Case Note & Summary
The appeals arose from orders of the Special Court constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, dismissing a petition by the appellant, a notified person under Section 3(2) of the Act. The appellant had been notified on 2 July 1992 and subsequently appointed as an advisor by Killick Nixon Ltd. with effect from 8 October 1994, entitled to consultancy fees of Rs.5,000 per month. When the appellant sought to open a new current account with Dena Bank, the bank referred the matter to the Custodian, prompting the appellant to file a petition in the Special Court on 23 November 1995 seeking a declaration that his post-notification employment income was not liable to attachment and permission to operate a bank account. The Special Court proceeded on the basis that the appellant was genuinely seeking release of income earned from services, but refused relief, interpreting Section 3(3) of the Act as attaching all present and future property of a notified person, including any income, gift, or inheritance received after notification, to prevent siphoning of undisclosed assets. The appellant appealed to the Supreme Court, contending inter alia that Section 3(3) attached only property having a nexus to transactions in securities during the specified period, though the Court found it unnecessary to decide that argument. The Supreme Court examined the statutory scheme, particularly Sections 3, 4, 9A, 11, and 13, and held that the words 'on and from the date of notification' in Section 3(3) indicated the point of time when attachment took effect simultaneously with the notification, and did not extend to property acquired later. The Court reasoned that if the legislature intended to attach future property, it would have said so expressly and provided for subsistence allowance. A wide interpretation would render the provision unconstitutional by depriving the notified person of the means of livelihood. The Court clarified that income or usufruct of already attached property, such as dividends, bonus, and rights shares on shares, would also remain attached, but income generated by the notified person's own labour after notification fell outside Section 3(3). Accordingly, the Court set aside the orders under appeal, allowed the petition to the extent that the appellant's personal labour income was not subject to attachment, and permitted the appellant to open a bank account solely for depositing such income, with the Custodian entitled to inspect the account and take action if other monies were deposited. The appellant was allowed to draw arrears of remuneration, and no order as to costs was made.
Headnote
A) Special Court Act - Attachment of Property - Section 3(3) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 - On and from date of notification, only property belonging to notified person as on that date stands attached; future acquisitions are not automatically attached absent clear legislative expression - Court interpreted the provision narrowly to avoid rendering it unconstitutional and to prevent deprivation of livelihood - Held that no separate notification or order for attachment is necessary, but attachment is limited to property owned at notification date. B) Constitutional Law - Right to Livelihood - Purposive Interpretation - Wide interpretation of Section 3(3) to attach all future property would reduce notified person to beggary and be perilously close to unconstitutionality - Court preserved constitutionality by reading provision to attach only property existing at notification date, while noting income or usufruct of attached property remains attached - Held that income generated by personal labour after notification falls outside attachment. C) Special Court Act - Income from Personal Labour - Section 3(3) of Special Court Act - Consultancy fees earned by notified person after notification as advisor are not attached - However, income or usufruct of attached property (e.g., dividends, bonus, rights shares) remains attached - Court directed that appellant may open bank account for depositing only such personal income and Custodian may inspect and act if other monies deposited - Held that appellant entitled to draw arrears of remuneration.
Issue of Consideration
Whether Section 3(3) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 attaches only property belonging to a notified person as on the date of notification or also all property acquired after such date, including income earned by personal labour; and whether the appellant was entitled to open and operate a new bank account for such income.
Final Decision
Appeals allowed; judgment and orders under appeal set aside; petition filed by appellant in Special Court allowed to the extent that income from personal labour earned after notification is not subject to attachment under Section 3(3); appellant entitled to open a bank account for depositing such income alone; Custodian entitled to inspect the account and take appropriate action if other monies are deposited; appellant may draw arrears of remuneration; no order as to costs.
Law Points
- Section 3(3) attaches only property belonging to notified person on date of notification
- future income from personal labour is not attached
- income or usufruct of attached property remains attached
- purposive interpretation must preserve constitutionality
- Custodian may inspect bank account opened for personal income
- no separate attachment order needed
- wide interpretation would deprive notified person of livelihood and be unconstitutional.
