Mukundakam Sharma, J. - (1.) The present appeals were filed against the judgment and order of the Special Court constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as Rs. Act) for conducting trial of offences related to transactions in securities. By the impugned judgment and order the Special Court allowed the application filed by the respondent No. 1, the State Bank of India and directed the appellant to deposit an amount of Rs. 546.22 crores with the Custodian alongwith interest at 9% per annum. The Special Court while issuing the said direction held that the income tax liability for the statutory period of the notified party, namely, Mr. Harshad S. Mehta under Section 11(2)(a) did not at that stage appear to be in excess of Rs. 140 crores approximately, subject to further orders that the Court might pass at a later stage. In the impugned judgment and order a further direction was issued that no useful purpose would be served by keeping the amount lying deposited with the Custodian and, therefore, a direction was also issued to the Custodian to pay to the banks, namely, the State Bank of India and the Standard Chartered Bank against their decrees the principal amount, from the amounts in deposit with the Custodian as also from the amount that was likely to be coming back from the Income Tax Department. As the said amount was inadequate to fully satisfy the claims of the Banks with respect to the principal amount it was further held that the same would be disbursed by the Custodian on pro-rata basis and after receiving an undertaking from the banks to the Court that they would bring back the amount, if so required, on such terms and conditions as may be directed by the Court.
(2.) As this Court in an order in an interim application recorded the directions of the committee of the Union of India regarding the State Bank of India not requesting for any interim payment, the aforesaid orders and directions were made subject to the condition of the Custodian seeking clarification from this Court and releasing such payment in favour of the concerned parties, only if, permitted by this Court.
(3.) The issue which is particularly sought to be raised by the appellant, Income Tax Department by filing the present appeal is whether the Special Court constituted under the aforesaid Act was right in scaling down the priority tax demand by delving into the merits of the assessment orders and by deciding the matter as an appellate authority which directions according to the appellant are in violation of the decision of this Court in the case of Harshad S. Mehta v. Custodian and Ors., (1998) 231 ITR 871(SC) .;