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TMI Blog2002 (7) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the Calcutta Stock Exchange Association Limited. Hence, both the appeals are disposed of by a common order. 2. Brief facts which are necessary for disposal of these appeals are that the writ petitioners, M/s. C. Mackertich Limited, a company incorporated under the Companies Act, 1956, and one Vijay Kumar Kothari, Director and shareholder of the petitioner-company, challenged various communications dated 20-11-2001, 26-11-2001 and orders dated 5th and 10-12-2001 by filing the present writ petition. The notification dated 20-11-2001 was issued by Mr. D.K. Tyagi, Custodian appointed under section 3(1) of the Act of 1992 and by that notification one Sri Ajay Kayan, figured as proprietor of M/s. C. Mackertich and Co., was notified and all his assets and properties were attached. The relevant notification reads as under : "Notification New Delhi, the 20-11-2001 No. Custodian/13/2001 I, D.K. Tyagi, appointed as Custodian under section 3(1) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as the Act) vide Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) No. F.4/3/94-SCS/VI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a-700 017. 8. Shri Shyam Sunder Dalmia, S/o R.P. Dalmia Securities Broker, 10/4B, Lala Lajpat Sarani, Calcutta-700 020. 9. M/s. Dhyan Investments and Trading Co. Ltd., 10th Floor, Tulsani Chambers, 222, Nariman Point, Mumbai-400 021. 10. M/s. Rahul and Co., Share and Stock Broker, 3B, Lalbazar Street, 3rd Floor, Sir R.N. Mukherjee Road, Calcutta-700 001. 11. Shri Gourishankar Kayan, S/o Late Shri Chhedilal Kayan (a )Prop. M/s. Rahul and Co., 3B, Lalbazar Street, 3rd Floor, Sir R.N. Mukherjee Road, Calcutta-700 001. (b)R/o (Present and Permanent), 9/2, Hunger Ford Street, Calcutta-700 017. 2. All concerned may note that in accordance with the provisions of section 3(3) of the Act, notwithstanding anything contained in the Code of Criminal Procedure, 1973 and any other law for the time being in force, on and from the date of the aforesaid notification, any property, movable or immovable of both belonging to any notified persons/entities shall stand attached simultaneously with issue of the notification. 3. Further, under section 3(4) of the Act, the property attached under section 3(3) shall be dealt with by the Custodian in such manner as the Special Court may d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Custodian, Nariman Bhawan, 9th Floor, 227, Vinay K. Shah Marg, Nariman Point, Mumbai 400 021. New DelhiSd/- D.K. Tyagi 20-11-2001Custodian." 4. A copy of the notification was sent to various Stock Exchanges by the Officer on Special Duty for their information and necessary action. Immediately thereafter, on 26-11-2001 the Stock Exchange. Mumbai deactivated the BOLT terminal (Broker's online terminal) of the petitioner-company and informed them that the Exchange was in process of seeking certain clarification from the Custodian and till such clarification is received from the Custodian the BOLT terminal of the petitioner-company shall remain deactivated. It was alleged that the Stock Exchange, Mumbai advised the petitioner-company to obtain resignation of its Director, Ajay Kayan from the petitioner-company. The General Manager of the petitioner-company protested this action by his communication dated 4-12-2001 alleging that the Stock Exchange, Mumbai has acted with undue haste in deactivating the BOLT terminal of the petitioner-company. It was pointed out that the petitioner-company is a separate and distinct legal entity in the eye of law and cannot be made to suffer becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contested without filing any affidavit-in-opposition by the respondents, as recorded by the learned Single Judge in his order and it is also admitted before us by the respondents that they did not file any affidavit-in-opposition and argued the matter on the question of principles. The Custodian was represented by Mr. Subba Rao and he took the position that this Court should not interfere in its extraordinary jurisdiction in a matter which is aftermath of a great scandal popularly known as 'scam' and Shri Ajay Kayan, Director of the petitioner-company has been notified under the Act of 1992. It was also contended that, since the order has been passed by the Custodian in exercise of powers vested under the Act of 1992 and in pursuance of that all Stock Exchanges all over the country have passed consequential orders, therefore, the remedy for the petitioner-company is to approach the Special Court constituted under the Act of 1992 for redressal of its grievance. The stand of the stock exchanges including that of Calcutta Stock Exchange was that they have only complied with the order of the Custodian received by them on fax on 22-11-2001. The fax message dated 22-11-2001 reads as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Transactions in Securities) Ordinance, 1992 was promulgated on the 6-6-1992. The Ordinance provides for the establishment of a Special Court with a sitting Judge of a High Court for speedy trial of offences relating to transactions in securities and disposal of properties attached. It also provides for appointment of one or more Custodian for attaching the property of the offenders with a view to prevent diversion of such properties by the offenders. 3. The Bill seeks to replace the said Ordinance." 8. As per the statement of objects and reasons it appears that certain irregularities and malpractices were brought to the notice of the Government that some brokers in collusion with the employees of various financial institutions indulged in malpractice, which led to diversion of funds from banks and financial institutions to the individual account of certain brokers. Therefore, in order to deal with such kind of malpractices indulged in by certain brokers this Act of 1992 was enacted and for speedy recovery of the amounts and trial of offences relating to fraudulent transactions the Special Court came to be established. As per provisions of the Act of 1992, the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce, on and from the date of notification under sub-section (2), any property, movable or immovable, or both, belonging to any person notified under that sub-section shall stand attached simultaneously with the issue of the notification. Therefore, according to section 3(3), which starts with a non-obstante clause, the property movable or immovable or both of such notified person shall stand attached from the date when the person is notified in the Official Gazette. Therefore, the effect of section 3(3) is that the moment a person is notified by the Custodian that he has been involved in offences relating to securities during the period from 1-4-1991 to 6-6-1992 and his name has been notified in the Official Gazette all his properties movable or immovable shall stand attached. The effect of this attachment will be that this property shall be dealt with by the Custodian in such manner as the Special Court may direct. Therefore, the property of the offender who has been notified shall stand attached with the Custodian and that property will be dealt with by the Custodian under the orders of the Special Court. Section 3(5) says that the Custodian may take assistance of any person whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill have the jurisdiction to try any person concerned either as principal, conspirator or abettor and all other offences and accused persons as can be jointly tried therewith at one trial in accordance with the Code. Section 9 deals with procedure and powers of Special Court, which says that the Special Court shall have all power of Code of Civil Procedure as far as they are not inconsistent with the provisions of this Act and the Special Court shall be deemed to be a Court of Session. The Special Court will be competent to convict and pass sentence authorised by law. It also gives the latitude to the Special Court that it can adopt such procedure as it deem fit consistent with the principles of natural justice. Section 9A deals with jurisdiction, powers, authority and procedure of Special Court in civil matters. Section 9A has been inserted to this Act by the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Act (24 of 1994). By virtue of section 9A the Special Court has also been conferred full powers of a Civil Court in relation to any property stood attached under section 3(3). According to sub-section (2) of section 9A every suit, claim or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act has an overriding effect. It says that this Act shall have an overriding 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 any other authority. 11. Therefore, the Act of 1992 has an overriding effect agaisnt all other provisions of law. In the scheme of things, only question fell for consider-ation of the learned Single Judge was that whether the order passed by the Calcutta, Mumbai and National Stock Exchanges in deactivating the terminal of the petitioner-company was justified or not. If we examine the action of the Calcutta Stock Exchange with reference to the provisions of the Act, it only transpires that the Calcutta Stock Exchange has done nothing but complied with the order of the Custodian. It is an admitted fact that the incumbent is a notified person by the notification dated 20-11-2001 which was published in the Gazette of India (Extraordinary) on 20-11-2001. Once Sri Ajay Kayan has been notified as notified person and by virtue of that notification all the properties movable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat whether all the money for establishing the petitioner-company was tainted money or the petitio- ner company which has been established by Sri Kayan was from any other source which does not have the tinge of that tainted money. This question could not have been decided in this proceeding. Moreso, by virtue of the notification dated 20-11-2001 and the public notice issued on 24-11-2001 all the properties of all the persons who were notified and that of Sri Ajay Kayan stood attached. The 20th November, 2001 notification clearly says that all the properties movable or immovable or both belonging to persons/entities shall stand attached by virtue of section 3(3) of the Act of 1992 and similarly in the public notificatin dated 24-11-2001 the same was reiterated for notice of all concerned that from the date of the aforesaid notification any property movable or immovable or both belonging to the notified persons/entities shall stand attached and it shall only be dealt with by the Custodian in such manner as the Special Court may direct. It was also made clear in the public notice dated 24-11-2001 that the provisions of the Act of 1992 shall have overriding effect on all other laws and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under challenge. The Calcutta Stock Exchange has only acted as per the direction given by the Custodian as executing agency and if the petitioner-company has any grievance against the order passed by the Custodian then it has remedy under the Act of 1992. Even in a civil matter if a decree is passed and in prusance of that decree the executing Court attaches the property of a third person, he thinks that this property is not covered by the decree then the remedy is to approach that very Civil Court which has passed the decree for modification and the remedy does not lie in the executing Court. Similar is the position here. The Calcutta Stock Exchange like an executing Court has complied with the order passed by the Custodian and if the petitioner-company has any grievance against the order passed by the Custodian, then the remedy lies before the Special Court and not under section 226. The Act of 1992 is a complete Court in itself and all the remedies have been provided in that Code and it has prohibited the jurisdiction of all other Civil Courts. Therefore, it is a sound exercise of jurisdiction by the learned Single Judge who has directed the parties to resort to the remedy pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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