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TMI Blog1996 (2) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... vocates fees. He fairly pointed out, on a question from the Court, that release of a further sum of approximately Rs. 2 crores is going to be asked for. Thus, release is sought and will be sought of approx. Rs. 3.5 crores by the Harshad Mehta Group. This only towards advocates fees for work done by various advocates during the last 3 years. 2. Mr. Vazifdar has submitted that these petitions raise three ques- tions: ( 1 ) Whether this Court has power or jurisdiction to raise from attach- ment a part of the property/assets of a notified party for the purposes of payment of legal expenses. ( 2 ) If there is such a power, whether it should be exercised for such a purpose. ( 3 ) If the Court has power and is willing to exercise the power then in what manner it can or should exercise such power. 3. By this order only these questions are being answered. The facts of each case, including this case, are not being looked into except by way of examples. Each petition including this petition will then have to be separately dealt with. It must also be mentioned that by these petitions release is sought for Advocates fees. However, the Court cannot forget or ignore the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the notification dated 8-6-1992 issued by the Custodian by which Mr. Hitesh Mehta was notified. The Division Bench of the Bombay High Court whilst considering section 3(4) has held that the power of the Special Court to give directions to the Custodian in respect of any attached property must necessarily bring within its ambit, the power to order the release of such property or any part of it from attachment. The Division Bench has held that if a notified party approaches the Special Court and makes out, for example, a case that the property which is attached or a portion of it has no nexus of any sort with the illegal dealings in securities during the relevant period and/or that there are no claims or liabilities which have to be satisfied by attachment and sale of such property, the Special Court would have the power to direct the Custodian to release such property from attachment. The Division Bench has held that the Special Court could, after looking at all the relevant circumstan- ces, also come to the conclusion that the entire property should be released from attachment. The Division Bench has held that the Special Court could also direct the Custodian to de-notify the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law were as follows : " 1. Whether the priority created by section 11 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 is only in respect of amounts due prior to the date of notification and/or whether the priority would also apply to amounts due after the date of the notification? 2. Whether the phrase taxes as used in section 11 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, can only mean amounts due as and by way of taxes or whether it would also include penalties and interests, if any ? 3. Whether penalty and/or interest can be levied on or charged to notified parties after the date of notification?" Mr. Vazifdar referred to paragraphs 41 to 49 of this order and submitted that the ratio laid down therein is that the liabilities which are to be paid are those which have arisen during the period that the Court called the year of the Scam and up to the date of notification. Mr. Vazifdar submitted that advocates fees which are claimed in all these petitions are not liabilities or expenses for the year of the Scam or up to the date of the notification. He submitted that for that reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the attached assets. He submits that if monies are not released towards the advocates fees then there would be no proper legal representation and/or investigation which could result in the preserva- tion or collection of attached assets. He further submitted that under section 9A(1)( a ) this Court has the same power, whilst dealing with attached assets, as a civil court had before the amendment of the said Act. He submitted that so far as civil courts are concerned, there could have been an attachment before judgment under order 38, Rule 5, or an attachment in execution under order 21 of the Code of Civil Procedure, 1908. He submitted that the civil courts always have power to release from attachment properties for the purpose of meeting legal expenses. He submitted that genuine legal expenses would not amount to an intention to defeat and/or delay the decree which is likely to be passed or which has been passed. He submitted that it is for this reason that section 11(1) gives to this Court the power to make such orders as is deemed fit directing disposal of the property under attachment. He submitted that section 11(1) is different and distinct from section 11(2) which provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o expansive and takes so long, many parties with genuine claims are forced to settle/compromise. They are forced to give up, in many cases, a substantial part of their genuine claim. Also even if a party ultimately succeeds he does not in reality get his entire claim. The amount actually spent by him in litigating is never awarded. The successful party is thus out of pocket. Nowadays this is in a sizable amount. This hurts the genuine party. The dishonest party does not mind. He is sitting on the property or money, using it and in most cases making money out of it. This further encourages parties to be dishonest. In my view it is time that Courts actively curbed this tendency to file false cases or to take up false defences merely with a view to delay payment or deliver up property. In my view if a Court is convinced that an absolutely false case has been filed or an absolutely false defence has been taken up, with a view to use laws delays, than the Courts should now grant a prohibitively high rate of interest. In my view the Courts must now grant actual costs incurred in conducting the litigation. In my view a dishonest litigant must be made to bear not just his own costs but als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other side must be made to pay actual costs. This could then be handed over to Advocates. This would also be a deterrent to dishonest defences being adopted." Mr. Vazifdar also relied upon the judgment dated 13-3-1995 in Suit No. 13 of 1994. The relevant portion of that judgment has already been reproduced in the judgment dated 18-9-1995 in Misc. Application No. 221 of 1993. He submitted that this Court has noted that dishonest defences and/or claims may be taken up or made. He submitted that this Court has already prima facie held that the Custodian would have no evidence. He submitted that this Court has noted that it is only notified persons who can contest and bring all facts before the Court. He submitted that this Court has, therefore, left open the question whether amounts could be released for paying advocate fees. He submitted that if advocates fees are not released then a notified party who may have a genuine case will not be able to contest or defend litigation. He submitted that in all cases the Court would not or may not award cost to notified parties. He submitted that unless the notified party was in a position to have legal representa- tion and contest liti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be presumed to be innocent until they are proved guilty beyond a reasonable doubt. He submitted that in criminal matters the notified party must be held entitled as of right to a legal representation of his choice. He submitted that this is because a notified party is not an indigent person or a pauper. In this behalf, Mr. Vazifdar relied upon the observation of the Supreme Court in the case of Gurbaksh Singh Sibbia v. State of Punjab 1980 Crl. LJ 1125 wherein the Supreme Court has observed as follows : "It was observed that the principle to be deduced from the various sections in the Cr. P.C. was that grant of bail is the rule and refusal is the exception. An accused person who enjoys freedom is in a much better position to look after his case and to properly defend himself than if he were in custody. As a presumably innocent person he is therefore entitled to freedom and every opportunity to look after his own case. A presumably innocent person must have his freedom to enable him to establish his innocence." Mr. Vazifdar submitted that these observations of the Supreme Court are in respect of bail, but that they also apply to fees of advocates. He submitted that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of constitutional virus. Mr. Seervai submitted that the Court has in fact been passing such orders as demonstrated by Mr. Vazifdar. He submitted that it could not even be suggested that the numerous orders already passed by this Court are bad in law and without jurisdiction. He submitted that recourse to a Court of law is the foundation of a civilised society. He submitted that in all civilised society there is a fundamental right to have proper legal representation of his own choice. Mr. Seervai submitted that undoubted- ly the power is a discretionary power. He submitted that unless some elaborate guidelines are laid down by this Court, the Court may have to consider each and every case on its own merit. He submitted that however, the discretion would have to be used judicially, fairly, justly and reasonably. He submitted that the main consideration in each matter should be whether the case or defence is genuine or not. Mr. Seervai submitted that the Court should not decide the questions involved on the basis of the amounts likely to be involved. He submitted that the questions have to be decided as questions of law irrespective of what the consequences may or may not be. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of the Custodian submitted that the present applications, by the Harshad Mehta group, are not bona fide. He submit- ted that all the applications by the Harshad Mehta Group are filed in August 1995. He submitted that these are for release of advocates fees for the last 3 years. He submitted that, therefore, the notified party have already incurred these expenses on a liberal scale for the last several years. As and by way of example, he points out that in this very matter release is sought of a sum of Rs. 96,000 as and by way of fees of advocate Mr. Mistry. He points out that this is in respect of some work which he had done earlier. He points out that the sum of Rs. 90,000 is in respect of the memo dated 14-4-1995 in respect of a matter where the last date of hearing was on 1-9-1993. He submits that similarly release is sought of amount of Rs. 5,250 in respect of a memo dated 15-5-1995 for settling grounds of appeal on 30-10-1993. Mr. Setalvad submits that these are not cases where a party has first come to the Court and asked for release prior to the event. He submits that, without permission of the Court or even intimation to the Court, the parties have chosen thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s out of turn and in a priority. Mr. Setalvad submitted that for the present, this Group is seeking release of a sum of approx. Rs. 1.5 crores. He pointed out that further release is going to be sought of approx. another Rs. 2 crores. He submitted that this is only by way of legal or advocates fees. He submitted that one does not know as to how many other applications in respect of other matters will be made for release of amounts. He submits that very likely this group will have incurred lavish expenses on other things also. He submitted that therefore, once expenses are already incurred then they have become liabilities which can only be paid under section 11(2)( c ). Mr. Setalvad next submitted that the Court has before it numerous types of matters. He submitted that the Court has before it criminal matters and applications in criminal matters, applications/petitions which are undoubtedly for preservation, protection and/or augmentation of the attached assets of notified parties or matters which are required to be defended for this purpose. He submitted that there are also cases before this Court where the notified party has been caught out in an impropriety, if not an illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Company Court Rules, rule 348 lays down that the fees which would be paid would only be as per the Schedule which is annexed to the Company Court Rules. He submitted that the Court can prescribe fees which may be similar to the fees paid by the Central Government to its advocates. Mr. Setalvad also relied upon the authority in the case of Re : British Folding Bed Co. Ex parte Trustee v. N. A. Woodiwiss Co. 1948 All. ER 216 wherein it has been held that as a general rule a trustee in bankruptcy may, in his discretion, adopt and pay for services rendered to a bankrupt after notice of an act of bankruptcy, where such services have clearly resulted in a benefit or profit to the bankrupt s estate commensurate with the services rendered, but that the trustee must be very strict in the application of such a formula. Lastly Mr. Setalvad submitted that the prima facie view taken by this Court in paragraph 129 of the judgment dated 18-9-1995 in Misc. Application No. 221 of 1993 is the correct view and should be finally adopted by this Court. 10. Mr. Bobde, on behalf of the Income-tax Department submitted that it was arguable that for the purposes of preservation, protec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases where this Court can issue directions or orders in respect of the attached assets or property. He submitted that the Legislature not having speci-fically conferred on this Court any power to issue directions in respect of the person of the notified party could imply that fees could not be released in criminal matters. He submitted that the Ordinance is still in force. In support of this, he relied upon the authorities in the cases of MM. Sales Exports v. State of Uttar Pradesh AIR 1974 All. 263 and State of Bihar v. Santo Kumar Mitra AIR 1952 Pat. 148. He pointed out that under the said Act the attachment has not been levied by the Court but that there is a statutory attachment. He submitted that the Court can, therefore, only act or exercise such power as have been expressly conferred by the said Act. 11. Mr. Vyas also appearing on behalf of the Income-tax Department showed to the Court a resolution dated 9-7-1981 providing for free legal aid in the Supreme Court. He submitted that a similar provision also exist in Maharashtra. Mr. Vyas submitted that all the assets are attached because these are monies belonging to Banks and Financial Institutions and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the legal aid, he would be probably laughed out of the Court. He submitted that to apply for legal aid a person has to pass means test and a notified party could never pass such a test. Mr. Seervai submitted that in fact section 75(2) of the Presidency Town Insolvency Act and section 66(2) of the Provincial Insolvency Act give to the Court power to release monies for payment of advocates fees. He submitted that such a power must be read into this Act also. He repeated that if such a power was not read into the said Act then it would be open to challenge on constitutional grounds. Mr. Seervai submitted that the Criminal Law (Amendment) Ordinance was enacted before the Constitution. He submitted that it was enacted at a time when there were no fundamental rights. He submitted that after the Constitution every person has a fundamental right to legal represen-tation of his choice. He submitted that after the Constitution there can be no law which prevent legal representation of a party s own choice. Mr. Seervai submitted that under section 2 of the said Act, the term Code is to mean the Code of Criminal Procedure. He submitted that section 9 of the said Act provides that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pending distribution it would become necessary for the Court to issue appropriate directions, including directions for disposal of attached assets. The Legislature has thus provided the power to give appropriate directions under sections 3(4) and 11(1). The powers given to the Court under sections 3(4) and 11(1) are distinct from and different to the powers under section 11(2). Section 11(2) deals with distribution. Sec- tions 3(4) and 11(1) may also apply at the stage of distribution but they further empower the Court to give directions at any stage, i.e., even prior to distribution. It is thus irrelevant whether or not the notified party can or cannot approach the Legal Aid Society. The powers of the Court have nothing to do with the capacity of a notified party to approach the Legal Aid Society. Even otherwise, in my view, Mr. Seervai was absolutely right when he submitted that notified parties could never get Legal Aid under the existing Rules. They could never pass the means test. It will have, therefore, to be held that section 3(4) and section 11(1) give to this Court powers to release monies or expenses for the purposes of preservation, protection and/or augmentation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was necessary that the monies be released. It was only thereafter that the monies were released. 16. Mr. Vazifdar and Mr. Seervai had argued that it makes no difference that the expenses were first incurred and then claimed. They had submitted that so long as the Court has power and so long as the Court concludes that the expenses are for preservation, protection and/or augmentation of attached assets the Court must release the expenses. Mr. Vazifdar and Mr. Seervai had strongly relied on fact that monies towards rents and societies charges had been released by the Court after they were incurred. They had submitted that the orders of this Court releasing monies towards rent and/or societies charges establishes that expenses can first be incurred and then claimed. They had emphasised that a notified party is not under the control of the Court. 17. These submissions cannot be accepted for a number of reasons. Firstly the examples given by Mr. Vazifdar are expenses which are automatically incurred in respect of an attached assets, e.g., the taxes, cesses, rents (in respect of tenanted premises) societies outgoings (in respect of the premises owned in co-operative societi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party without first coming to the Court, appoints very expensive contractors, selects the most expen- sive paint and material and gets the work done, then there is nothing further left for the Court to do. Here the liability is already incurred. The contractors and others have already completed the work. The work of preservation and/or augmentation, even presuming it is so, has already been completed. All that now remains is a claim for payment for work already done. Unlike in the earlier instance even if now the Court does nothing and does not release payment there can be no loss or deteriora- tion to the asset. Thus for preservation, protection and/or augmentation of asset there is no necessity to pass any order or give any direction. In such cases the liability is one which now the Court can only certify for payment under section 11(2)( c ). As it falls under section 11(2)( c ) the Court cannot, even if it wanted to, pay it except in the manner set out under section 11(2). The said Act provides that the Court shall meet those liabilities in the priority set out in section 11(2). 19. To take another example. Suppose a company announces a rights issue. Applying for rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mentioned that Mr. Setalvad is also right that the Harshad Mehta group of notified parties appear to have incurred these expenses on a lavish scale. However, that is not the reason for holding that these fall under section 11(2)( c ). 21. There-is another reason why the submission that, expenses can be first incurred and release of monies sought subsequently, cannot be accepted. Under section 3(4) as well as section 11(1) it is only the Court which can give directions or orders. Thus, the decision as to whether or not a particular expense is or is not necessary for preservation, protection and/or augmentation of attached assets can only be taken by the Court. Even the Custodian cannot take such a decision. The said Act does not give to a notified party and right to incur expenses for preservation, protection and/or augmentation of attached assets. Thus notified party cannot decide whether a particular expense is necessary or not. The notified party cannot present the Court with a fait accompli If without the permission of the Court or without the Court having first decided that such expenses are necessary, a notified party on his own decides to incur such expenses and deals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or receive goods without having the capacity to pay for them. Also to be remem- bered that these principles would apply not just to advocates fees but also to various other expenses which possibly have already been incurred or may be incurred. 23. For all the above reasons the submission of Mr. Vazifdar and Mr. Seervai that merely because they have first incurred cannot be a ground for holding that the liabilities fall under section 11(2)( c ) cannot be and is not accepted. The only type of expenses which would fall under section 3(4) and section 11(1) are those expenses where the Court has first decided are necessary for the preservation, protection and/or augmen- tation of the attached assets or those where even after they are incurred the Court still has to pass some direction or order for the preservation, or protection of the asset. It will have to be held that advocates fees for services already rendered fall under section 11(2)( c ) and can only be paid at time of distribution and in the priority set out in section 11(2). 24. It must be mentioned that, as far as possible, the Court has been protecting the advocates inasmuch as in a number of matters the Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts may have to be released. If, however, there is no such right then the Court will have to consider what is to be done in each case. 26. As has been set out earlier, the argument has been that all persons including notified persons have a right to avail of legal representation of their own choice. Mr. Seervai has submitted that it is a fundamental right guaranteed by articles 14, 19 and 21. As set out earlier, reliance has also been placed upon section 303 of the Code of Criminal Procedure, 1898 and article 22(1) of the Constitution. As set out earlier, it has been submitted that to hold otherwise would render the said Act open to challenge on the ground that it is ultra vires the Constitution of India. 27. In my view, it is difficult to accept submission that legal representa- tion in criminal matters also assist in preservation, protection and/or augmentation of attached assets. However, Mr. Seervai is right when he submitted that an interpretation must be one which would not leave the said Act open to challenge on the ground of constitutional validity. In my view, such a power must necessarily be implied in the Act. It would have to be accepted that every person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentation of one s own choice have necessarily proceeded on the footing that the attached assets belong to a notified party. The arguments have been on the footing that the notified party could afford advocates of his choice. This may not necessarily be true in the case of all Notified parties. Nobody can claim that he/she is entitled to spend somebody else s monies for his defence. Such a thing has not even been suggested. Mr. Vazifdar and Mr. Seervai have, however, submitted that till such time as a notified party is held to be guilty he must be presumed to be innocent. There can be no dispute with that proposition. However, for the purposes of distribution the Court is not concerned so much with the innocence or guilt of the notified party. For purposes of distribution the Court is more concerned with seeing whether these persons have entered into transactions in securities between the stated period and whether there are liabilities of the nature set out in section 11(2). 30. From the large number of civil matters before this Court it has been seen that all the notified parties have in fact entered into transactions in securities during the stated period. The Court has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property having already passed, there would be no attachment. In all other cases, the best course was to stop further dealings. Thus a statutory attachment was provided for. The Legislature was well aware that every single transaction would have to be enquired into. The whole purpose and object of the Act is to channel the enquiry into one forum so that one Court can have before it the entire picture. It is therefore provided that it would be only the Special Court which can pass directions in respect of the property which stand attached. It is therefore provided that it would be the Special Court which would then distribute the property in the manner laid down under section 11(2). It is therefore provided, under section 13, that the provisions of the Act would prevail over all contracts, other Acts, Decrees of Courts, etc. 60. ****** 61. It is also to be remembered that the Notified parties themselves would not have had any right in the public monies which were siphoned off. These continue to be properties of the Banks/Financial Institutions. Any properties purchased out of these public monies would not thus belong to the notified party but would be, really speaking property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence or that a particular civil claim or dispute should have arisen directly as a result of any offence." In an order dated 22-7-1993 in Misc. Application No. 96 of 1992 this Court has held as follows: "25. These are the rival submissions before this Court. In all honesty it must be stated that the said Act appears to be very loosely drafted. However this is due to the pressing circumstances and the urgency then prevailing. In my view, in spite of this, the intentions and objects sought to be achieved have been brought out. Undoubtedly there is great force in the submission that private rights cannot be abrogated or curtailed without compensation. However Mr. Setalvad has not even contended that private rights have been taken away. Mr. Setalvad has admitted that all private rights are preserved. Mr. Setalvad s submission has been that the said Act provides for distribution in a particular manner only. There can also be no dispute with the proposition that the interpretation of a statute must be one which must be just, reasonable and sensible. The question is whether the interpretation sought to be given by the custodian is unreasonable, unjust and/or would in any way be vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired out of public monies. As stated above in most cases, the notified party would have had no right to the monies siphoned out from Financial Institutions/Banks. Any asset bought by him out of these monies would be, strictly speaking, held by him in trust for the Financial Institutions/Banks. Thus private parties entering into contracts with a notified party would get only such rights as the notified party had. They cannot get a better title, except may be in cases of Negotiable Instruments and/or shares. If the notified party had no right, the third party will get none. It is for this reason that in section 11(2)( c ) the words used are any other liability as may be specified by the Special Court from time to time ." [Emphasis supplied] 31. So far as this Court is concerned these authorities are binding. Thus, it is to be seen that this Court has held that these are not properties of notified parties. These are properties and/or monies which have been siphoned off from Banks and Financial Institutions. The said Act pro- ceeds on the footing that these continue to be properties of the Banks and Financial Institutions. Any property purchased from these public monies als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttachment is to be paid. The Supreme Court has held that the tax liabilities of a notified party along with the revenue, cess and rates is entitled to be paid first in order of priority and in full. The Supreme Court has held that in relation to claims for payment of taxes, the Special Court has only the limited power to determine what, having regard to the funds available, can be paid, i.e., whether that claim can be paid in full or only in part. The Supreme Court has held that if any claim cannot be paid in full then provision will have to be made for the balance. Thus, so far as the assessed claims of the Income-tax Department are concerned, this Court is bound to pay them in full. Therefore, in cases where the assessed claims of the Income-tax Department exceed the available assets of a notified party, the available asset will have to be used to pay off that liability. In such a case there is no asset available for meeting advocates fees or other expenses. In such a case the notified party is in no better position than a pauper or an indigent person. If the money is not available the right to legal represen-tation is illusory. It is illusory not because the law prevents it, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture before it. It is in a position to ascertain whether the notified party has used monies of banks and Financial Institutions and how and where it is so used. It is correct that the jurisdiction of normal civil Courts is not done away with. But an additional forum is provided for enforcement of rights and claims by asking for distribution. ****** In my view, they are neither unreasonable nor unjust nor irrational nor inequitable. In my view, there is a reasonable classification meant for meeting the object, viz., recovery of public monies and for return of the same to the bodies from whose pockets it went out in the first instance in a speedy manner." Further, in an order dated 3-8-1993 in Misc. Application No. 120 of 1993 and other connected applications the Court has also held as follows: "... This Court has been established because public monies have been siphoned out from Financial Institutions and/or Banks into private pockets. Apart from criminal trials, the Court has under section 11 of the Special Court Act, to pay off liabilities in the manner set out therein. This form property belonging to notified parties. Today the Court cannot ignore the fact that generall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases end. The Court cannot presume that the prosecution will fail in all cases. This is not to say that the Court is presuming that the notified party is guilty. All that the Court is saying that assets cannot be allowed to be used till the matter is finally decided. Thus, in such cases, i.e., where the assets are not sufficient to meet the liability the notified party is in no better position than a pauper or an indigent person. As the assets are not sufficient to meet the liabilities and till it is clear that these are not public monies which have to be returned to the Banks and Financial Institutions they cannot be spent. If that be so, then the so-called right to have legal representation of one s own choice is an illusory right. As stated above, even though such a power can be implied, the Court can never exercise the power. To do so is to allow an indigent or a pauper notified party to use public monies for his own private defence. To do so would mean to put the notified party on a pedestal. It would mean that a private citizen who is a pauper would have no right to insist that he get legal representation of his choice, but a notified party will get a right to use publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or an indigent person or an insolvent. Thus, the so-called right to have legal representation of his choice even though not curtailed by the Act is in effect an illusory right. 35. That this is the position is very clear from the fact that the Legislature whenever it intends to provide for legal expenses for the purposes of private defence, specifically so provides. As is seen the Legislature has so specifically provided in section 9(1)( a ) of the Criminal Law (Amendment) Ordinance. As is seen that Ordinance is still in force. If the Legislature wanted to specifically provide for payment of legal expenses in criminal matters, irrespective of whether the assets were more than sufficient to meet the liabilities or not, the Legislature would have so specifically provided. The fact that they have not so done clearly indicates that the Legislature did not want public monies to be utilized for payment of legal fees for private defence of notified parties. The intention of the Legisla- ture is clear. Public monies can be utilised only for disbursements of the liabilities in the priority set out in section 11(2). If there is surplus it can be used for payment of such expenses as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For other purposes no such power exists either in the Insolvency law or in the said Act. However, it must be mentioned that if the argument of Mr. Seervai is to be accepted and it is to be held that section 75(2) of the Presidency Town Insolvency Act and section 66(2) of the Provincial Insolvency Act permit a Court to release amounts towards the legal fees, then it would strengthen Mr. Bobde s submission that when the Legislature so desires it specifically so provides. It would then strengthen the submission that when the Legis-lature does not so provide it clearly does not so desire. 39. Thus, to sum up, it will have to be held that for the purposes of preservation, protection and/or augmentation of the attached assets the Court has power to incur expenses. This is irrespective of whether the assets are sufficient to meet the liabilities or not. This power is given to Court so that the assets are available for distribution. This power of the Court would only be where the liability is not of a nature which falls under section 11(2). If a liability is of a nature covered by section 11(2), then the Court shall discharge it in the manner/priority set out therein. Thus, the powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitions the claim falls under section 11(2)( c ). Thus so far as these petitions are concerned it is not really necessary to decide these questions at this stage. Payment under section 11(2)( c ) will only be made provided all other prior liabilities are discharged. If there is a surplus after distribution it will then be monies of the notified party. In that case, at this stage, the Court prima facie sees no reason why payment should not be made for services already rendered to a notified party or at his behest to somebody else. In that case the Court prima facie sees no reason why payment should not be the rate agreed to by the notified party. At this stage it must be clarified that all petitions on board today are not for release of monies for fees already incurred. Same petitions were filed for release of monies towards advocates fees prior to their being incurred. Those will be dealt with separately. 41. In cases where applications are filed prior to expenses being incurred, if the Court is satisfied that it is for preservation, protection and/or augmentation of attached assets the Court can release monies to pay for the same. However, the Court must keep in mind t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian and the notified party. It must be mentioned that when the Custodian started filing such applications, this Court frowned upon the Custodian. This Court made it clear that it was for the notified party to file such applications and that the Custodian may, if he was so advised support the notified party. At that time the question of advocates fees was not before the Court. The Court had not considered what was to happen if the notified party could not afford to pay legal fees. Now that the question has arisen, in my view, there is nothing wrong in the notified party getting the Custodian to file or defend applications/petitions which are for preservation, protection, augmentation and/or recovery of attached assets. This provided the assets are not sufficient to meet the liabilities. Clarified that the Court is not saying that the Custodian must so file or defend. It is open to the Custodian to do as advised by his lawyers. If the Custodian chooses not to assist the notified party can then personally approach this Court. Simple matters can then be disposed of without intervention of lawyers. In cases where it is necessary the Court will try and provide legal assistance. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient to meet the liabilities the Court will have to decide from case to case whether or not fees are to be released and in what amount. To be immediately clarified that now this decision must be prior to the liability being incurred. The Court cannot and should not forget that public monies are going to be used. Thus only what is necessary can be spent. The Court has already before it a scale of fees which are paid by the Central Government to its advocates including the public prosecutors. The Court has also before it a scale of fees which the Custodian pays to his counsel and advocates. As far as the Court is concerned, the normal scale paid to the public prosecutors and advocates for the Custodian appear to be most reason- able and proper. In view of the Court on these scales, there should be no difficulty in procuring legal assistance either by the notified party or the Court. On these scales both the Custodian and the C.B.I. have got very efficient and competent lawyers. There is thus no reason why those scales should not be applied and paid to lawyers of the notified parties or the lawyers the Court will endeavour to procure for the notified party. To be remembered that there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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