Santosh Hegde, J. - (1.) These appeals are filed against the judgment and order dated 20th July, 1998 passed by the Special Court at Bombay constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (for short 'the Act'). Though by the impugned order, the High Court has decided a number of questions raised before it, the appellants before us have confined their argument to the following questions :(a) whether the interest claimed by them is liable to be disbursed under S. 11(2)(b) of the Act on a preferential basis or the same is to be distributed under S. 11(2)(c) of the Act; (b) do the secured creditors have the right to stand outside the distribution under S. 11 of the Act and recover their dues.
(2.) Section 11 of the Act reads thus : "Discharge of liabilities.- (1) Notwithstanding anything contained in the Code and any other law for the time being in force, the Special Court may make such order as it may deem fit directing the Custodian for the disposal of the property under attachment. (2) The following liabilities shall be paid or discharged in full, as far as may be, in the order as under :- (a) all revenues, taxes, cesses and rates due from the persons notified by the Custodian under sub-section (2) of S. 3 to the Central Government or any State Government or any local authority. (b) all amounts due from the person so notified by the Custodian to any bank of financial institution or mutual fund; and (c) any other liability as may be specified by the Special Court from time to time."
(3.) The High Court came to the conclusion in regard to the claim of interest by the appellants that the same cannot be distributed on priority basis under S. 11(2)(b) of the Act, but same can be done under S. 11(2)(c) of the Act. In regard to this finding, the appellants contend that in view of the wording of sub-section (2) of S. 11, they are entitled not only to the principal amount due to them but also to the interest that has become payable thereon, therefore, they are entitled for the payment under S. 11(2)(b) of the Act. On behalf of the Custodian, it is argued that the amount payable to the appellants, be it the principal or interest, can be only such amount and interest thereon as became due within the period stipulated in the Act, that is, the notified period being 1-4-1991 and 6-6-1992. Therefore, it is contended that the appellants are not entitled to the interest payable on the amount due to them which falls outside the notified period. It is the case of the Custodian that the interest that becomes payable outside the notified period, can be claimed only under S. 11(2)(c) of the Act.;