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TMI Blog2004 (9) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 have no application in relation to the proceedings under the said Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 111 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 interest, the Special Court erred in directing such payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 attached simultaneously with the issue of the notification. Jurisdiction of the Special Court : 6. The jurisdiction of the Special Court is of wide amplitude. Subject to a decision in appeal therefrom, its decisions is final. 6.1 In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently 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 not a case where a third party right is involved as was the case in Kudremukh Iron Ore Co. Ltd. v. Fairgrowth Financial Services Ltd. [1994] 4 SCC 246. The purpose of the said Act is to discharge the liabilities of the Government Banks, financial institutions, mutual funds, etc. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. This position in law is not disputed. Such attached property, thus, if necessary, for the purpose of discharging the claims and liabilities of the notified person indisputably would stand attached and can be applied for discharge of his liabilities in terms of section 11 of the said Act. 9.3 In Harshad Shantilal Mehta' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 motu by the Court and, thus, no question of any limitation arises - Nityanand M. Joshi v. Life Insurance Corpn. of India AIR 1970 SC 209, Hindustan Times Ltd. v. Union of India [1998] 2 SCC 242 and Mt. Laxmibai's case (supra). Even no period of limitation is prescribed in relation to a writ proceeding. 11.2 S.N. Variava, J. in A.K. Menon, Custodian' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chment 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 Special Court are disposed of, the property of the notified person stands attached. In other words, the provisions of the Limitation Act would inter alia, apply only when a suit is filed or a proceeding is initiated for recovery of an amount and not where a property is required to be applied towards the claims pending before the tribunal for the purpose of discharge of the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 is to prevail." 11.8 A statute of limitation bars a remedy and not a right. Although a remedy is barred, a defence can be raised. In construing a special statute providing for limitation, consideration of plea of hardship is irrelevant. A special statute providing for special or no period of limitation must receive a liberal and broader construction and not a rigid or a narrow one. The intent and purport of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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