TEJKUMAR BALAKRISHNA RUIA Vs. A K MENON

JUDGEMENT

(1.) These are appeals against the judgment and orders of the Special Court constituted under the provisions of The Special Court (Trial of Offences Relating to Transactions In Securities) Act, 1992, ("the Act") and they relate to the sweep of Section 3(3) thereof. The principal judgment and order gave the appellant liberty to file an application for a subsistence allowance. When the appellant declined to avail of the liberty the final order was passed.

(2.) The appellant became a notified person under the provisions of Section 3(2) of the Act on 2nd July, 1992. On 9th October, 1994, he was appointed as advisor by Killick Nixon Ltd. with effect from 8th October, 1994. By reason of such appointment he is entitled to be paid consultancy fees in the sum of Rs. 5,000/- per month by the said company. By a letter dated 7th August, 1995, to the Manager, Dena Bank, the appellant applied to open a new Current Account in his name to be operated by him. On 6th September, 1995, the appellant"s advocates were informed that the matter had been referred to the Head Office of the Bank and by a letter dated 27th October, 1995, that the matter had been referred to the Custodian appointed under the Act. The petitioner filed a petition on 23rd November, 1995, in the Special Court and sought a declaration that the income "earned by way of the aforesaid employment is not liable for attachment" and permission "to open a new Bank account and operate the same in the normal course".

(3.) The petition was dismissed by the order under appeal. The Special Court proceeded upon the basis that the appellant was "genuinely seeking release of an income which he is earning from his services". However, the Special Court said that if the interpretation which the appellant wanted it go give was accepted, it could result in a very clever method of siphoning off assets which could and must stand attached. The Special Court noted that even after 3 years monies which had been siphoned off had not been traced. It was thus evident that the notified parties or some of them had monies or assets which were lying in some undisclosed place. One of the simplest methods to bring such moneys into the open and start using them was to ostensibly render services to somebody else who then paid the notified party the purported income or for somebody to give to the notified party a gift or for a notified party to suddenly inherit some assets. This would become a method to defeat the object of the Act and could not be permitted. The Special Court then dealt with the provisions of Section 3(3) and held that the words therein "on and from the date of Notification" meant that all assets which were available on the date of the Notification and all assets which became available from and after that date stood attached. The term "property" has a wide connotation and included present and future property. Thus, if some notified party inherited or was gifted some property or earned some income subsequent to being notified, such property or income would stand attached and be available for distribution under the Act.