Case Note & Summary
The petitioner, Ketan Parekh, was declared a notified party on 6.10.2001 under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992. Consequently, all his movable and immovable properties stood attached simultaneously under Section 3(3) of that Act, with the Custodian confirming the attachment on 1.11.2001. Subsequently, the Oriental Bank of Commerce (Respondent No.1) filed an Original Application No.233 of 2002 before the Debt Recovery Tribunal (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, seeking recovery of dues from the petitioner. The DRT issued a certificate in favor of the bank, and the bank sought to execute it by selling the petitioner's attached properties. The petitioner challenged this before the Bombay High Court, arguing that the properties attached under the Special Courts Act could not be sold without the Custodian's permission. The court framed the issue as whether property of a notified person under the Special Courts Act can be sold in execution of a certificate under the Debt Recovery Act. After hearing counsel for both sides, the court held that the attachment under the Special Courts Act takes precedence over any subsequent execution proceedings. The Debt Recovery Tribunal cannot sell the attached property without the consent of the Custodian appointed under the Special Courts Act. The court allowed the petition, setting aside the DRT's order permitting sale, and directed that the bank must seek the Custodian's permission before proceeding with execution. The judgment emphasizes the paramountcy of the Special Courts Act in preserving assets of notified persons for the purpose of trial and restitution.
Headnote
A) Special Courts Act - Attachment of Property - Priority over Debt Recovery - Section 3(3) of Special Courts Act, 1992 - Property of notified person stands attached simultaneously with notification - Custodian confirmed attachment on 1.11.2001 - Debt Recovery Tribunal cannot sell such property without Custodian's permission - Held that attachment under Special Courts Act prevails over execution under Debt Recovery Act (Paras 2-4).
Issue of Consideration
Can the property of a person notified under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 be sold in execution of a certificate obtained under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993?
Final Decision
The court allowed the petition, holding that the property of a notified person under the Special Courts Act cannot be sold in execution of a certificate under the Debt Recovery Act without the permission of the Custodian. The order of the Debt Recovery Tribunal permitting sale was set aside.
Law Points
- Attachment under Special Courts Act
- 1992 takes precedence over execution under Recovery of Debts Due to Banks and Financial Institutions Act
- 1993
- Custodian's consent required for sale of attached property
Case Details
2006 LawText (BOM) (01) 9
Writ Petition No. 6162 of 2005
F.I. Rebello, Mrs. R.S. Dalvi
Mr. V.R. Dhond with Mr. R. Agarwal, N. Dhruva, P. Shinde and Ms. Archana Panchal i/by M/s. M. Dhruva & Co. for Petitioner; Ms. Neeta Rajda with Mr. Shailesh Rajda i/by M/s. D.S.R. Associates for Respondent No.1; Mr. Satish Shetye with Ms. Swati Deshpande i/by M/s. M.S. Bodhandwala & Co. for Intervenor Bank of India
Oriental Bank of Commerce, Panther Investrade Limited, Mr. Kiritkumar Parekh, Mividha Investment Pvt. Ltd., Mascon Global Limited
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Nature of Litigation
Writ petition challenging the sale of attached property of a notified person under the Special Courts Act in execution of a certificate under the Debt Recovery Act.
Remedy Sought
Petitioner sought to prevent the sale of his attached properties by the Debt Recovery Tribunal without the Custodian's permission.
Filing Reason
The petitioner was declared a notified party under the Special Courts Act, and his properties were attached. The bank obtained a certificate from the Debt Recovery Tribunal and sought to sell the attached properties.
Previous Decisions
The Debt Recovery Tribunal issued a certificate in favor of the bank and permitted execution sale of the petitioner's properties.
Issues
Whether property of a notified person under the Special Courts Act can be sold in execution of a certificate under the Debt Recovery Act without the Custodian's consent.
Submissions/Arguments
Petitioner argued that the attachment under the Special Courts Act takes precedence and the Custodian's permission is required for sale.
Respondent bank argued that the Debt Recovery Act allows execution of its certificate against the debtor's properties.
Ratio Decidendi
The attachment under Section 3(3) of the Special Courts Act, 1992, which attaches all properties of a notified person simultaneously with the notification, takes precedence over execution proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Debt Recovery Tribunal cannot sell such attached property without the consent of the Custodian appointed under the Special Courts Act.
Judgment Excerpts
Can the property of the person notified under the Special Courts (Trial of offences Relating to Transactions in Securities) Act, 1992 be sold in execution of the certificate obtained under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993?
The Petitioner was declared as a notified party on 6.10.2001. Pursuant to the said notification, considering Section 3(3) of the Special Courts Act, all properties, movable and immovable stand attached simultaneously.
Procedural History
The petitioner was notified under the Special Courts Act on 6.10.2001, and his properties were attached by the Custodian on 1.11.2001. The bank filed Original Application No.233 of 2002 before the Debt Recovery Tribunal, which issued a certificate. The bank sought to execute the certificate by selling the attached properties. The petitioner filed Writ Petition No.6162 of 2005 before the Bombay High Court challenging the sale.
Acts & Sections
- Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992: Section 3(3)
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
