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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 ..... han clear that section 9A 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 9A in 1994 being subsequent legislation will prevail and not the provisions of the Act of 1993. - CIVIL APPEAL NO. 3652 OF 2008 ARISING OUT OF SLP (C) NO. 7744 OF 2006 - - - Dated:- 16-5-2008 - A.K. MATHUR AND ALTAMAS KABIR, JJ. K.N. Bhatt, Gopal Jain, Jai Singh Brar, Abeer Kumar, Manu Aggarwal and Mrs. Manik Karanjawala for the Appellant. Ms. Kamini Jaiswal, Subramonium Prasad, S. Udaya Kumar Sagar, Ms. Bina Madhavan and Hemal K. Sheth for the Respondent. JUDGMENT A.K. Mathur, J. - Leave granted. 2. This appeal is directed against the order dated 17-1-2006 passed by the Division Bench of the Bombay High Court whereby the Division Bench has held that since the property of the respondent No. 1 has been seized under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter to be referred to as the Act of 1992 ), the Debts Recovery Tribunal had no jurisdiction to grant a declaration that the properties of a notified person stand charged and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal had no jurisdiction to deal with the matter. The Appellate Tribunal held that the provisions of the Act of 1992 are not attracted and consequently, dismissed the appeal. Aggrieved against this order the present writ petition was filed before the Bombay High Court by respondent No. 1. The Division Bench of the Bombay High Court held that since the respondent No. 1 was declared as a notified party all the properties stood attached pursuant to section 3 of the Act of 1992 and considering section 9A of the said Act, it is the Special Court which will have jurisdiction so far as the notified party is concerned and as such the Division Bench of the High Court reversed the order passed by the Appellate Tribunal and held that the Special Court will have jurisdiction and not the Appellate Tribunal. Hence, the present appeal against the order passed by the Division Bench of the High Court of Bombay dated 17-1-2006. 4. Mr. K.N. Bhatt, learned senior counsel appearing for the appellant strenuously urged before us that since the Act of 1993 is a subsequent legislation which came into force in 1993 will override the Act of 1992 which came in 1992. It was contended that the decree passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Special Court in civil matters. Section 9A came into force subsequently by amending Act 24 of 1994 with effect from 25-1-1994 which reads as under: "9A. Jurisdiction, powers, authority and procedure of Special Court in civil matters. (1) On and from the commencement of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Act, 1994. the Special Court shall exercise all such jurisdiction, powers and authority as were exercisable, immediately before such commencement by any Civil Court in relation to any matter or claim ( a )relating to any property standing attached under sub-section (3) of section 3; ( b )arising out of transactions in securities entered into after the 1st day of April, 1991, and on or before the 6th day of June, 1992. In which a person is notified under sub-section (2) of section 3 is involved as a party, broker, intermediary or in other manner. (2) 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 cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the powers of the Special Court in arbitration matters. Section 10 deals with appeal. Section 11 which deals with the discharge of liabilities and is relevant for our purpose, reads as under : "11. 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." Section 13 deals with overriding effect which has relevance for our purpose, reads as under : "13. Act to have overriding effect. The provisions of this Act shall have effect notwithstanding anything incons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elonging 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 by 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 9A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 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 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 overriding 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 prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under : " Statement of Objects and Reasons. (1) In the course of the investigations by the Reserve Bank of India, large scale irregularities and malpractices were noticed in transactions in both the Government and other securities, indulged in by some brokers in collusion with the employees of various banks and financial institutions. The said irregularities and malpractices led to the diversion of funds from banks and financial institutions to the individual accounts of certain brokers. (2) To deal with the situation and in particular to ensure speedy recovery of the huge amount involved, to punish the guilty and restore confidence in and maintain the basic integrity and credibility of the Banks and financial institutions the Special Court (Trial of Offences Relating to 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 custodians for attaching the property of the offenders with a view to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action was consisting of two interconnected legs i.e. ready leg consisting of sale of securities by the brokers and purchase thereof by the banks at market price and the forward leg consisting of sale back of the securities by the banks and purchase thereof by the brokers after a period of 14 days on a fixed date at a price determined on the first date. Their Lordships held that the ready-forward transaction is severable into two parts i.e. the ready leg and the forward leg. Ready leg transaction was not illegal, unlawful or prohibited under section 23 of the Contract Act. Ready leg having been completed prior to the notified date, forward leg which is illegal being hit by the notification, the same has to be ignored. It was further held that once the payment of market price is made the title to the securities stood validly transferred to the banks under Transfer of Property Act and thereby the banks became owners and the ready leg having been performed illegally of the forward leg contained in the agreements cannot affect the transfers which had already taken place. The appellant banks had prior to 6-6-1992 entered into contracts with different brokers for the purchase and sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement 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. [2004] 11 SCC 456 1 . 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 9A 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 [2000] 4 SCC 406. In this case there was ..... 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