Holding

The Special Courts Act, 1992 (with Section 9‑A) overrides the 1993 Recovery of Debts Act, giving the Special Court exclusive jurisdiction over the attached property of a notified person.

Summary

Bank of India appealed against a decision that the Debts Recovery Tribunal lacked jurisdiction over the property of Ketan Parekh, who had been declared a notified person under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992. Parekh's movable and immovable assets were attached by the Custodian under the 1992 Act, and the Bank sought recovery of its dues. The question was whether the Special Court, as per the 1992 Act (including the 1994 amendment of Section 9‑A), had exclusive jurisdiction, overriding the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Supreme Court examined the legislative intent, the overriding clauses, and the chronology of amendments, concluding that the 1992 Act, being a special law and amended later, prevails over the 1993 Act. Consequently, only the Special Court can adjudicate the attached property, and the Debts Recovery Tribunal’s order was invalid. The appeal was dismissed.

Issues considered

The Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, as amended by Section 9‑A (1994), has overriding effect over the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Whether the Special Court has exclusive jurisdiction over property attached under the 1992 Act, precluding the Debts Recovery Tribunal/Appellate Tribunal.
Whether the Custodian under the 1992 Act must be impleaded as a necessary party in proceedings before the Debts Recovery Tribunal.
Whether the status of the defendant as a guarantor affects the applicability of the 1992 Act.

Legislation cited

Code of Civil Procedure, 1908
Recovery of Debts Due to Banks and Financial Institutions Act, 1993s. 17, s. 20, s. 34
Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992s. 11, s. 13, s. 3(3), s. 7, s. 9-A

Subjects

jurisdictionspecial courtsecurities fraudoverriding legislationattachment of propertyrecovery of debtsnotified personnon‑obstante clausestatutory interpretation

Judgment

[2008] 9 S.C.R. 346

;.. \
A BANK OF INDIA
v.
KETAN PAREKH & ORS.
(Civil Appeal No.3652 of 2008)
MAY 16, 2008
B
[A.K. MATHUR AND ALTAMAS KABIR, JJ.]
~

Special Courts (Trial of Offences Relating to Transac- ...
tions in Securities) Act, 1992 - s. 3(3), 7, 9-A and 11 - Juris-
diction of Special Court - Attachment of property of Notified
c Party on 6.10.2001 - Confirmed by Custodian under 1992
Act - Application by Notified Party for impleading Custodian
as necessary party - Dismissed by ORT as also Appellate
Tribunal - However, High Court holding that as property of
Notified Party stood attached by Custodian under 1992 Act,
D the Special Court would have jurisdiction regarding property 411
of Notified party and not Appellate Tribunal - Interference with ,._
- Held: Not called for - Act of 1992 has over-riding effect on
Act of 1993 -Act of 1992 as amended to include s. 9-A in 1994
being a subsequent legislation would prevail over the Act of
E 1993 - s. 9-A of 1992 Act specifically provided that only Spe-
cial Court would have jurisdiction over the property of notified
person attached u/s 3(3) of Act of 1992, pertaining to transac-
tions in securities entered from 1.4.1991 to 6.6.1992 - Recov-
ery of Debts Due to Banks and Financial Institutions Act, 1993.
...
,
F Respondent No.1 was declared as a notified party
on 6.10.2001 and all his movable and immovable proper-
ties stood attached under the Special Courts (Trial of Of-
fences Relating to Transactions in Securities) Act, 1992.
The Custodian confirmed the attachment. Bank filed origi-
G nal application against the respondent No.1. The respon-
dent No.1 filed application for impleading the Custodian
as a party. Respondent No.1 contended that the Custo- ~ \

dian under the 1992 Act had to be joined as necessary
party as the respondent No.1 had been declared as a no-
H 346
BANK OF INDIA v. KETAN PAREKH & 347
ORS.
• -l tified party under the said Act; and thats. 9-A of the 1992 A
Act would be attracted. The Bank contended that the pro-
visions of s. 9A of the Act of 1992 were not attracted as
the respondent No.1 was being sued in his personal ca-
pacity as guarantor and not as a mortgagor or pledger of
the movable or immovable properties. ORT dismissed the B
application. Aggrieved, respondent no. 1 challenged the
"'I order on the ground that the property of the respondent
.... no. 1 stood attached by the Custodian under the Act of
1992, thus, ORT had no jurisdiction. The Appellate Tribu-
nal also dismissed the appeal holding that the provisions c
of the Act of 1992 were not attracted. Meanwhile, in the
application filed by the Bank before the ORT for recovery
of its debts against respondent no. 1, temporary injunc-
tion was granted to disclose the assets. Thereafter, writ
petition was filed challenging the order of the Appellate
D
,JI. Tribunal. The Division Bench of the High Court set aside
J. the order of the Appellate Tribunal. It held that since the
respondent No.1 was declared as a notified party all the
properties stood attached pursuant to s. 3 of the Act of
1992 and considering s. 9A of the said Act, the Special
Court will have jurisdiction to grant a declaration that the E
properties of a notified person stood attached and not
the Debts Recovery Appellate Tribunal. Hence, the present
appeal.
~ Dismissing the appeai, the Court F
~

HELD: 1.1 The analysis of s. s. 3(3), 9-A, 11 and 13 of
the Special Courts (Trial of Offences Relating to Transac-
tions in Securities) A~t, 1992, clearly establishes that once
the property of a no ified person is attached by the Cus-
todian and the same having been notified then the prop- G
erty of the notified person being movable or immovable
t ~ 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 been mentioned in Sec-
tion 11 of the Act of 1992 and lastly that the provisions of H
348 SUPREME COURT REPORTS [2008] 9 S.C.R

A the Act will have the over-riding effect even on Tribunals ;... ,
is clearly and categorically mentioned in Section 13 of the
Act of 1992. Therefore, in the scheme of things the Act
has been given priority over all Acts. In the instant case,
the property of the respondent stood attached under the
B orders of the Special Court on 6.10.2001 when the respon-
dent was declared a notified person under s. 3(3) of the
Act of 1992. [Para 5] [358-8-E]
1.2 The submission that Section 9-A of the Act of 1992
.
came by the amending Act 24of1994 on 25.1.1994 and it
c is specifically provided that after a person is notified un-
der 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 6th June, 1992 shall stand
attached and the Special Court will have the jurisdiction and
D none else; and that this provision having come subse-
quently after the Recovery of Debts Due to Banks and Fi- •
.._
·nancial Institutions Act, 1993, Section 9-A of the Act of 1992
(came into force w.e.f. 25.1.1994) will have the over-riding
effect over the Act of 1993 is justified. [Para 5] [360-E-G]
E 1.3 It is provided ins. 3(3) of the Act of 1992 that the
transactions in securities entered into after 1st day of April,
1991 and on or before 6th June, 1992, the properties per-
taining to these securities shall vest with the Custodian
to be dealt with as directed by the Special Court. There-
F fore, the properties pertaining to these transactions dur- ~
i

ing the aforesaid period, will be subject to the jurisdiction
of the Special Court only. Furthermore, this Act was spe-
cially meant to deal with the fraudulent transactions which
has taken place from 1st of April, 1991 to 6th of June, 1992.
G Therefore, this Act has special purpose to deal with the
scam which has taken place in securities transactions
during this period. The special purpose behind this Act is
>- '
more than apparent from the Statement of Objects and
Reasons which amply clarifies this position. Therefore,
H this Act has a special task before it and that task has to be
BANK OF INDIA v. KETAN PAREKH & 349
~ ..I. ORS.

dealt with in the parameters laid down by this Act. [Para 5 A
& 6] [360-G-H; 361-A-C; 362-A]
1.4 The Recovery of Debts Due to Banks and Finan-
cial Institutions Act, 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 B
~ pertaining to recoveries of Banks and Financial lnstitu-
tions spreading over the Civil Courts and this has resulted
into great strain on the Banks and Financial Institutions.
Therefore, in order to meet that contingency this Act was
promulgated. Therefore, the purpose of the Act of 1993 c
was to expedite the recovery of the debts due to the banks
and financial institutions. This Act also contains the over-
riding effect. Section 34 of the Act of 1993 clearly says
> that this Act will have the over-riding effect for recovery
~ . of debts due to the Banks and Financial Institutions. D
[Paras 5 and 6] [362-A,B,D, 360-C,D]
1.5 Incidentally, the purpose of both the Acts has
separate area of operation. The subject matter appears
to be the same under both the Acts. Both the two Acts i.e.
the Act of 1992 and the Act of 1993 start with the non-ob- E
stante clause. Section 34 of the Act of 1993 starts with
non-obstante clause, likewise Section 9-A of the Act of
~ 1992. But incidentally, in the instant case, Section 9-A 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 F
amended to include Section 9-A in 1994 being subsequent
legislation will prevail and not the provisions of the Act of
1993. Section 9-A which has come subsequently in the
Act of 1992 i.e. on 25.1.1994 deals with the over-riding ef-
feet on the Act of 1993. Therefore, the Act of 1992 is a sub- G
i ~ sequent legislation which will have the over-riding 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 H
350 SUPREME COURT REPORTS [2008] 9 S.C.R.

A special enactment was made and in case the dominant
purpose is covered by that contingencies, then notwith-
standing that the Act might have come at a later point of
time still the intention can be ascertained by looking to
the objects and reasons. [Paras 6 and 8] [362-D, 365-F,
B 366-A]
1.6 In the instant case, both the Acts can be read har- >
moniously. Whatever dues are due to the Banks or the
Financial Institutions can be claimed u/s.11 (2) of the Act
of 1992 which specially empowers that the liabilities can
C be adjusted out of the securities of the person notified in
the manner provided u/s.11 (2)(b). Therefore, the Bank can
certainly make an application before the Special Court u/
s. 11 (2)(b) for discharge of their liabilities against these-
curities of the notified person. The view taken by the High "-
D Court is justified and there is no ground to interfere with -1..
the same. [Para 9] [366-C,D,E]
B. 0 I. Finance Ltd. v. Custodian & Ors. (1997) 10 SCC
488; Tax Recovery Officer, Central Range-I v. Custodian &
Ors. (2007) 7 SCC 461; Ltfe Insurance Corporation of India v.
E D.J.Bahadur & Ors. (1981) 1 SCC 315; L. S. Synthetics Ltd. v
Fairgrowth Financial Services Ltd. & Anr (2004)11 SCC 456;
Allahabad Bank v. Canara Bank & Anr. (2000) 4 SCC 406 -
referred to.
F CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3652
of 2008
From the final Judgment and Order dated 17.1.2006 of
the High Court of Judicature at Bombay in Writ Petition No. 6162
of 2005
G
KN. Bhatt. Gopal Jain. Jai Singh Brar, Abeer KumarManu
Aggarwal and Manik Karanjawala for the Appellant.
Kamini Jaiswal, Subramonium Prasad, S Udaya Kumar
Sagar. Bina Madhavan and Hema! K. Sheth (for M/s. Lawyer's
H Knit & Co.) for the Respondents.
BANK OF INDIA v. KETAN PAREKH & 351
ORS. [A.K. MATHUR, J.]
t .I.
The Judgment of the Court was delivered by A

A.K. MATHUR, J. 1. 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 prop- B
' erty 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 declara-
tion that the properties of a notified person stand charged and c
the certificate against such properties cannot be executed 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.
D
_..
3. Brief facts which are necessary for disposal of this,ap-
peal are that the respondent No.1 was declared as a notified
party on 6.10.2001. Pursuant to the said notification, consider-
ing section 3(3) of the Act of 1992, all properties, movable and
immovable stood attached simulta.1e::ously. The Custodian con- E
firmed the attachment on 1.11.200·1. The respondent No.2 -
Oriental Bank of Commerce (hereir.after to be referred to as
'the Bank) filed an a~plication 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 F
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 Tribu-
nal). That appeal came to be rejected by order dated
G
19.8.2005.Against the order passed by the Appellate Tribunal,
~ ~
a writ petition was filed before the High Court. It was contended
by the respondent No.1 before the Debts Recovery Tribunal that
the custodian under the Act of 1992 had to be joined as neces-
sary party as the respondent No.1 had been declared as a no-
H
352 SUPREME COURT REPORTS [2008] 9 S.C.R

4 •
A tified party under the said Act. This was opposed by the Bank
on the ground that the defendant No.2 has been sued merely as
a guarantor and therefore, the provisions of the Act of 1992 were
not attracted. It was submitted that Section 9A of the Act of 1992
would be attracted. This was opposed by the Bank on the ground
B that the provisions of Section 9A of the Act of 1992 were not
attracted as the respondent No.1 was being sued in his per-
sonal capacity as guarantor and not as a mortgagor or pledger )>.

of the movable or immovable properties. The D.R.T accepted
the objection and rejected the petition of respondent No.1. Ag-
c grieved against this order the matter was taken up before the
Appellate Tribunal on the basis that the property of the respon-
dent No.1 stood attached by the Custodian under the Act of
1992. Therefore, the Debts Recovery Tribunal had no jurisdic-
tion to deal with the matter. The Appellate Tribunal held that the
provisions of the Act of 1992 are not attracted and consequently,
D
dismissed the appeal. Aggrieved against this order the present
writ petition was filed before the Bombay High Court by respon-
_. ""
dent 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
E 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 Ap- .., 1
F pellate 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
G
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 passed by the Debts Recovery Tribunal will pre-
vail over the property attached under the provisions of the Act of
1992. Therefore, the short question for our consideration is
H
BANK OF INDIA v. KETAN PAREKH & 353
ORS. [A.K. MATHUR, J.]
.. ).

whether the Act of 1992 will prevail or the Act of 1993. In order A
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 8
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.
c
(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 7th 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,
D

movable or immovable, or both, belonging to any person
notified under that sub-section shall stand attached E
simultaneously with the issue of the notification.
(4) The property attached under sub-section (3) shall be
dealt with by the Custodian in such manner as the Special
'
~ Court may direct.
F
(5) The Custodian may take assistance of any person
while exercising his powers or for discharging his duties
under this section and Sec.4."
Section 4 deals with the contracts entered into fraudulently
may be cancelled. Section 5 deals with the establishment of G
;. ~ Special Court. Section 6 deals with the cognizance of cases by
Special Court. Section 7 deals with the jurisdiction of Special
Court which is relevant for our purpose and it reads as under:
" 7. Jurisdiction of Special Court.- Notwithstanding
H
354 SUPREME COURT REPORTS (2008] 9 S.C.R.
....
A anything contained in any other law, any prosecution in
respect of any offence referred to in sub-section (2) of
Sec.3 shall be instituted only in the Special Court and any
prosecution in respect of such offence pending in any
Court shall stand transferred to the Special Court."
B Section 9 lays down the procedure and powers of Special
Court. Section 9-A deals with the jurisdiction, powers, authority )>.

and procedure of Special Court in civil matters. Section 9-A
came into force subsequently by amending Act 24 of 1994 with
effect from 251h January, 1994 which reads as under:
c
"9-A. 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 .II.-
D
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-
E section (3) of Sec.3;

(b) arising out of transactions in securities entered into
after the 1st day of April, 1991, and on or before the
5th day of June, 1992. In which a person is notified
under sub-section (2) of Sec.3 is involved as a party, ~

F 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
G
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
H
BANK OF INDIA v. KETAN PAREKH & 355
~ ~
ORS. [A.K. MATHUR, J.]

Special Court and the Special Court may, on receipt of the A
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. B
(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 c
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,
-+ D
1908 ( 5 of 1908), but shall be guided by the principles of
natural justice, and subject to the other provisions of this
Act and or any rules, the Special Court shall have power
to regulate its own procedure.
(5) Without prejudice to the other powers conferred under E
this Act, the Special Court shall have, for the purposes of
·discharging its functions under this section, the same
powers as are vested in Civil Court under the Code of
... Civil Procedure, 1908 (5 of 1908, while trying a suit in
~

respect of the following matters, namely: F
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits; G
r ..-
(d) subject to the provisions of Secs.123 and 124 of the
Indian Evidence Act, 1872, requisitioning any public
record or document or copy of such record or
document from any office;
H
356 SUPREME COURT REPORTS [2008] 9 S.C.R
,.( 1

A (e) issuing commissions for the examination of
witnesses or documents;

(0 reviewing its decisions;

(g) dismissing a case for default or deciding it ex parte;
B (h) setting aside any order of dismissal of any case for
default or any order passed by it ex parte; and •
(i) any other matter which may be prescribed by the
Central Government under sub-section (1) of Sec.14."
c Section 9-8 deals with 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
D .....
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 >
E
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 Sec. 3 to the Central Government or any State
F Government or any local autority.
(b) all amounts due from the person so notified by the
Custodian to any bank or financial institution or mutual
fund; and
G (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:
H " 13. Act to have overriding effect.- The provisions of
BANK OF INDIA v. KETAN PAREKH & 357
ORS. [A.K. MATHUR, J.]

' ). this Act shall have effect notwithstanding anything A
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 Recovery of Debts Dye to Banks and Financial lnsti- B
tutions Act, 1993 came into effect in 1993. The purpose of this
Act was recovery of debts due to Banks or financial institutions
""" or consortium of Banks less than ten lakhs rupees or such other
amount being not less than one lakh rupees as the Central Gov-
ernment may by notification specify. Under this Act Tribunals c
were constituted. Section 17 lays down the jurisdiction that a
Tribunal shall exercise on and from the appointed day, the pow-
ers and authority to entertain and decide application from the
Banks and financial institutions for recovery of debts due to such
..... banks and financial institutions. Appeal is provided against that D
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 over-riding effect.- (1) Save as otherwise
provided in sub-section (2), the provisions of this Act shall E
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 any law other than
'
,. this Act.
F
~
(2) The provisions of this Act or the rules made thereunder
shall be in addition to, and not in derogation of, the Industrial
Finance Corporation Act, 1948 (15 of 1948), the State
Financial Corporation Act, 1951 (63 of 1951 ), the Unit
Trust of India Act, 1963 ( 52 of 1963),The Industrial
G
Reconstruction Bank of India Act, 1984 (62 of 1984), the
Sick Industrial Companies (Special Provisions) Act, 1985
;. ... and the Small Industries Development Bank of India Act,
1989."
5. The admitted facts are that the respondent No.1- Ketan H
358 SUPREME COURT REPORTS [2008] 9 S.C.R.

A Parekh was a notified party on 6.10.2001. Therefore, on J. 1
6.10.2001 all his movable and immovable properties stood at-
tached. Under the Act of 1992, under Section 3(3), the Custo-
dian may, on being satisfied on information received that any
person has been involved in any offence relating to transac-
8 tions in securities after the 1st day of April, 1991 and on and
before 71h June, 1992, notify the name of such person in the
official gazette and from the date when such party is notified all
properties, movable or immovable or both belonging to any >-
person notified shall stand attached simultaneously with the is-
C sue of the notification, notwithstanding anything contained in the
Code and any other l<Jw for the time being in force. After attach-
ing that property the Custodian will have the right to deal with
such property in such manner as directed the Special Court.
Therefore, an analysis of this section means that the moment a
person is notified, his property stands attached and the Custo-
0
dian is in authority of that property and he shall deal with the •
property in the manner as directed by the Special Court not- ...,.
withstanding anything contained in the Code ( Code means the
Civil Procedure Code). Therefore, the property of the respon-
dent herein stood attached under the orders of the Special Court
E on 6.10.2001 when the respondent was declared a notified per-
son under sub-section (3) of Section 3 of the Act of 1992. Sec-
tion 9-A 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
F the cases pending immediately before such commencement ~ ~
by any Civil Court in relation to any manner or claim relating to
the property standing attached under sub-section (3) of Sec-
tion 3. Sub-section (2) of Section 9-A says that every suit, claim
or other legal proceeding (other than an appeal) pending be-
G fore 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 pro- ... ~
ceeding, the cause of action whereon it is based is such that it
would have been, if it had arisen after such commencement,
H within the jurisdiction of the Special Court under sub-sect:--,
BANK OF !NOIA v. KETAN PAREKH & 359
ORS. [AK. MATHUR, J.]
. ~
(1 ), shall stand transferred on such commencement of the Spe- A
cial 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 B
Court may deem fit. Sub-section (3) further says that no Court
other than the Special Court shall have, or be entitled to exer-
cise any jurisdiction, power or authority in relation to any matte~
or claim referred to in sub-section (1 ). Sub-section (4) further
says that the Special Court shall not be bound by the procedure c
laid down by the Code of Civil Procedure. But it shall be guided
by the principles of natural justice and subject to the other provi-
sions of this Act and the Rules framed thereunder. Sub-section
(5) futher says that the Special Court shall have all powers as a
Civil Court under the Code of Civil Procedure for trying such
D
suits. Section 11 deals with the discharge of liabilities. It also
-+ starts with a non-obstante clause and says that notwithstanding
anything contained in the Code or any other law for the time
being in force, the Special Court shall direct the Custodian for
,. disposal of the property under attachment and liabilities shall
be discharged in the order i.e. (a) all revenues, taxes, cesses E
and rates due from the persons notified by the Custodian under
sub-section (2) of Sec. 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 any other liability as may be speci- F
fied by the Special Court. Therefore, by virtue of section 11, the
first priority has been given to 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 G
that this Act will have over-riding effect notwithstanding anything
,. .-f
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 pro- H

.
360 SUPREME COURT REPORTS [2008] 9 S.C.R

A visions 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 Spe-
cial Court and the manner in which properties for discharge of
B 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 over-riding 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
C priority over all Acts. The Act of 1993 came for recovery of debts
due to the Banks and Financial Institutions. This Act also con-
tains the over-riding effect Section 34 of the Act of 1993 clearly
says that this Act will have the over-riding 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 leg-
0
islation 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 over-riding effect over the Act of 1992. As against this,
learned senior counsel for the respondent No.1, contended that
E Section 9-A 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 prop-
erty pertaining to the transactions in securities entered after the
1s1 day of April, 1991 and on and before 5th June, 1992 shall
F 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 of 1993, Section 9-A of the Act of 1992 (came into force
w.e.f. 25.1.1994) will have the over-riding effect over the Act of
G 1993. The contention of learned senior counsel for respondent
No.1 appears to be justified. Apart from that it is provided in
sub-section (3) of Section 3 that the transactions in securities
entered into after 1st day of April, 1991 and on or before 51h
June, 1992, the properties pertaining to these securities shall
H vest with the Custodian to be dealt with as directed by the Spe- ·
BANK OF INDIA v. KETAN PAREKH & 361
ORS. [A.K. MATHUR, J.]
., ..I.

cial Court. Therefore, the properties pertaining to these trans- A
actions during the aforesaid period, will be subject to the juris-
diction of the Special Court only. There is another reason to
come to this conclusion that in fact this Act was specially meant
to deal with the fraudulent transactions which has taken place
from 1st of April, 1991 to 5th of June, 1992. Therefore, this Act B
has special purpose to deal with the scam which has taken
place in securities transactions during this period. The special
~
purpose behind this Act is more than apparent from the State-
ment of Objects and Reasons and the Statement of Objects
and Reasons amply clarifies this position. The Statement of c
Objects and Reasons 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, D
.+ 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. E
(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 F
Transactions in Securities) Ordinance, 1992, was
promulgated on the 5th June, 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 G
attached. It also provides for appointment of one or more
/I ~
custodians for attaching the property of the offenders with
a view to prevent diversion of such properties by the
offenders.
H

.....
362 SUPREME COURT REPORTS [2008] 9 S.C.R.
~ .,
A 6. Therefore, this Act has a special task before it and that
task has to be dealt with in the parameters 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 recover-
B ies of Banks and Financial Institutions spreading over the Civil
Courts and this has resulted into great strain on the Banks and
Financial Institutions. Therefore, in order to meet that contin- )

gency this Act was promulgated. The preamble in this Act clearly
reads as under :
c " 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
0
the recovery of the debts due to the banks and financial institu- +
tions. 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
E issued to disclose the assets and during the pendency of these
Original Applications the jurisdiction of the Tribunal was chal-
lenged. Therefore, the issue came up specially before the High
Court. The effect of Act of 1992 has special purpose and inci- ..,
dentally the subject matter appears to be the same under both ~

F the Acts but the Act of 1992 clearly lays down the specific pur-
pose i.e. the scam which has taken place relating to the trans-
actions in securities from 1.4.1991 to 6.6.1992 to deal with such
scam only. Section 9-Awhich has come subsequently in the Act
of 1992 i.e. on 25.1.1994 deals with the over-riding effect on
G the Act of 1993. Therefore, the Act of 1992 has the over-riding
effect over the Act of 1993. 't'
"·
7. In this connection, our attention was invited to a deci-
sion of this Court in 8.0./. Finance Ltd. v. Custodian & Ors. [
(1997) 10 sec 488). In this case, notification was issued un-
H
BANK OF INDIA v. KETAN PAREKH & 363
ORS. [A.K. MATHUR, J.]
-
...... .>.
der the Securities Contracts (Regulation) Act, 1956 prohibiting A
all contracts for sale or purchase of securities other than such
spot delivery contract or contract for cash or hand delivery or
special delivery in any securities as permissible under the Act.
The transaction was consisting of two interconnected legs i.e.
ready leg consisting of sale of securities by the brokers and B
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 Lord-
ships held that the ready- forward transaction is severable into c
two parts i.e. the ready leg and theforward leg. Ready leg trans-
action 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
D
~
once the payment of market price is made the title to the secu-
rities stood validly transferred to the banks under Transfer of
Property Act and thereby the banks became owners anCl 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 E
6.6.1992 entered into contracts with different brokers for the
purchase and sale of certain securities which were not listed on
.. )"
any stock exchange. Therefore, such transactions were com-
pleted after the payment of agreed price and delivery of securi-
F
ties were received 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 in- G
vited to another decision of this Court in Tax Recovery Officer,
~"" -1
Central Range-I v. Custodian & Ors. [(2007) 7 SCC 461]. In
that case it was held that that the property of any person notified
under section 3(2) & (3) of the Act can be attached and the
jurisdiction of the Special Court is confined to that property of H
364 SUPREME COURT REPORTS [2008] 9 S.C.R.

.... '
'
A 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 Com-
pany K and its subsidiaries and it was in execution of the de-
cree passed in the favour of Company D, the property of Com-
B pany K was put to auction. Thus, the Special Court could not
have entertained the application moved by the Income-Tax De-
partment for realization of its income tax dues from the Com-
pany Kand therefore, it was held that the application moved by
the Income Tax Department was rightly rejected by the Special
c Court. Our attention was invited to a decision of this Court in
Life Insurance Corporation of India v. D.J.Bahadur & Ors. [
(1981) 1SCC315]. In this case, the question was whether the
provisions of the Industrial Disputes Act will prevail or the provi-
sions of the Life Insurance (Alteration of Remuneration and other
Terms and Conditions of Service of Employees) Order, 1957 '
D
framed under the Life Insurance Corporation Act, 1956. In that
context, their Lordships after dealing with the provisions of Life
.
Insurance Corporation Act and the Rules framed thereunder held
that the case will be covered by the Industrial Disputes Act. It
was observed per Krishna Iyer, J as follows:
E
" In determining whether a statute is a special or a general
one, the focus must be on the principal subject-matter
plus the particular perspective. For certain purposes, an
Act may be general and for certain other purpose it may ,...
be special. Vis-a-vis ' industrial vists' at the termination of ...
F
the settlement as between the workmen and the
Corporation the ID Act is a special legislation and the UC
Act a general legislation. So the ID Act, being a special
law, will prevail over the UC Act which is a general law."
G Pathak, J. concurring with Krishna Iyer, J observed as fol-
lows"
't" "·
" 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
H
BANK OF INDIA v. KETAN PAREKH & 365
ORS. [A.K. MATHUR, J.]
.I.
comparable in this regard but, if anything the observations A
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
LS.Synthetics Ltd. v. Fairgrowth Financial Services Ltd. & Anr. B
[ (2004)11SCC456]. In this case it was held that the contention
"'I 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 9-A of the Act must
be read down was not sustainable. Our attention was also in- c
vited to a decision of this Court in Allahabad Bank v. Canara
Bank & Anr. [(2000) 4 sec 406]. In this case there was a ques-
tion of jurisdiction whether the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993 will prevail or the provisions
of the Companies Act, 1956. In that context their Lordships ob- D
served as follows:
"Alternatively, the Companies Act, 1956 and the ROB 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 E
special Act giving it overriding effect, can also be applied.
Such a provision is there in the ROB Act, namely Section
34. Therefore, in view of Section 34 of the ROB Act, the
~
~
said Act overrides the Companies Act, to the extent there
is anything inconsistent between the Acts." F

8. In the present case, both the two Acts i.e. the Act of
1992 and the Act of 1993 start with the the non-obstante clause.
Section 34 of the Act of 1993 starts with non-obstante clause,
likewise Section 9-A of the Act of 1992. But incidentally, in this
G
case Section 9-A came subsequently, i.e. it came on 25.1.1994.
- -1 Therefore, it is a subsequent legislation which will have the over-
riding 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
H
366 SUPREME COURT REPORTS [2008] 9 S.C.R.

A subject and the domioant purpose for which the special enact-
ment was made and in case the dominant purpose is covered
by that contingencies, then notwithstanding that the Act might
have come at a later point of time still the intention can be as-
certained by looking to the objects and reasons. However, so
B far as the present case is concerned, it is more than clear that
Section 9-A 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 9-A in 1994 being subse-
quent legislation will prevail and not the provisions of the Act of
c 1993.
9. Apart from this, in the present case both the Acts can be
read harmoniously. Whatever dues are due to the Banks or the
Financial Institutions can be claimed under Section 11 (2) of
the Act of 1992 which specially empowers that the liabilities
D can be adjusted out of the securities of the person notified in
the manner provided under Section 11(2)(b). Therefore, in the
present case, the Bank can certainly make an application be-
fore the Special Court under Section 11 (2)(b) of the Act of 1992
for discharge of their liabilities against the securities of the no-
E tified person.
10. As a result of our above discussion, the view taken by
the Division Bench of the High Court of Bombay appears to be

F
justified and there is no ground to interfere with the same. Con-
sequently, the appeal is dismissed with no order as to costs.
N.J. Appeal dismissed
-