TEJKUMAR BALAKRISHNA RUIAversusA.K. MENON AND ANOTHER

                  TEJKUMAR BALAKRISHNA RUIA                                        A
                                       v.
                     A.K. MENON AND ANOTHER

                           SEPTEMBER 9, 1996

          [S.P. BHARUCHA AND K. VENKATASWAMI, JJ.]                                 B

      Special Court (Trial of Offences Relating to Transactions in Securities)
Act 1992-Section 3(3)-''Property" of notified person to be attached "on and
from the date of the notification''-Meaningof-Held, does not i11clude income
ge11erated by notified person by his ow11 labour after date of notification-17ie   C
provision does not lead to the co11clusio11 that what is attached is also all
such property that he might acquire at a11y time after the date of the notifica-
tion-However, /11come or usufntct of attached property is, also attached
property.

       I11terpretatio11 of Statute~rposive interpretation-Courts must inter- D
pret the law as. it reads-Where two i11terpretatio11s are possible, the purposive
interpretation must be such as preserves constitutionality of the
provision-Special Court (Trial of Offences Relating to Transactions in
Securities) Act 1992-Sectimi 3(3 ).
                                                                                   E
      The appellant became a notified person under Section 3(2) of the
Special Court (Trial of Offences Relating to Transactions in Securities)
Act 1992 in July 1992. Under Section 3(3), on and from the date of the
notification, any property belonging to any notified person shall stand
attached simultaneously with the issue of the notification. In 1994, the
appellant, appointed as advisor to a company, became entitled to a month-          F
ly consultancy fee. When the appellant applied to open an account with a
bank, he was informed that the matter had been referred to the Custodian
appointed under the Act. The appellant filed a petition in the Special Court
seeking a declaration that the income so earned was not liable to attach·
ment, and that he be permitted to open and operate a bank account in the           G
normal course.

      The Special Court, while acknowledging that the appellant was
genuinely seeking release of income which he was earning for his services,
dismissed his petition. Suggesting that this could be one way one siphoning
off monies which stood unrecovered in proceedings under the Act, it held H
                                      623
    624                    SUPREME COURT REPORTS (1996] SUPP. 5 S:C.R.

A   that Section 3(3) meant that all assets which became available from and
    after the date of the notification became attached, and that the term
    "property'' included present and future property. It gave him liberty to file
    for a subsistence allowance, which the appellant declined to avail, and
    preferred the present appeal.

B         Allowing the appeal, this Court
               I.

          Held : 1. Section 3 (3) of the Act is clear that the property that belongs
    to a notified person stands attached simultaneously with the issue of the
                                   a
    notification that makes him notified party. Neither the words "on and
    from the date of the notification" nor the word "property'' lead to the
C   conclusion that what is attached is not only that property which the notified
    person owned or was possessed of on the date of the notification but also
    all such property as he might acquire at any time thereafter. [627-C-E]

          2. However, the income or usufruct of attached property is also
D   attached property. It is only income generated by a notified person by dint
    of his own labour which falls outside the net of Section 3(3). [628-C]

          3. If what a notified person obtains by way of purported income or
    gift or inheritance is really his own money, such money would, upon
    establishment of the fact, stand attached automatically under the
E   provisions of Section 3(3). In any event, it is for Parliament to enact a law
    that meets all contingencies. The courts must interpret the law as it reads.
    While a purposive interpretation is permissible where two interpretations
    are possible, the purposive interpretation must be such as preserves the
    constitutionality of the provision. [628-B]
F        4. The income which the appellant is earning from his services is not
    subject to attachment under Section 3(3) and he is entitled to open a bank
    account for, the purpose of depositing such income alone. [628-E]

          ClvIL APPELLATE JURISDICTION: Civil Appeal Nos. 7143-44
G   of 1996.

        From the Judgment and Order dated 14/21.2.96 of the Special Court,
    Bombay in Misc.P. No. 278 of 1995.

          S.D. farekh, N.H. Seervai, S.V. Mehta, B.V. Desai and P J. Mehta
H   for the Appellant.




                                                                                       •.
               T.B.RU!Av. AK.MENON [BHARUCHA,J.]                       625

     A. Subba Rao for the Respondents.                                        A

     The .Judgment of the Court was delivered by

       BHARUCHA, J. 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   B
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.

      The appellant became a notified person under the provisions of
                                                                              c
Section 3(2) of the Act on 2nd July, 1992. On 9th October, 1994, he was
appointed an 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 D
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 Cus-
todian appointed under the Act. The petitioner filed a petition on 23rd E
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 ihe
same in the normal course".

       The petition was dismissed by the order under appeal. The Special F
Court proceeded upon the basis that 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
to 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 G
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 service to somebody else who then paid the
notified party the purported income or for somebody to give to the notified H
    626                    SUPREME COURT REPORTS (1996) SUPP. 5 S.C.R.

A   party a gift or for a notified party to suddenly inherit some assets. This
    would becomes 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 the Notification"
    meant that all a~sets which were available on the date of the Notification
    and all assets which became avo.ilable from and after that date stood
B   attached. The terms "property" had 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 dis-
    tribution under the Act.
c                    I
          The Act. was preceded by an Ordinance which established the Spe-
    cial Court for trial of offences relating to trans'a~tions in securities that had
    been entered into between 1st April, 1991 and 6th June, 1992. Section 3,
    sub-section (1) empowered the Centr~l 'Government to appoint one or
D   more Custodians under the Act. By reason of sub-section (2), the Cus-
    todian could, on being satisfied on information received that any person
    had been involved in any offence relating to transaction in securities
    between the stated dates, notify the name of such person in the Official
    Gazette, Sub-s~ction (3) reads thus :

E            "(3) Notwithstanding anything contained in the code and any other
             law for the time being in force, on and from the date of notification
             und~r sub-section (2), any property, movable or immovable, or
             both, belonging to any person notified under that sub-section shall
             stand attached simultaneously with the issue of the notification."
F
    The Custodian could, by reason of sub-section (4), deal with property
    attached under sub-section (3) in such manner as the Special Court
    directed. Section 4(1) empowered the Custodian, if he was satisfied, after
    such inquiry as he thought fit, that any contract or agreement entered into
    at any time between the stated dates in relation to any property of the
G   notified person had been entered into fraudulently or to defeat the
    provisions of the Act, to cancel such contract or agreement, whereupon
    such property stood attached under the Act. Sections 7,8 & 9 deal with the
    jurisdiction of the Special Court in criminal proceedings. Section 9A deals
    with the jurisdiction of the Special Court in civil proceedings relating to
H   property that stands attached and arising out of transactions in securities
               T.B. RUIA v. AK. MENON [BHARUCHA, J.]                     627

between the stated dates in which a notified person was involved as a party, A
broker, intermediary or in any other manner. Section 11 deals with the
discharge of liabilities and sub-section (1) states that the Special Court may
make such order as it may deem fit directing the Custodian in the matter
of disposal of attached properties; sub-section (2) sets out the order in
which liabilities are to be paid or discharged. Section 13 states that the Act
                                                                               B
has effect notwithstanding anything inconsistent therewith contained in any
other law for the time being in force or in any instrument having effect by
virtue of any law or in any decree or order of any court, tribunal or other
authority.

       In our view, the terms of sub-section (3) of Section 3 are clear. By     C
reason thereof, the property that belongs to a notified person stands
attached simultaneously with the issue of the notification that makes him a
notified party. The words "on and from the date of notification" indicate
the point of time at which the attachment taken effect; this is reiterated by
the words "shall stand attached simultaneously with the issue of the            D
notification". This also indicates that no separate notification or order in
regard to the attachment is necessary.

      Neither the words "on and from the date of notification" nor the word
"property" lead to the conclusion that what is attached is not only that
property which the notified person owned or was possessed of on the date        E
of the notification but also all such property as he might acquire at any
time thereafter. The intention to attach property which did not belong to
the notified person on the date of the notification but which he might
acquire later would, had it been there, have been clearly expressed and
sub-section (3) would have stated that such property would stand att(\ched      p
the moment it was acquired by the notified person. The Act would also
have made provision for a subsistence allowance or the like for the notified
person.

       In seems to us that to give to Section 3(3) the wide meaning that has
been ascribed to it in the judgment and order under appeal would render G
it perilously close to being held unconstitutional, for it would deprive the
notified person, so long as he remained a notified person, from earning a
livelihood. Even to say that such interpretation would reduce a notified
person to beggary would not be accurate because the alms that he received,
being his property, would stand attached.                                    H
    628                   SUPREME COURT REPORTS [1996] SUPP. 5 S.C.R.

          The apprehension expressed by the Special Court does not appear .
    to be well founded : if what a notified person obtains by way of purported
    income or gift. or inheritance is really his own money, such money would,
    upon establishment of the fact, stand attached automatically under the
    provisions of Section 3(3). In any event, it is for Parliament to enact a law
    that meets all contingencies. The courts must interpret the 11;1w as it reads.
B   While a purposive interpretation is permissible where two interpretations
    are .possible, the purposive interpretation must be such as preserves the
    constitutionality of the provision.

          It is perhaps necessary to make clear that the income or usufruct of
c   attached property is also attached property. Thus, if the property be shares,
    dividends and. bonus and rights shares thereon would also be attached
    property. It is only income generated by the notified person by dint of his
    own labour which falls outside the net of Section 3(3). In respect of such
    income, the attachment under Section 3(3) does not operate.

D         We must, therefore, hold, particularly since the Special Court has
    proceeded upon the basis that the appellant is "genuinely seeking release
    of an income which he is earning from his services", that the same is not
    subject to attachment under Section 3(3) and that he is entitled to open a
    bank account for the purpose of depositing such income (and such income
    alone). The Custodian shall be entitled to inspect this bank account and
E
    take action in such manner as he deems fit against the appellant if it be
    found that other monies have been deposited in the bank account.

          The appellant may now draw the arrears of his remuneration from
    the company.
F
          It was sought to be argued on behalf. of the appellant that the
    provisions of section 3(3) attached only such property as had a nexus to
    transactions in securities between the stated dates. For the purposes of this
    appeal, we have found it unnecessary to entertain the argument.

G          The appeals are allowed. The judgment and orders under appeal are
    set aside. The petition filed by the appellant in the Special Court is allowed
    to the extent aforestated.

          There shall be on order as to costs.

H U.R.                                                          Appeals allowed.