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TMI Blog2008 (5) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... cuted by the Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter to be referred to as the 'Act of 1993') and the financial institution would have to move the Special Court in respect of the property attached. 3. Brief facts which are necessary for disposal of this appeal are that the respondent No. 1 was declared as a notified party on 6-10-2001. Pursuant to the said notification, considering section 3(3) of the Act of 1992, all properties, movable and immovable stood attached simultaneously. The Custodian confirmed the attachment on 1-11-2001. The respondent No. 2 - Oriental Bank of Commerce (hereinafter to be referred to as the Bank) filed an application being Original Application No. 233 of 2002 against the respondent No. 1. The respondent No. 1 took out Miscellaneous Application for impleading the Custodian as a party. That application came to be rejected by order dated 16-3-2005. Aggrieved against the said order the respondent No. 1 preferred an appeal before the Debts Recovery Appellate Tribunal (hereinafter to be referred to as the 'Appellate Tribunal'). That appeal came to be rejected by order dated 19-8-2005. Against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty attached under the provisions of the Act of 1992. Therefore, the short question for our consideration is whether the Act of 1992 will prevail or the Act of 1993. In order to better appreciate the controversy involved in the matter we may refer to necessary provisions of both the Acts. The Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 came into force in 1992. Section 3 deals with the appointment and functions of the Custodian. Section 3 reads as under : "3. Appointment and functions of Custodian.-(1) The Central Government may appoint one or more Custodian as it may deem fit for the purpose of this Act. (2) 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 1st day of April, 1991 and on and before 6th June, 1992, notify the name of such person in the Official Gazette. (3) Notwithstanding anything contained in the Code and any other law for the time being in force, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isen 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 sofar 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. (3) On and from the commencement of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Act, 1994, 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). (4) While dealing with cases relating to any matter or claim under this section, the Special Court shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice, and subject to the other provisions of this Act and of any rules, the Special Court shall have power to regulate its own procedure. (5) Withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than this Act, or in any decree or order of any Court, Tribunal or other authority." The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 came into effect in 1993. The purpose of this Act was recover of debts due to Banks or financial institutions or consortium of Banks less than ten lakh rupees or such other amount being not less than one lakh rupees as the Central Government may by notification specify. Under this Act Tribunals were constituted. Section 17 lays down the jurisdiction that a Tribunal shall exercise on and from the appointed day, the powers and authority to entertain and decide application from the Banks and financial institutions or recovery of debts due to such banks and financial institutions. Appeal is provided against that to the appellate authority under section 20 of the Act. Section 34 lays down that it has the overriding power. Section 34 reads as under : "34. Act to have overriding effect.-(1) Save as otherwise provided in sub-section (2), the provisions of this Act shall have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 34 of the Act of 1993 clearly says that this Act will have the overriding 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 overriding effect over the Act of 1992. As against this, learned senior counsel for the respondent No. 1, contended that section 9A 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 6-6-1992 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 16 of 1993, section 9A of the Act of 1992 (came into force with effect from 25-1-1994) will have the overriding effect over the Act of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 which has resulted in great strain on the Banks and Financial Institutions. Therefore, in order to meet that, contingency this Act was promulgated. The preamble in this Act clearly reads as under : "An Act to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto." Therefore, the purpose of the Act of 1993 was to expedite the recovery of the debts due to the banks and financial institutions. Incidentally, the purpose of both the Acts has separate area of operation. Application was filed by the Bank before the Debts Recovery Tribunal for recovery of its debts against the same person, i.e., Ketan Parekh and temporary injunction was issued to disclose the assets and during the pendency of these Original Applications the jurisdiction of the Tribunal was challenged. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived before 6-6-1992. Therefore, it was held that the order passed by the Special Court on application filed by the Custodian of the notified person was not correct and the order passed by the Special Court was set aside. This was a case in which the transaction was found to be valid. Therefore, this case cannot provide any assistance. Our attention was invited to another decision of this Court in TRO v. Custodian [2007] 7 SCC 461. In that case it was held that the property of any person notified under section 3(2) and (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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 9A of the Act of 1992. But incidentally, in this case section 9A came subsequently, i.e. it came on 25-1-1994. Therefore, it is a subsequent legislation which will have the overriding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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