STANDARD CHARTERED BANK Vs. CUSTODIAN

JUDGEMENT

(1.) The Reserve Bank of India noticed large-scale irregularities and mal practices 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 mal practices had led to the diversion of fund from banks and financial institutions to the individual accounts of certain brokers.

(2.) With a view to deal with this situation and in particular to ensure speedy recovery of the huge amounts involved, the Special Court (Trial of Offences relating to transactions in Securities) Ordinance, 1992 was promulgated on 6th June, 1992. The said Ordinance has now been replaced by an Act known as Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as 'the Act'). Section 3 of the Act enables the Central Government to appoint one or more Custodian for the purposes of the Act. The Custodian has power under sub-section (2) of Section 3 to notify the name of any person in the official gazette, who has been involved in any offence relating to transactions in securities after the first day of April, 1991 and on/or before 6th June, 1992. The effect of a person being so notified was that according to sub-section (3) of Section 3, notwithstanding anything contained in the Code of Criminal Procedure or any other law for the time being in force, any property, movable or immovable or both, belonging to any person notified under that sub-section stands attached simultaneously with the issue of the notification. The property so attached is to be dealt with by the Custodian in such manner as the Special Court may direct.

(3.) The Special Court is established under Section 5 of the Act to be presided over by a sitting Judge of a High Court. The Special Court is to take cognizance of or to try such cases as are instituted before it or transferred to it. It is this Court which, under Section 9-A, has the jurisdiction to exercise such power and authority which was exercisable before the commencement of the Act by a Civil Court in relation to any property standing attached under sub-section (3) of Section 3 or in relation to any matter or claim arising out of transactions in securities entered into after first day of April, 1991 and on/or before 6th day of June, 1992, in which a person notified under Section 3(2) is involved as a party, a broker, intermediary or in any other manner.