TAX RECOVERY OFFICER, CENTRAL RANGE-1 versus CUSTODIAN APPOINTED UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTION IN SECURITIES) ACT, 1992

Citation: [2007] 8 S.C.R. 1051 · Decided: 17-08-2007 · Supreme Court of India · Bench: G.P. MATHUR · Disposal: Dismissed

Judgment (excerpt)

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TAX RECOVERY OFFICER, CENTRAL RANGE-1 
v. 
CUSTODIAN APPOINTED UNDER THE SPECIAL COURT (TRIAL OF 
OFFENCES RELATING TO TRANSACTION IN SECURITIES) ACT, 1992 
AND ORS. 
AUGUST 17, 2007 
[G.P. MA THUR AND P.K. BALASUBRAMANY AN, JJ.] 
A 
B 
Special Courts (Trial of Offences relating to Transactions in Securities) C 
Act, 1992-ss. 3, 9A, 11 & 13-Assets of notified party attached-Suit for 
recovery of dues of notified party from a third party, decreed-In execution 
proceedings, property of third party put to auction sale-Intervention 
application, filed by Income Tax Department, seeking recovery of its dues 
from said third party on priority basis before distribution of sale proceeds 
to other creditors-Maintainability of-Held: Not maintainable-Provisions D 
of the 1992 Act, wherever applicable, prevail over provisions of Income Tax 
Act-In view of s.9A of the 1992 Act, jurisdiction of Special Court is in 
relation to any claim relating to any property attached under the 1992 Act-
Thus, Special Court could not have entertained application filed by Income 
Tax Department under s.226(4) of the Income Tax Act for realization of its E 
dues-Income Tax Act, 1961-s.226(4). 
Custodian appointed under the Special Courts (Trial of Offences 
relating to Transactions in Securities) Act, 1992 published the name of Mis. 
Dhanraj Mills in gazette as a notified person. All the assets of Mis. Dhanraj 
Mills stood attached to the Special Court. Mis. Killick Nixon and its group F 
companies owed substantial amount of money to Mis. Dhanraj Mills and Mis • 
Killick Nixon also stood as guarantor for repayment of the money. The 
Custodian on behalf of Mis. Dhanraj Mills filed suit for recovery of its dues 
against Mis. Killick Nixon and its group companies. The suit was decreed by 
the Special Court. The Custodian then filed Execution Application before the 
Special Court for recovery of the decretal amount on behalf of Mis. Dhanraj G 
Mills. The Special Court appointed a receiver for taking charge of certain 
assets and properties of Mis. Killick Nixon and the other group companies 
which were sufficient to satisfy the entire decretal amount. Subsequent thereto 
the properties of Mis. Killick Nixon were put to auction and money was 
1051 
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1052 
SUPREME COURT REPORTS 
[2007) 8 S.C.R. 
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A realized. A certified demand against Mis. Killick Nixon was already pending 
for recovery by the Tax Recovery Officer. The Tax Recovery Officer filed 
Intervention Application before the Special Court with a prayer that the 
Custodian be directed to consider the claim of recovery of arrears of income 
tax from Mis. Killick Nixon on a priority basis before distribution of sale 
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· proceeds to any other creditor and that the Custodian be restrained from 
distributing the sale proceeds without first satisfying the claim of the income 
tax department The Intervention Application was however summarily rejected 
by the Special Court as not maintainable. 
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In appeals before this Court under Section IO of the Special Courts 
c Act it was contended by the Appellent that if money is realized by sale of the 
properties of the judgment-debtor in execution of the decrees obtained by the 
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decree-holders, until the money is actually paid over to the decree-holders it 
is the property of the judgment-debtor and the Income Tax Department will 
have a priority to recover its dues from the judgment-debtor out of the money 
so realized; that the Intervention Applications moved by the Tax Recovery 
D Officer should, therefore, have been entertained by the Special Court as the 
~ncome Tax Department had a certified demand against Mis. Killick Nixon 
and the money realized by auction of its property was still lying with the 
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Special Court and had not been distributed to the Custodian or anybody else. 
It was contended that the summary rejection of the Intervention Applications 
E by the Special Court was wholly illegal. 
Dismissing the appeals, the Court 
HELD: 1.1. The language employed in Section 13 of the Special Courts 
Act is clear and explicit when it says that the provisions of the Act shall have 
F effect notwithstanding anything. inconsistent therewith contained in any other 
law for the time being in force. Section 32 of the Sick Industrial Companies 
(Special Provisions) Act, l 985 also contains a similar clause that the 
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provisions of the said Act and of any rules or schemes made thereunder shall 
have effect notwit

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