- (1.) Special leave granted.
(2.) This appeal is filed against an order of the Special Court appointed under the provisions of the Special Court (Trial of Offences Relating To Transactions in Securities) Act, 1992. The appellant, an Assistant Commissioner of Income-tax sought release of the sum of Rs. 50,60,198.34, being the tax liabilities of the respondents, who are notified persons under the sad Act. from the funds available with the Custodian appointed under the provisions thereof, Learned counsel appearing for some of these notified persons submitted to the learned Judge that he wished to show that the demands of the appellant were unreasonable and unjustified and, if satisfied, he should not order release of the amounts claimed, Having heard counsel, the learned Judge passed the impugned order. It said that while the Special Court could not sit in appeal over orders of the tax authorities, it was entrusted with the task of distributing the funds in the manner laid down under Section 11, of the said Act and the priorities laid down thereunder had to be observed. The priorities and objects of the said Act could and would be defeated if the Special Court could not go into the bona fides of a claim. In that case a party, like the Income-tax Department may make a claim in an absurdly large amount. Whether a claim was justified or enforceable can only be decided by looking into that claim, Counsel for the notified parties was, therefore, entitled to try and show to Court that the claim is unreasonable and unjustified. The appellant's application was adjourned for the purpose, and he has appealed.
(3.) The said Act was enacted to provide for the establishment of a Special Court for the trial of offences relating to transactions in securities and for matters connected therewith or incidental thereto. The Act requires the appointment of a Custodian thereunder who is, inter alia, required to deal with the property of person notified in such manner as the Special Court may direct. The Special Court has jurisdiction under Section 7, of the Act, exclusively to hear and decide prosecutions in respect of offences under the said Act, that is to say, offences relating to transactions in securities after 1st April, 1991 and on or before 6th June 1992. By reason of the amendment of the said Act and the inclusion of Sections 9A and 9B the Special Court is invested with civil jurisdiction in regard to such transactions, Section II is relevant for our purpose. Sub-section (1) states that the Special Court may make such order as it may deem fit directing the Custodian for the disposal of the property under attachment. Sub-section (2) states that 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 Section 3 to the Central Government or any State Government or any local authority : (b) xxx xxx xxx ";