JUDGMENT
S.N. Variava, J.
1. By this petition the petitioners seek to recover a sum of Rs. 1,57,20,616.44 with interest on the principal amount till payment or realisation.
2. The admitted facts are that on 3rd March, 1992 the petitioners granted to the 1st respondents a loan in a sum of Rs. 50,00,000/-. On 20th March, 1992 the petitioners granted to the 1st respondents another loan of Rs. 25,00,000/-. On 23rd March, 1992 a further loan of Rs. 25,00,000/- was also granted. Thus in all a sum of Rs. 1 crore has been lent and advanced by the petitioners to the 1st respondents.
3. By their letter dated 15th July, 1992 the 1st respondents confirmed having received the above mentioned amounts on the above mentioned dates.
4. The petitioners were Notified on 2nd July, 1992. After the petitioners were notified, the Custodian made inquiries with the 1st respondents. In pursuance of these inquiries, by their letter dated 17th May, 1993, the 1st respondents admitted receipt of the abovementioned amounts. They claimed that the amounts were repayable after three years. They claimed that the amount was to be repaid along with interest at 18% per annum.
5. The Custodian by his letter dated 3rd June, 1993 points out that monies payable to a Notified Party would now stand attached. The Custodian calls upon the 1st respondents to deposit these amounts into the account of the petitioners. The Custodian points out that, as there is a dispute about the rate of interest, any deposit would be without prejudice to any claim that may arise. The Custodian points out that the rate of interest and penal interest would be decided by this Court. The Custodian also cautions the 1st respondents that in the event the amount is not deposited this Court may levy considerable, interest.
6. After this petition was served on the 1st respondents, the 1st respondents filed a Writ Petition bearing No. 20632 of 1994 in the High Court of Judicature at Madras. In that writ petition the 1st respondents pray that the petitioners herein be restrained from proceeding with this petition. This on the ground that this Court would have no jurisdiction to entertain and try this petition. By an order dated 14th December, 1994 that writ petition is dismissed by the Madras High Court. Whilst dismissing the writ petition the Madras High Court holds that the question of jurisdiction can be taken up before this Court and that this Court can decide whether it has jurisdiction or not.
7. The 1st respondents have filed an affidavit in reply. In the affidavit they admit that they have received the sum of Rs. 1 crore on the abovementioned dates. They however claim that they are only liable to repay the amount along with interest at the rate of 18% per annum. They claim that the understanding was that the amount should be repaid at the end of three years.
8. In the affidavit it is averred that this Court has no jurisdiction to try Civil cases. In the affidavit it is averred that this Court is only established to conduct criminal trials. In fairness to Mr. Shah it must be stated that he has not made any such submissions before this Court. And this is rightly so because even before the amendment of the Special Court (Trial of Offences Relating to Transactions In Securities) Act, (hereinafter called the said Act) under sections 3 and 11 the Custodian was to deal with attached properties as per the directions of this Court. For purposes of giving directions, in many cases, this Court had to decide disputed claims to the attached properties. This Court had also to decide whether or not certain properties stood attached. These disputes were all civil in nature. Thus even prior to the amendment this Court had civil jurisdiction. After the amendment of the said Act on 25th January, 1994 section 9-A specifically confers exclusive civil jurisdiction on this Court. Under sections 9-A(2) and 9-B of the said Act every pending suit, claim or other legal proceedings now stand transferred to this Court. Under section 9-A(3) of the said Act no Court other than the Special Court shall have or be entitled to exercise any jurisdiction, power or authority in relation to any matter or claim set out in section 9-A(1) of the said Act. Thus now there can be no doubt that this Court has Civil Jurisdiction. In fact it has exclusive Civil Jurisdiction in certain matters. What that exclusive Jurisdiction is set out hereafter whilst considering the submissions of Mr. Shah.
9. Mr. Shah submitted that he would like to challenge the Jurisdiction of this Court on certain other grounds. He submitted that these are legal submissions and that even though they are not raised in the Affidavit in reply he is entitled to raise them. To that extent Mr. Shah is right. Parties are entitled to take up legal submissions. It must only be mentioned that Mr. Shah proudly claimed that the submissions set out hereafter are submissions thought up by him.
10. According to Mr. Shah even after the amendment of the said Act on 25th January, 1994, this Court would not have any Jurisdiction to try any claim or matter which pertains to a commercial loan transaction which has taken place prior to the date of Notification of the petitioners. According to Mr. Shah this Court has no retrospective Jurisdiction to try claims in commercial matters. According to Mr. Shah only if a suit or claim or other legal proceeding had been commenced in any Civil Court, prior to the amendment, then that suit, claim or legal proceeding would get transferred to this Court. Mr. Shah submitted that it is only in such cases that this Court could try pending cases dealing with commercial transactions which had taken place prior to Notification. In other words, according to Mr. Shah, if a suit, claim or legal proceeding was not, on the date of amendment, pending in any Civil Court, this Court could not try that claim or matter. According to Mr. Shah in such cases it is the normal Civil Court which will continue to exercise Jurisdiction.
11. In my view, this is a argument which merely needs to be stated to be rejected. Very conveniently these arguments ignore the specific provisions of section 9-A(1), 9-A(2), 9-A(3) and 9-B(2) of the said Act which read as follows :—
“9-A.(1) On and from the commencement of the Special Court (Trial Offences Relating to Transactions in Securities) Amendment Ordinance, 1994, the Special Court shall exercise all such jurisdiction, powers and authority as were exercisable, immediately before such commencement, by any Civil Court in relation to any matter or claim —
(a) relating to any property standing attached under sub-section (3) of section 3;
(b) arising out of transactions in securities entered into after the 1st day of April, 1991, and on or before the 6th day of June, 1992, in which a person notified under sub-section (2) of section 3 is involved as a party, broker, intermediary or in any other manner.
(2) Every suit, claim or other legal proceedings (other than an appeal) pending before any Court immediately before the commencement of the Special Court (Trial of offences Relating to Transactions in Securities) Amendment Ordinance, 1994, being a suit claim or proceeding, the cause of action whereon it is based is such that it would have been, if it had arisen after such commencement, within the jurisdiction of the Special Court under sub-section (1), shall stand transferred on such commencement to the Special Court and the Special Court may, on receipt of the records of such suit, claim or legal proceeding from the stage which was reached before such transfer or from any earlier stage or de novo as the Special Court may deem fit.
(3) On and from the commencement of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Ordinance, 1992, no Court other than the Special Court shall have or be entitled to exercise, any jurisdiction, power or authority in relation to any matter or claim referred to in sub-section (1).
9-B(1). ………………………………………………………………………………………………….
(2) Every suit or other proceedings (other than an appeal) in relation to any matter or claim referred to in sub-section (1) of section 9-A pending before any Court and governed by the Arbitration Act, 1940, immediately before the date of commencement of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Ordinance, 1994 shall stand transferred on that date to the Special Court.”
12. It is thus to be seen that the Civil Jurisdiction, which would otherwise have been exercised by a Civil Court, in respect of any matter or claim relating to any property standing attached is now to be exercised by this Court after the amendment of the said Act. The term ‘Jurisdiction’ would also include jurisdiction in respect of commercial loan transactions. Not only that but now this Court has exclusive Jurisdiction in respect of claims or matters in relation to attached properties. This exclusive Jurisdiction is in respect of all claims and matters relating to property standing attached. The said Act does not lay down that this Jurisdiction is only in respect of transactions or claims or matters arising after date of Notification. In fact after Notification no commercial activity could be carried out by a Notified party. After Notification there could be no transaction, commercial or otherwise. Thus the Jurisdiction could only be in respect of matters or claims arising in respect of transactions entered into earlier. Also Suits, Claims or legal proceedings pending in other Civil Courts, on date of amendment, could be (and mostly will be) in respect of transactions prior to date of Notification. If all such suits, claims or legal proceedings are transferred to this Court, admittedly this Court has Jurisdiction to try suits in respect of transactions arising prior to Notification. It is absurd to suggest that in respect of transferred suits this Court has retrospective Jurisdiction but that it has no retrospective Jurisdiction in respect of fresh suits. Also the submission that fresh suits can only be in normal Civil Court conveniently ignores the express provisions of sections 9-A(1) and 9-B(2).
13. Mr. Shah submitted that this was a simple loan transaction and the dispute was only in respect of the rate of interest. He submitted that this was not arising out of any securities transaction and it did not relate to any property standing attached. Mr. Shah submitted that money claims are not claims relating to attached properties. Mr. Shah submitted that the term property would not include money. In my view, this again is a submission which merely needs to be stated to be rejected. Under section 3(3) of the said Act, any property, movable or immovable or both belonging to a Notified party stands statutorily attached. Money belonging to Notified party is movable property.
14. It is next submitted by Mr. Shah that the petitioners have no locus standi to file this petition. He submits that after the petitioners were Notified all their properties vested in the Custodian. Mr. Shah submitted that after Notification it is only the Custodian who can now file claims. In my view, this again is an argument which merely needs to be stated to be rejected. On a question from a Court Mr. Shah could not show any provision in the said Act under which the property of Notified parties vests in the Custodian. All that he could show was section 3. Under section 3(3) there is only a statutory attachment of the properties of Notified parties. In spite of this, Mr. Shah insisted on submitting and kept repeating that the properties vested in the Custodian. In my view, the Notified parties continue to be the owners. All that the said Act provides for is an attachment. This so that Notified parties cannot alienate or transfer their properties. As the Notified parties continue to remain the owners of the properties, they are entitled to file claims for recovery of their properties.
15. Mr. Shah next submitted that this Court can only try transactions which are fraudulent in nature or which are security transactions. In my view, this again is a submission which merely needs to be stated to be rejected. It is a submission which is contrary to the plain language of the statute itself. Under section 9-A(1)(a) this Court has civil jurisdiction to try all matters and claims – (1) relating to the properties standing attached and (2) arising out of security transactions entered after 1st April, 1991 and before 6th June, 1992.
16. Mr. Shah next submitted that this was a simple loan transaction. He submitted that there are no documents evidencing this transaction. He submitted that there are no documents showing that the 1st respondents are bound and liable to pay interest at the rate of 23% p.a. or 21.5% p.a. as claimed by the petitioners. He submits that the 1st respondents are admitting that interest at the rate of 18% p.a. was payable. He submits that therefore interest must be only at the rate of 18% per annum.
17. I am unable to accept this submission. In this case the 1st respondent was called upon, by the Custodian, to deposit the amount into the account of the petitioner. The 1st respondent was warned and put on guard, by the Custodian, as far back as 3rd June, 1993, that if the amount is not deposited into the petitioner’s account, he will become liable to pay interest at a high rate. The 1st respondent does not deposit the amount but continues to use this amount. In my view, such a party deserves no consideration at all. In my view, this is a fit case where the party must be made to pay a high rate of interest. The petitioners have claimed interest on the amount of Rs. 50 lakhs at 21.5% p.a. and on the amount of Rs. 25 lakhs each at 23% p.a. The Court has seen that the petitioners in their turn have borrowed at very high rates of interest. The Court has seen that in all transactions where petitioner has advanced monies it has been on very high rates of interest and on terms regarding penal interest. It is clear that the amounts could not have been advanced on interest at only 18% p.a. In my view the 1st respondents must repay the amounts with interest at the rate claimed by the petitioners.
18. Accordingly, the petition is made absolute in terms of prayer (a). The amount along with accrued interest upto date to be repaid forthwith to the Custodian for and on behalf of the petitioners.
19. In my view, this is a fit case where the 1st respondents must also pay costs.
20. Accordingly, there will also be an order in terms of prayer (c).
21. The 1st respondents to pay costs in the sum of Rs. 10,000/-.