Whatever dues are due to the Banks or the Financial Institutions can be claimed under Section 11 (2) of the Act of 1992 which specially empowers that the liabilities can be adjusted out of the securities of the person notified in the manner provided under Section 11(2)(b). Therefore, in the present case, the Bank can certainly make an application before the Special Court under Section 11(2)(b) of the Act of 1992 for discharge of their liabilities against the securities of the notified person.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. The admitted facts are that the respondent No.1-Ketan Parekh was a notified party on 6.10.2001. Therefore, on 6.10.2001 all his movable and immovable properties stood attached. Under the Act of 1992, under Section 3(3), the Custodian may, on being satisfied on information received that any person has been involved in any offence relating to transactions in securities after the lst day of April, 1991 and on and before 7th June, 1992, notify the name of such person in the official gazette and from the date when such party is notified all properties, movable or immovable or both belonging to any person notified shall stand attached simultaneously with the issue of the notification, notwithstanding anything contained in the Code and any other law for the time being in force. After attaching that property the Custodian will have the right to deal with such property in such manner as directed the Special Court. Therefore, an analysis of this section means that the moment a person is notified, his property stands attached and the Custodian is in authority of that property and he shall deal with the property in the manner as directed by the Special Court notwithstanding anything contained in the Code (Code means the Civil Procedure Code). Therefore, the property of the respondent herein stood attached under the orders of the Special Court on 6.10.2001 when the respondent was declared a notified person under sub-section (3) of Section 3 of the Act of 1992. Section 9-A which was introduced in 1994 gives full power from the date this amended provision came into force i.e. in 1994 that the Special Court alone will have the jurisdiction to deal with all the cases pending immediately before such commencement by any Civil Court in relation to any manner or claim relating to the property standing attached under sub-section (3) of Section 3. Sub-section (2) of Section 9-A says that every suit, claim or other legal proceeding (other than an appeal) pending before any Court immediately before the commencement of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Act, 1994, being a suit, claim or proceeding, the cause of action whereon it is based is such that it would have been, if it had arisen after such commencement, within the jurisdiction of the Special Court under sub-section (1), shall stand transferred on such commencement of the Special Court and the Special Court may, on receipt of the records of such suit, claim or other legal proceedings proceed to deal with it so far as may be in the same manner as a suit, claim or legal proceeding from the stage which was reached before such transfer or from any earlier stage or de novo as the Special Court may deem fit. Sub-section (3) further says that no Court other than the Special Court shall have, or be entitled to exercise any jurisdiction, power or authority in relation to any matter or claim referred to in sub-section (1). Sub-section (4) further says that the Special Court shall not be bound by the procedure laid down by the Code of Civil Procedure. But it shall be guided by the principles of natural justice and subject to the other provisions of this Act and the Rules framed thereunder. Sub-section (5) further says that the Special Court shall have all powers as a Civil Court under the Code of Civil Procedure for trying such suits. Section 11 deals with the discharge of liabilities. It also starts with a non-obstante clause and says that notwithstanding anything contained in the Code or any other law for the time being in force, the Special Court shall direct the Custodian for disposal of the property under attachment and liabilities shall be discharged in the order i.e. (a) all revenues, taxes, cesses and rates due from the persons notified by the Custodian under sub-section (2) of Sec. 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 any other liability as may be specified by the Special Court. Therefore, by virtue of section 11, the first priority has been given to all dues of the revenues, taxes, cesses etc. The second priority has been given to any bank or financial institution or mutual fund and the last priority has been given as directed the Special Court. Section 13 clearly lays down that this Act will have over-riding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law, other than this Act, or in any decree or order of any Court, tribunal or other authority. The analysis of these necessary provisions clearly establishes that once the property of a notified person is attached by the Custodian and the same having been notified then the property of the notified person being movable or immovable shall be subject to the order passed by the Special Court and the manner in which properties for discharge of the liabilities would be dealt with has already been mentioned in Section 11 of the Act of 1992 and lastly that the provisions of this Act will have the over-riding effect even on Tribunals as is clearly and categorically mentioned in Section 13 of the Act of 1992. Therefore, in the scheme of things this Act has been given priority over all Acts. The Act of 1993 came for recovery of debts due to the Banks and Financial Institutions. This Act also contains the over-riding effect. Section 34 of the Act of 1993 clearly says that this Act will have the over-riding effect for recovery of debts due to the Banks and Financial Institutions. Both the Acts have non-obstante clause. The Act of 1993 is a subsequent legislation and the Act of 1992 is a prior legislation. Therefore, it was contended by learned senior counsel for the appellant that since the Act of 1993 is a subsequent legislation, it should have the over-riding effect over the Act of 1992. As against this, learned senior counsel for the respondent No.1, contended that Section 9-A of the Act of 1992 came by the amending Act 24 of 1994 on 25.1.1994 and it is specifically provided that after a person is notified under section 3(3) of the Act of 1992, his property pertaining to the transactions in securities entered after the 1st day of April, 1991 and on and before 6th June, 1992 shall stand attached and the Special Court will have the jurisdiction and none else. Learned senior counsel for the respondent No.1 submitted that this provisions having come subsequently after the Act of 1993, Section 9-A of the Act of 1992 (came into force w.e.f. 25.1.1994) will have the over-riding effect over the Act of 1993. The contention of learned senior counsel for respondent No.1 appears to be justified. Apart from that it is provided in sub-section (3) of Section 3 that the transactions in securities entered into after 1st day of April, 1991 and on or before 6th June, 1992, the properties pertaining to these securities shall vest with the Custodian to be dealt with as directed by the Special Court. Therefore, the properties pertaining to these transactions during the aforesaid period, will be subject to the jurisdiction of the Special Court only. There is another reason to come to this conclusion that in fact this Act was specially meant to deal with the fraudulent transactions which has taken place from 1st of April, 1991 to 6th of June, 1992. Therefore, this Act has special purpose to deal with the scam which has taken place in securities transactions during this period. The special purpose behind this Act is more than apparent from the Statement of Objects and Reasons and the Statement of Objects and Reasons amply clarifies this position.Therefore, this Act has a special task before it and that task has to be dealt with in the parameters laid down by this Act. The Act of 1993 was of comparatively general in nature pertaining to recovery of debts due to the Banks and Financial Institutions. The idea was that all the suits pertaining to recoveries of Banks and Financial Institutions spreading over the Civil Courts and this has resulted into great strain on the Banks and Financial Institutions.In the present case, both the two Acts i.e. the Act of 1992 and the Act of 1993 start with the non- obstante clause. Section 34 of the Act of 1993 starts with non-obstante clause, likewise Section 9-A of the Act of 1992. But incidentally, in this case Section 9-A came subsequently, i.e. it came on 25.1.1994. Therefore, it is a subsequent legislation which will have the over-riding effect over the Act of 1993. But cases might arise where both the enactments have the non-obstante clause then in that case, the proper perspective would be that one has to see the subject and the dominant purpose for which the special enactment was made and in case the dominant purpose is covered by that contingencies, then notwithstanding that the Act might have come at a later point of time still the intention can be ascertained by looking to the objects and reasons. However, so far as the present case is concerned, it is more than clear that Section 9-A of the Act of 1992 was amended on 25.1.1994 whereas the Act of 1993 came in 1993. Therefore, the Act of 1992 as amended to include Section 9-A in 1994 being subsequent legislation will prevail and not the provisions of the Act of 1993.9. Apart from this, in the present case both the Acts can be read harmoniously. Whatever dues are due to the Banks or the Financial Institutions can be claimed under Section 11 (2) of the Act of 1992 which specially empowers that the liabilities can be adjusted out of the securities of the person notified in the manner provided under Section 11(2)(b). Therefore, in the present case, the Bank can certainly make an application before the Special Court under Section 11(2)(b) of the Act of 1992 for discharge of their liabilities against the securities of the notified person.