Standard Chartered Bank Vs Unknown On 13 July, 2010

Standard Chartered Bank vs Unknown on 13 July, 2010
Bombay High Court

Bench: V.M. Kanade
This Order is modified/corrected by Speaking to Minutes Order
1
BEFORE THE SPECIAL COURT CONSTITUTED UNDER THE
SPECIAL COURT (TRIAL OF OFFENCES RELATING TO
TRANSACTIONS IN SECURITIES) ACT, 1992 AT BOMBAY
SUIT NO. 6 OF 1994
Standard Chartered Bank,

a Company incorporated under
the provisions of the laws of
England and Wales and having
)
)
)
)
its Registered Office at 1,

Aldermanbury Square, London
ig
EC2V 7SB, carrying on banking
business in India and having
one of its branches at 23-25,
Mahatma Gandhi Road, Fort,

Bombay - 400 023.
)
)
)
)
)
)
..... Plaintiffs.
Versus
(1) Andhra Bank Financial Services )
Indian Kanoon - http://indiankanoon.org/doc/2943423/
Limited, a Company incorporated )

under the provisions of the
)
Companies Act, 1956, having its )
Registered Office at Andhra Bank )
Buildings, Sultan Bazar, Hyderabad)

- 500 195 and one of its branch
)
offices at 11 Homi Mody Street,
)
rd
Bansilal Building, 3 Floor, Fort, )
Bombay - 400 023.
)
)
(2) Hiten P. Dalal, Bombay
)
Indian Inhabitant, residing at
)
201, Shanti Towers, Military Road, )
Marol, Andheri (West), Bombay - )
400 059.
)
)
(3) Canara Bank, a nationalised
)
bank, constituted under the
)
::: Downloaded on - 09/06/2013 16

2
provisions of the Banking
Companies (Acquisition & Transfer
of Undertakings) Act, 1970,
)
)
)
having its head office at 112, J.C.

Road, Bangalore 560 002, as the
)
)
Principal Trustee of Canbank

Mutual Fund, a Trust having its
office at Orient House, 3rd
Floor, Adi Marzban Path, Ballard
)
)
)
)
Estate, Bombay - 400038

(4) V.R. Gupte
(5) Mrs. Ishar Judge Ahluwalia
)
)
)
)
(6) M.N. Kamath

(7) N.V. Kamath
(8) P.R. Nayak
(9) D.M. Nanjundeppa
(10) M.M. Khanna
)
)
)
)
)
ig
all being Trustees at the relevant

time/presently of the Canbank
Mutual Fund, a registered Trust,
)
)
)
)
having its office at Oriental House

2nd Floor, Adi Marzban Path,
)
)
Ballard Estate, Bombay - 400 038

(11) The Custodian appointed
under the Special Court Act, 1992
)
)
)
)
having office at 10th floor, Nariman

Bhavan, Nariman Point, Vinay K.
Shah Marg, Mumbai 400 021
)
)
) .... Defendants.
---Mr. Ram Jethmalani, Senior Counsel with Mr. T.K,.Cooper,

Ms. Mehernaaz Sam Wadia i/b Hariani & Co. for the Plaintiffs.
Mr. A.L. Pandya with Ms. Nina Kapadia
Gandhy & Co for Defendant No.1.
i.b M/s Pandya
Mr. M.P.S.Rao, Senior Advocate with Mr. Sunil Kale

Defendant No.2.
::: Downloaded on - 09/06/2013 1

3
Mr. Rohit Kapadia, Senior Counsel with Mr. Shaunak Thakker

with
Mr Pradeep Sancheti, Senior Advocate with Mr.
Shreeniwas Deshmukh, Mr. Nilesh Parekh, Mr. Gandhar

Raikar & Ms. M. Sophia i/b M/s Mulla & Mulla & CBC for
Defendant Nos. 3 to 10.

Mr. J.Chandran with Ms. Shilpa Bhate i/b P.M. & Mithi & Co.
for Defendant No.11/Custodian.
----
Coram: V.M. KANADE, J.
Judge, Special Court.

Date : 13th July, 2010.
JUDGMENT:Indian Kanoon - http://indiankanoon.org/doc/2943423/
1. Plaintiffs - Bank are a Company incorporated by Royal Charter under the laws of England and
Wales. They also carry on business at several branches in India, including their branch at 23-25,
Mahatma Gandhi Road, Fort, Mumbai 400023.
2. Plaintiffs filed a suit initially against Defendant No.1 only. Defendant No.1 is the wholly owned
subsidiary of the Andhra Bank, a nationalized Banking Company incorporated under the provisions
of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980. Plaintiffs - Bank
also This Order is modified/corrected by Speaking to Minutes Order had Investment Banking
Division which had a Unit known as Money and Investment Unit which dealt with the sale and
purchase of Securities, Bonds and Units. Defendant No.1 are also authorized to engage in sale and
purchase of Securities, Bonds and Units. The dispute raised in the suit is in respect of purchase by
Plaintiffs from Defendants 17% Taxable NPCL Secured Redeemable Non-cumulative Bonds 'E' Series Vth Issue of the face value of Rs 50 crores at the rate of 96.05 and delivery was to be made
on the same day.
The total price payable to Defendant No.1 was Rs 48,02,50,000/- which was paid by Pay Order
dated 26/02/1992. A Banker's Receipt was issued to the Plaintiffs by Defendant No.1 vide Banker's
Receipt No.23727 acknowledging the said payment and stating that the bonds would be delivered
later on. The other documents acknowledging receipt of the money were also issued.
Thereafter, in May, 1992 after the reports were published in newspapers of a large scale fraud being
perpetrated upon several banks including plaintiffs, investigation was made of the records and it
was alleged that the Banker's Receipt (hereinafter referred to as "BR") given by Defendant No.1 This
Order is modified/corrected by Speaking to Minutes Order was discharged and letter dated
26/02/1992 was given to the Plaintiffs asking them to handover the said BR in lieu of the original
allotment letter. Plaintiffs' initial case was that no such original was ever received by Plaintiffs and
that they had received only photocopy of the Letter of Allotment.
Plaintiffs were not aware about the circumstances under which the BR was discharged and that the
Defendant No.1 had handed over the original Letter of Allotment (hereinafter referred to as "LOA")
to Hiten Dalal who was their broker in the transaction and that the original LOA never reached the
Plaintiffs. It was alleged that Hiten Dalal had utilized the original LOA to undertake series of
transactions involving various Banks. Plaintiffs were under the impression that the transactions
were based on the very same LOA which was handed over to the Plaintiffs but, in fact, it was not
handed over either by Defendant No.1 or by Hiten Dalal. It was further alleged that Defendant No.1
were under an obligation to fulfill their contractual obligation of delivering the purchased bonds to
the Plaintiffs after having received the valuable consideration from the Plaintiffs being the amount
of Rs 48,02,50,000/- for the purchase of suit bonds and, This Order is modified/corrected by
Speaking to Minutes Order therefore, they were liable to pay the said amount with interest to the
Plaintiffs.
3. Thereafter, Written Statement was filed by Defendant No.1 on 19/09/1994 and, thereafter,
Chamber Summons was filed by Plaintiffs on 20/10/1995 being Chamber Summons No.51 of 1995,
inter alia, for adding parties as Defendants to the suit viz. Defendant Nos. 2 to 10. The Chamber
Summons was allowed on 15/12/1995 by this Court and paragraphs 11A to 11C were added that the
original LOA was taken by Defendant Nos. 3 to 10 from Defendant No.2 and the said LOA was
wrongfully converted to their own use and that this fact became known to Plaintiffs in the course of
proceedings before the Company Law Board being Company Petition No. 5/111/92-CLB (NR) which
was transferred to the Special Court and renumbered as Misc. Petition No. 81 of 1995. It was,
therefore, alleged that if this Court holds that Defendant No.1 are not liable then, in that event,
Defendant Nos. 2 and 3 were jointly and severally liable to pay to the Plaintiffs the said sum with
interest. Prayer clause was also amended and in the alternative to prayer clause (a) prayer clause
(aa) was This Order is modified/corrected by Speaking to Minutes Order made to the said effect.
4. Thereafter, second Chamber Summons was filed for amendment by Plaintiffs on 10/09/2006
being Chamber Summons No.10 of 2006 and the amendment was carried out by Plaintiffs - Bank on
17/10/2006. The additional Written Statement was filed by Defendant No.3 - Canara Bank on
08/01/2007 to the amended plaint. The Custodian was also added as Defendant No.11 on
19/01/2007. The additional Written Statement was also filed by Defendant No. 2 to the amended
plaint. The substantial amendments were made by Plaintiffs pointing out the circumstances under
which Plaintiffs discovered a hole i.e shortfall in Securities Account on 09/04/1992 and in order to
cover-up the said hole, the dealers of the Plaintiffs entered into dummy transaction dated
10/04/1992 purportedly with Defendant No.1, though, in fact, no such transaction had taken place.
This was done by earlier unilateral set of entries effected in Plaintiffs' books and Plaintiffs did not
receive any payment from Defendant No.1 nor Plaintiffs delivered any Securities. It was then alleged
that the defence taken by Defendants in This Order is modified/corrected by Speaking to Minutes
Order their Written Statement was barred by principles of resjudicata in view of the orders passed by the Apex Court.
5. Defendant No.2 filed his Written Statement and alleged that the plaint did not disclose any cause
of action against him and, therefore, the suit was liable to be dismissed on that count. It was also
alleged that the suit claim was barred by law of limitation. It was then contended that Defendant
No.2 was not concerned with the transaction between Plaintiffs and Defendant No.1 on 26/02/1992
and in para 4(b) of the Written Statement he had made an averment in which he stated that the
Plaintiffs lent to him two Securities viz.
17% NPC bonds of FV Rs 50 Crores and 9% NPC bonds of FV Rs 50 Crores and he had agreed to
return the Securities on 18/4/1992 with interest at the rate of 24% per annum. Then in para 4(c), he
came out with the case that on 13/04/1992, Plaintiffs were interested in purchasing Can Triple Units
and the Defendant agreed to sell those Units at the rate of Rs 58.50 per Unit to the Plaintiffs. He has
alleged that he was holding BR of City Bank of Rs 3.5 crores units of Can Triple and this BR was
handed over to Plaintiffs by the Defendant.
This Order is modified/corrected by Speaking to Minutes Order He also agreed that the said
transaction would be completed on 18/04/1992 and that the Defendant would retain the 9% NPC
bonds and 17% NPC bonds and the value of the bonds would be adjusted against value of the Can
Triple Units and the balance would be paid over to the Defendant. However, according to Defendant
No.2, Plaintiffs were postponing the completion of the transaction and in para 4(d) he has alleged
that sometime on/or about 09/05/1992, Plaintiffs purchased Can Triple Units and agreed to pay
balance amount after adjusting the cost of two bonds. However, this was not done thereafter by
Plaintiffs. Thereafter, it is alleged by Defendant No.2 that the Defendant sold 17% NPC bonds to
CMF on 27/02/1992 and delivered to CMF LOA alongwith transfer deed which was received by
Defendant No.2 from Plaintiffs. It was then contended that though Plaintiffs had admitted this
transaction before the various authorities, in Misc. Petition No.36 of 1993, Plaintiffs in their
affidavit had alleged that the said transaction was bogus. It is then contended that IDG report in the
said Misc. Petition No.430 of 1994 stated that Plaintiffs were not liable to pay to the Defendant No.2
a sum of Rs 205 crores and the transaction This Order is modified/corrected by Speaking to Minutes
Order of the Defendant with Plaintiffs on 09/05/1992 was also confirmed. It is also contended that
the case of Plaintiffs is proved to be false from the Flow Chart as submitted by Plaintiffs to CBI in
respect of various transactions between Plaintiffs and the second Defendant. It is then contended
that Defendant No.2 had never acted as broker in transaction between Plaintiffs and Defendant
No.1. It is also denied that Defendant No.1 handed over original LOA to Defendant No.2.
The averment in paragraph 7 of the plaint to the effect that second Defendant had utilized the
original LOA to undertake series of transaction with various banks is also denied. In the additional
Written Statement, Defendant No.2 has alleged that Plaintiffs are seeking decree on totally
contradictory and mutually exclusive cases.
6. Defendant No.3 in their Written Statement firstly alleged that the plaint did not disclose any
cause of action since the plaint did not disclose that the Plaintiffs did not acquire any title or right to
the suit bonds. It was contended by Defendant No.3 on the basis of list of transactions which were
filed by the Plaintiffs with Joint Parliamentary This Order is modified/corrected by Speaking to
Minutes Order Committee in October, 1994 that there were continuous dealings in these Securities
by the Plaintiffs which made it clear that either Plaintiffs had received these Securities and parted
with the same for consideration or its worth and even otherwise were estopped from claiming from
any other party.
It was then contended that Defendant No.3 had, on 27/02/1992 purchased through Hiten Dalal who
was share and stock broker ig of the said 17% NPCL bonds for consideration in good faith and
without knowledge of any prior transaction. The allegations of fraud and collusion were denied. It
was contended that the said transaction was the result of 15% arrangement between the Plaintiffs
and Hiten Dalal - Defendant No.2. Additional Written Statement is also filed by Defendant No.3 in
which it was alleged that the alleged entries were fictitious and the purchase transaction dated
26/02/1992 was also fictitious and, therefore, there was no need to plug the hole on 10/04/1992. It
was alleged that, in any case, such transactions and or entries were not only illegal but were also
opposed to public policy. Further particulars about 15% arrangement alleged in the suit are
mentioned in the written submissions. The particulars as to This Order is modified/corrected by
Speaking to Minutes Order how the suit is barred by limitation were mentioned in the additional
affidavit. The allegations that the plea of 15% arrangement and other averments made in the first
Written Statement were barred by res judicata were denied.
7. In the meantime, Plaintiffs filed affidavit of documents on 12/06/1997. Affidavit of documents is
filed by Defendant No.3 on 16/06/1997. Defendant No.1 filed their affidavit of documents on
19/06/1997. The supplementary affidavit of documents was filed by Plaintiffs on 23/06/1997.
Chamber Summons No.14 of 1997 was filed by Defendant No.3 for permission to deliver
interrogatories to Plaintiffs on 25/06/1997 and it was disposed of by order dated 15/07/1997.
Plaintiffs also filed Chamber Summons No.15 of 1997 for permission to deliver interrogatories to
Defendant No.3 and it was disposed of on 22/09/1997.
8. Following issues were framed on 05/03/2007 between Plaintiffs and CMF i.e Defendant Nos. 3 to
10 and Plaintiffs and HPD - Defendant No.2.
This Order is modified/corrected by Speaking to Minutes Order ISSUES BETWEEN PLAINTIFFS &
CMF:
1. Whether the suit as against Defendant Nos. 3 to 10 is barred by limitation?
2.
Whether the
collusion with one of the
Defendant No.2 in
employees of
the Plaintiff (viz. Santosh Mulgaonkar) fraudulently misappropriated the Suit LOA as alleged in para
6A(iii) of the Plaint?
3. Whether the Plaintiffs were unaware that the series of transactions involving Canbank Mutual
Fund (CMF), ANZ Grindlays Bank, Defendant No.1 and the Plaintiffs themselves were "based on the
very same Letter of Allotment" as alleged in para 7 of the Plaint?
4. Whether the Plaintiffs prove that they had purchased 17% taxable NPCL Bonds on 26th February,
1992 of the FV of Rs. 50 Crores from the Defendant No.1 or acquired any title to the Suit LOA as
alleged by the Plaintiffs in para 5 of the Plaint?
5. Whether the Plaintiffs prove that the 3rd Defendant choose to issue its BR with a view to conceal
the alleged "misappropriation" of Bonds as alleged in para 7D & 7E of the Plaint?
6. Whether the Plaintiffs prove that on 9-4-1992 there was a "hole" pertaining to the transactions of
26-2-1992 between the Plaintiffs and the 1st Defendant as alleged in para 7H of the Plaint?
7. Whether the Plaintiffs prove that the then Dealers of the Plaintiffs entered into a dummy
transaction dated 10-4-1992 with the 1st Defendant to cover-up the said "hole"
This Order is modified/corrected by Speaking to Minutes Order as alleged in para 7 I of the Plaint?
8. Whether the Defendant No.3 have converted the Bonds/LOA as alleged in para 6A & 7(k) of the
Plaint?
9. Whether the Suit transaction and the transactions referred to in para 7(a), 7(f) and 7(g) of the
Plaint reflect that the same were fictitious transactions for funding and/or they were transactions at
structured price and/or they were transactions involving difference between the actual rate (as
transacted) and the derived rate as alleged in para 25 and 27 of the further Written Statement?
10. If the answer to the above issue is in the affirmative whether such transactions are illegal and/or
opposed to the public policy?
11. Whether the contention that the transactions are opposed to public policy is barred by the
principles of res judicata and/or constructive res judicata having regard to the judgment of the Spl.
Court dated 13-3-1995 in Suit No.13 of 1994 and the decision of the Supreme Court in CA 4456/95
dated 30th October, 2001 and in CAs 2275 & 2276 dated 5th May, 2006?
12. Whether the Defendant No.2 was the broker for Defendant No.1 in the alleged suit transaction
and Defendant No.1 handed over the original LOA to Defendant No.2 as alleged in para 6(c) and
11(a) of the Plaint?
13. Whether the Plaintiffs are estopped from making any claim as alleged in para 2 read with para 14
of the Written Statement of the Defendant No.3?
14. Whether the Defendant No.3 proves that it had on 27th February, 1992 purchased the said 17%
NPCL bonds through the Defendant No.2 who was allegedly acting as a mercantile agent of the
Plaintiff and/or Defendant No.1 for consideration in good faith and without notice as alleged in
paragraph 11 of the Written Statement of the said Defendant?
15. Whether the transactions under the 15% arrangement were transactions of HPD & not of SCB
and HPD was entitled to deal with bonds at his discretion as alleged in para 7(g) of Defendant No.3's
WS?
16. Whether the Defendant No.3's allegations that transactions under 15% arrangement were
transactions of HPD, are barred by res judicata by the judgment of the Special Court in 13/94 dated
13-3-1995 and the decision of the Supreme Court in CA No.4456 of 1995 dated 30-10-2001 as
alleged in para 7(L)(i) to 7(L)(v) of the Plaint and denied in 32, 33, & 34 of additional Written
Statement and by the judgment of the Supreme Court dated 5-5-2006 in Appeal from Suit No.11 of
1996 as alleged in paras 7(L)(vii) to 7(L)(xv) of the Plaint?
17. Whether Defendant No.3's allegation that transactions of the Plaintiff under the 15%
arrangement were actually transactions of HPD, is barred by constructive res judicata as alleged in
para 7(L)(v) of the Plaint & denied in para 36 of the Additional Written Statement?
18. Whether the issue of payment of consideration by the 3rd Defendant for acquisition of Bond on
27-2-1992 is barred by virtue of the principles of res-judicata as This Order is modified/corrected by
Speaking to Minutes Order alleged in para 11(e) of the Plaint?
are jointly and severally liable to pay to the Plaintiffs the sum of Rs 55,26,16,438.36 as per the
Particulars of Claim together with further interest on principal sum of Rs 48,02,50,000.00 @ 20%
per annum from 28th November, 1992 till payment and/or realizations?
20. What relief?
ISSUES BETWEEN PLAINTIFFS & HPD DEFENDANT NO.2:
1. Whether the Plaint fails to disclose any cause of action against the Defendant No. 2 as alleged in
para 1 of the Written Statement of Defendant No.2.?
2. Whether the suit is barred by limitation as against Defendant No.2 as alleged in para 2 of the
Written Statement of Defendant No.2?
3. Whether allegations of Defendant No. 2 that the LOA was lent to him on 27th February, 1992
and/or that he purchased the same on 9th May, 1992 in the circumstances and manner set out in
para 4 of his written statement are barred by res judicata as alleged in para 6B of the Plaint?
4. Whether the Defendant No.2 is jointly and severally liable along with the Defendant Nos 3 to 10
to pay to the Plaintiffs the sum of Rs 55,26,16,438.36 as per the particulars of claim together with
further interest on principal sum of This Order is modified/corrected by Speaking to Minutes Order
Rs 48,02,50,000.00 @ 20% p.a. from 28th November, 1992 till payment and/or realisation?
5. Whether the Plaintiffs are entitled to any relief and if, what?
9. Plaintiffs examined five witnesses PW1 - R.
Kalyanraman, PW2 - Mr. R. Kannan, PW3 - Mr. N. Srinivasan, PW4 - Mr. David Loveless and PW5 Mr. R.R. . PW1 - R.
Kalyanraman was an ex-employee of Defendant No.1 ABFSL. PW2 - R. Kannan, PW3 - Mr. N. Srinivasan and PW4 Mr David Loveless were all ex-employees of Plaintiffs. PW5 R.R. is an Officer working under the Right to Information Act with the Nuclear Power Corporation
Limited (NPCL)
10
10. PW1 - R. Kalyanraman, alongwith his evidence has produced his affidavit dated 25/01/1993 at
Exhibit P-1, annexures and documents of Written Statement at Exhibit P-2 collectively and the
signature of Mr. R.V. Shenoy on Written Statement dated 19/09/1994 at Exhibit P-3.
11. In the cross-examination by Defendant Nos. 3 to 10, following documents were produced on
record:This Order is modified/corrected by Speaking to Minutes Order Documents Exhibits
1 Letter dated 24/2/1992 at page 19 of the Annexures to Written Statement dated
25/1/1993 annexed to the Exh-D-3(1) Affidavit of Evidence of PW1. 2 Letter dated
26/2/1992 by ABFSL to NPCL at page 20 of the Annexures to Written Statement
dated 25/1/1993 Exh.D-3(2) annexed to the Affidavit of Evidence of PW1.
3 Letter dated 26/2/1992 by NPCL to ABFSL at page 21 of the
Annexures to Written Statement dated 25/1/1993 Exh-D-3(3) annexed
to the Affidavit of Evidence of PW1 4 Letter dated 26/2/1992 by NPCL
to ABFSL at page 24 of the Annexures to Written Statement dated
25/1/1993 Exh-D-3(4) annexed to the Affidavit of Evidence of PW1.
issued by ABFSL in favour of SCB at page 50 of the Annexures to
Written Exh-D-3(5) Statement dated 25/1/1993 annexed to the
Affidavit of Evidence of PW1.
12. Following documents were separately shown and tendered by Defendant Nos. 3 to
10:Documents
1
Exhibits
Xerox copy of Bank Receipt No.56
dated 5/3/1992 of ANZ Grindlays Exh-D-3(6) Bank.

This Order is modified/corrected by Speaking to Minutes Order 2 Letter dated
24/11/1992 by ABFSL to ANZ Grindlays Bank Exh-D-3(7) 3 Page 165, para 11 of
Janakiraman Committee Report. Exh-D-3(8) 4 Entire Evidence of R. Kalyanraman
(PW1) in Special Court Suit No.11 of Exh-D-3(9) 1996.
5
Daily Transaction
29/4/1992
Page 2 of Daily Transaction Report
Report
dated
Exh-D-3(10)
11
dated 29/4/1992 written and signed Exh-D-3(11) by R. Kalyanraman (PW1) 7 Daily

Transaction Report dated
236) 26/2/1992 First Transaction 102 (At page except the last Exh-D-3(12)
Transaction written & signed by R.
Kalyanraman(PW1)
Daily Transaction Report dated
26/2/1992 at page 235 written and Exh-D-3(13) signed by R. Kalyanraman (PW1) 9

The Four Entries in Column of FUNDS RECEIVED FROM and in Column of
THROUGH/REMITTED TO a Daily Exh-D-3(14) Transaction Report dated
26/2/1992 at page 235 & last Transaction 217 signed by R. Kalyanraman (PW1).
10 Further statement of R. Kalyanraman (PW1) recorded by Bhupinder Kumar,
Exh-D-3(15) Dy. Suptd, of Police, CBI at page 441 to 448.
11 Daily Transaction Report dated 27/3/1992 at page 204 handwritten Exh-D-3(16)
by Mr. Shenoy and signed by R.Kalyanraman (PW1) 12 Daily Transaction Report
dated 28/2/1992 at page 234 Exh-D-3(17) This Order is modified/corrected by
Speaking to Minutes Order 13 Letter dated 29/5/1992 by ABFSL to NPCL (enclosing
letter of same date Exh-D-3(18) addressed by SCB to ABFSL page 46 of Notes of
Evidence of PW1.
13. PW2 - Mr. R. Kannan produced the original letter dated 11/5/1992 by HPD to SCB
at Exh-P-5 and the letter dated 20/5/1992 addressed by Mr. R. Kannan to the
Company Secretary of NPCL at Exh-P-6. In cross-examination by Defendant No.2,
original file note prepared by PW2 - Mr. R.
Kannan was produced at Exh-D-2(1)
14. In the cross-examination by Defendant Nos. 3 to 10, the following documents
were brought on record:Documents
1
Exhibits
Letter dated 29/5/1992 addressed
by SCB to ABFSL which was duly Exh-D-3(19) signed by R. Kannan(PW2) 2 Page 379
para 17 of the affidavit in evidence dated 30/9/1998 of Exh-D-3(20) Mr. R Kannan
(PW2) filed in Suit No.17 of 1994.
3
Copy of File Note dated 23/5/1992

duly
signed
by
Mr.
R. Exh-D-3(21)
Kannan(PW2)
12
Copy of File Note dated 28/5/1992
duly signed by Mr. R. Kannan Exh-D-3(22) (PW2) This Order is modified/corrected

by Speaking to Minutes Order 5 Copy of File Note dated 6/8/1992 duly signed by Mr.
R. Kannan Exh-D-3(23) (PW2) 6 Copy of File Note dated 1/6/1992 duly signed by
Mr. R. Kannan Exh-D3(24) (PW2) 7 Deal Slip dated 10/4/1992 of Standard
Chartered Bank Exh-D-3(25) 8 Page 426 and 427 of Notes of Evidence of witness R.
Kannan in Exh-D-3(26) Suit No.17 of 1994 9 Page 364 of para 8 of Evidence of
witness R. Kannan in Suit No.17 of Exh-D-3(27) 1994.
15. In the evidence of PW3 - Mr. N. Srinivasan, following documents have been
brought on record:Documents
Exhibits
Original File Note of Meeting
dated 7/11/1991 unsigned by Mr. Exh-P-8 N. Srinivasan 2 Letter dated 11/3/1996

addressed by Industrial Credit Company Ltd Exh-P-9 to Mr. SCB signed by N.
Srinivasan
16. PW4 - Mr. David Loveless has produced the document viz Original Entry dated
26/2/1992 in Bank Receipt Held Registered, which is at Exhibit-P-10.
17. In the cross-examination of PW4 by Counsel for Defendant No.2, following
documents are brought on record viz a copy of the letter dated 3/5/1994 alongwith
Report addressed by David Loveless to CBI at Exhibit D-2(2)
18. In the Cross examination by Counsel for Defendant Nos.
3 to 10 following documents are brought on record viz copy of FIR with annexures at
Exh-D-3(28) and the entire Janakiraman Committee Report at Exh-D-3(29).
19. PW5 - Mr. R.R. Kakde has brought on record the following documents viz copy of
the letter dated 1/6/1997 addressed by NPCL to M/s Hariani & Co at Exh-P-11,
application under section 6 of the Right to Information Act 2005(22/2005)
addressed by M/s Hariani & Co. to Mr. R.R.
Kakde, Addl. Chief Engg at Exh-P-12.
13
20. In the cross-examination by Counsel for Defendant Nos.

3 to 10 following documents were brought on record viz copy of letter dated
10/1/2008 addressed by NPCL to M/s Mulla & Mulla & CBC at Exh-D-3(30) and
application under section 6 This Order is modified/corrected by Speaking to Minutes
Order of the Right to Information Act, 2005 (22/2005) addressed by M/s Mulla &
Mulla to Mr. R.R. Kakde at Exh.D-3(31).
21. Following Documents have been tendered by Plaintiffs which are not shown to the
witnesses:Documents
1.
Exhibits
CHAMBER SUMMONS NO. 15 OF 1997
ALONGWITH AFFIDAVIT
Exh-P-13
2. COPY OF UNAFFIRMED AFFIDAVIT DATED

---- SEPTEMBER 1998 IN COMPLIANCE OF Exh-P-14 ABOVE ORDER
ALONGWITH COVERING LETTER
3. AFFIDAVIT OF S. RAMARAJ DATED 13/7/1993 FILED IN COMPNAY PETITION
Exh-P-15.
NO.5011/99 CLB(NR) OF 1993
4. BANK RECEIPT NO. 2767 DATED 17/3/1992 ISSUED BY CMF TO SCB WITH
Exh-P-16 RESPECT TO 17% NPCL BONDS OF FACE VALUE RS.50 CRORES(NOT
AVAILABLE WITH US NOT EVEN A COPY. CBI TO PRODUCE ORIGINAL AND
CMF TO PRODUCE COPY)
5. ORDER DATED 21/4/1998 REMANDING SUIT 11/96 AND M.P. NO. 81/95 TO
THE Exh-P-17 SPECIAL COURT.
6. REVIEW PETITION NO.391 OF 2002 AGAINST JUDGEMENT IN SUIT NO.
17/94 Exh-P-18
7. CHARGESHEET DATED 15/6/1995 IN R.C.
NO. 11/(S)/92/CBI SCB/BOM.
14
Exh-P-19
8.
ORDER DATED 1/5/2002

PETITION NO.391 OF 2002
IN
REVIEW
Exh-P-20
9.
10.
MISC. PETITION NO. 81 OF 1995 FILED BY

CMF
AFFIDAVIT DATED 2ND JUNE 1993 BY
Exh-P-21
ANDHRA BANK FINANCIAL SERVICES LTD.

Exh-P-22(A) This Order is modified/corrected by Speaking to Minutes Order
11. AFFIDAVIT DATED 14/6/1996 BY HITEN P.DALAL Exh-P-23
12. SUIT 11 OF 1996 DATED 28/11/ 1992 BY Exh-P-24 SCB
13. WRITTEN STATEMENT DATED 24/12/1996 OF DEFENDANT NO.1(ABFSL)
Exh-P-25
14. WRITTEN STATEMENT DATED 14/10/1996 Exh-P-26 OF DEFENDANT
NO.2(CMF)
15. FURTHER WRITTEN STATEMENT DT. Exh-P-27 29.7.1997 OF DEF.NO.2(CMF)
16. WRITTEN STATEMENT DATED 6/1/1997 OF DEF.NO.3(NPCL) Exh-P-28
17. APPLICATION NO.351 OF 2001 ALONGWITH AFFIDAVIT IN Exh-P-29
SUPPPORT( SUIT 13/94 - RES-JUDICATA)
18. REPLY DATED 5/12/2001 TO APPLICATION NO. 351 OF 2001 Exh-P-30
19. MISC.PETITION NO 36 OF 1993 DATED Exh-P-31 6/4/1993 BY CMF
20. REPLY DATED 6/10/1993 BY HITEN P.DALAL Exh-P-32
21. ORDER DATED 21/7/2000 PASSED BY HIS LORDSHIP MR. JUSTICE S.H.
KAPADIA Exh-P-33
22. ORDER DATED 28/1/2000 PASSED BY HIS Exh-P-34 LORDSHIP MR.
JUSTICE S.H.
KAPADIA(AMENDMENT)
23. SUIT 9/94 FILED ON 27/11/1992 BY SCB Exh-P-35
15
24. WRITTEN STATEMENT DATED 13/12/1994 Exh-P-36 OF DEF.NO.2(HPD)

25. ORDER DATED 2ND AUGUST 2000 PASSED Exh-P-37 BY HIS LORDSHIP MR.
JUSTICE S.H.
KAPADIA
26. SUIT NO. 13 OF 1994 FILED ON 27TH Exh-P-38 NOVEMBER 1992 BY SCB
27. WRITTEN STATEMENT DATED 12/10/1994 Exh-P-39 OF DEF.NO.1(CANARA
BANK)
27. ORDER DATED 13/3/1995 PASSED BY HIS Exh-P-40 LORDSHIP MR. JUSTICE
S.N. VARIAVA
28. CIVIL APPEAL NO. 2275 DATED 22/2/2002 Exh-P-41 BY SCB
29. CIVIL APPEAL NO. 2276 DATED 22/2/2002 Exh-P-42 BY SCB
30. ORDER DATED 5/5/2006 PASSED BY THEIR LORDSHIPS MR.JUSTICE
Exh-P-43 This Order is modified/corrected by Speaking to Minutes Order
Y.K.SABHARAL,MR. JUSTICE C.K.THAKKER AND MR. JUSTICE ALTAMAS
KABIR
31. JUDGEMENT DATED 30/10/2001 PASSED Exh-P-44 BY HIS LORDSHIP MR.
JUSTICE B.N. KRIPAL IN CIVIL APPEAL NO. 4456 OF 1995(ARISING FROM SUIT
13/94)
32. CIVIL APPEAL NO. 5357 DATED 28/8/2000 Exh-P-45 BY HITEN P.DALAL
33. CIVIL APPEAL NO/5072 OF 2000 BY HITEN Exh-P-46 P.DLAL
34. ORDER DATED 21/2/2002 PASSED BY Exh-P-47 THEIR LORDSHIPS MR.
JJUSTICE B.N.
KRIPAL, MR. JUSTICE SHIVARAJ V. PATIL AND MR. JUSTICE BISHESHWAR
PRASAD SINGH.
35. CIVIL APPEAL NO. 762 OF 1999 BY Exh-P-48 STANDARD CHARTERED BANK
36. CIVILAPPEAL NO.1878 OF 1999 BY HITEN Exh-P-49 DALAL
37. ORDER DATED 18TH APRIL 2000 PASSED Exh-P-50 BY THEIR LORDSHIPS
MR. JUSTICE B.N.
16
KRIPAL & MR. JUSTICE R.P. SETHI.

22. Defendant No.2 has produced the following documents which are taken on record
viz. Chamber Summons No.1 of 1997 in Suit No.11 of 1996 along with Affidavit in
support dated 10/01/1997 at Exh-D2-3 and the order dated 20/03/1997 in Chamber
Summons No.1 of 1997 at Exh-D2-4
23. Following documents have been tendered by Defendant Nos. 3 to 10 :Documents Exhibits
1. Order dated 2/3 March 1995 in Suit No. 13/94 (regarding 15% Exh-D3-(32) This
Order is modified/corrected by Speaking to Minutes Order arrangement)
2. S. Raghunandan Menon's Affidavit dated 2/7/93 in CLB Exh-D3-(33) Petition No.
5/111/92/CLB(NR) ( paras 1,2, & 7) pgs 1-7
3. S. Raghunandan Menon's Affidavit dated 2/7/93 in CLB Exh-D3-(34) Petition No.
5/111/92/CLB(NR) ( paras 1,2,5 & 6) pgs 8-13
4. Rashna Mistry's Affidavit dated 05/08/98 in CHS 14 of 1997 in Exh-D3-(35) Suit
6/94( paras 2,3 alogwith the relevant interrogatories) pgs 14-17
5. List of Transactions given by Exh-D3-(36) SCB to RBI pgs 18-189
6. Notes of Evidence of
(a) Wasim Saifee in suit Exh-D3-(37) 17/94(pages 5,6,7,56,57,58,68,69) pgs 190-192
(b) Parvesh Singh Nat in Suit 17/94(pages 84G, 84L and 118) pgs 193
(c) Rabvi Iyer in suit 17/94 (pages 211,212,213 read with 213,second half of para
29,233,237,238 read with page 204 to 206,299 read with 212) pgs 194-197
7. RBI Correspondence and entire Exh-D3-(38) JPC Report is taken on record pgs 209-210
8. Affidavit of ANZ in suit No. 12 of 1995 showing ANZ is SCB pgs Exh-D3-(39) This
Order is modified/corrected by Speaking to Minutes Order 211-215
9. JPC REPORT Exh-D3-(40) Interrogatories in Suit No. 6 of
10. 1994, Suit No. 11 of 1994, Suit Exh-D3-(41) of 1994.
17
24. To summarise, therefore, the case of Plaintiffs in brief is that they had purchased
bonds for consideration from ABFSL on 26/02/1992. The original LOA was taken by
HPD and it was given to CMF on the same day. Plaintiffs sold bonds to ANZ and gave
BR and in order to discharge their liability had to purchase the bonds from CMF and
paid consideration to them for the said purchase. Plaintiffs' case is that, as a result,
they had made payment twice for the same bonds;
one to ABFSL & other to CMF. Plaintiffs' case is that CMF had no title and, therefore,
they were entitled to get the possession of original LOA for the purpose of handing
over the same to ANZ to whom they had sold the bonds on 27/02/1992. They could
not do so since the bonds were converted by HPD and, ultimately, by CMF to their
own use.
25. On the other hand, the case of Defendant No.2 is that This Order is
modified/corrected by Speaking to Minutes Order the LOA was initially borrowed
from Plaintiffs and they purchased after adjustment of sale consideration of Can
Triple Units and that the Plaintiffs were, on the contrary, liable to pay Rs 205 crores
to Defendant No.2
26. The case of Defendant No.3 is that the entries in the Plaintiffs' books were
fictitious and if the last entry was fictitious then even the first entry was fictitious.
Secondly, the rate at which the bonds were purchased and sold demonstrated that
these transactions were bogus and this was done as a result of 15% arrangement
between Plaintiffs and HPD whereby the LOA would be used by HPD and, after a
fixed period, entries would be reversed after adjusting the interest. Alternatively it is
urged that the HPD had squared off his liability. It is also urged that Plaintiffs were
estopped, therefore, from claiming money and, lastly, it is submitted that the
transactions were against the public policy. The reliance is placed on the Joint
Parliamentary Committee's Report and Ganapathi Report and it is, therefore,
submitted that there was no cause of action. Lastly, it is submitted that the suit was
barred by limitation.
27. Plaintiffs, after Written Statement was filed, amended their plaint and contended
that issue of 15% arrangement between Plaintiffs and HPD and that the transactions
were against the public policy and other related issues were barred by principles of
res judicata and it was not open for Defendant No2 and Defendant Nos. 3 to 10 to
raise these issues in this suit.
CONVERSION
28. In the present case, since the suit is filed alleging conversion of the suit bonds by
Defendant No.2 and Defendant Nos. 3 to 10, it would be necessary to consider
18
definition of conversion. In the Commentary on the Law of Torts by Salmond &

Hueuston, 20th Edition published by Sweet & Maxwell, the conversion has been
defined in Chapter 6.4 page 101 as under"A conversion is an act, or complex series of acts, of wilful
interference, without lawful justification, with any chattel in a manner
inconsistent with the right of This Order is modified/corrected by
Speaking to Minutes Order another, whereby that other is deprived of
the use and possession of it."
Conversion has been defined by John G. Fleming in the Law of Torts as under:"Conversion may be defined as an intentional exercise of control over a chattel which
so seriously interferes with the right of another to control it that the intermeddler
may justly be required to pay its full value."
Winfield and Jolowicz on Tort, 13th Edition at page 470 have observed in respect of
conversion as under:"Conversion at common law may be committed in so many different
ways that any comprehensive definition is probably impossible but the
connecting thread running through the cases seems to be that the
wrong is committed by a dealing with the goods of a person which
constitutes an unjustifiable denial of his rights in them or the assertion
of rights inconsistent therewith."
This Order is modified/corrected by Speaking to Minutes Order In Butterworths
Common Law Seriries on the Law of Tort, conversion is defined at page 536 at 11.5 as
under:"11.5 It is important to recognise at the outset that the term
'conversion' is a legal term of art. It has been described as an
unfortunate expression because in many cases where conversion is
brought 'no conversion in one sense has taken place; the goods are in
the same state as they always were; there is no actual conversion in the
sense in which a person, not a lawyer, might possibly understand the
term'."
Then in para 11.9 regarding modes of conversion, it is observed as under:"11.9
It has been said that there are
'thousands'
of
reported
conversion, most of which turn upon
cases
on
19
their particular facts. It is, therefore, difficult to generalise to any great degree, but
for explanatory purposes a This Order is modified/corrected by Speaking to Minutes
Order number of classifications have been adopted. It should be noted, however, that
the categories are not mutually exclusive, the question always being whether the
conduct of the defendant is inconsistent with the right to immediate possession of the
claimant."
29. From the above definitions, therefore, it is clear that the conversion is a common
law tort and the conversion is voluntary act by one person inconsistent with
ownership rights of another. It is a tort of strict liability.
30. In the present case, according to Plaintiffs, the suit bonds belonged to the
Plaintiffs and they were to be delivered to ANZ. However, BR was given to ANZ and
the original bonds were converted by Hiten Dalal and were given by him to
Defendant No.3 - CMF and, therefore, though the Plaintiffs were entitled to
possession of the said bonds, they were taken out of their possession by Hiten P.
Dalal and consequently by CMF who sold the same bonds to Plaintiffs, though CMF
was not the owner and the Plaintiffs had already purchased the same bonds from
ABFSL.
31. Before I record my findings on issues between the parties, it will be necessary to
briefly take into consideration the evidence of Plaintiffs.
32. PW1 - R. Kalyanraman has been inter alia examined by Plaintiffs to bring on
record the sale of the suit bonds by ABFSL to Plaintiffs on 26/02/1992 for
consideration and the acknowledgment by the ex-employee of ABFSL for
consideration received by ABFSL for the said transaction and the various documents
which were executed viz cost memo etc for the purpose of proving the said
transaction. Secondly for proving that on 10/04/1992 ABFSL had not purchased the
suit bonds from Plaintiffs and that, in fact, neither they had paid any amount nor
delivered any securities and thirdly for the purpose of bringing on record the Written
Statement of ABFSL in earlier suit.
33. Plaintiffs have also examined PW2 - Mr. R. Kannan, PW3 - Mr. N. Srinivasan and
PW4 - Mr. David Loveless.
34. PW2 - Mr. R. Kannan has been examined to prove that there was a shortfall in the
Securities in the Bank's portfolio and that various meetings were held in connection
with the Securities Scam and HPD had admitted that the losses were caused by him
to the Bank to the tune of Rs 1,258 crores as also to bring on record various letters
20
written by HPD to SCB and that large number of Securities had been purchased
through HPD but they were not backed by Bank Receipts or physical securities and
also that they had noticed that original LOAs were not traceable in SCB's records and
request was made to NPCL to issue duplicate LOAs in favour of SCB and,
inadvertently, both the sets of bonds were mentioned as 9% NPCL bonds. He has
stated that latter on he learnt that, in fact, 17% NPCL bonds had been sold to ANZ
Grindlays who, in turn, had sold it to ABFSL which had, thereafter, sold the bonds to
Fair Growth Financial Services Limited and that Kalyanraman (PW1) had, therefore,
informed the Plaintiffs that they could not issue any confirmation in respect of 17%
NPCL bonds though they were ready to issue such letter in respectof 9% NPCL bonds.
He has also deposed about the meetings which were held This Order is
modified/corrected by Speaking to Minutes Order between 11/5/1992 and 5/6/1992
between the various Officers of SCB, HPD and other brokers in order to sort out the
shortfall in SCB's portfolio and one such meeting was held on 23/5/1992 which was
also attended by HPD. In his evidence, he has also stated that Hiten P. Dalal in the
said meeting informed the Plaintiffs that though full consideration was paid to SCB,
records reflected receipt of only photocopies of the original LOA and that he had
diverted the said bonds to Canara Bank. It was further stated in para 11 of his
affidavit of evidence that the information which was given by HPD was purely
informal and that he would deny his conversation with SCB if they were to seek
formal use of his statement. He has also stated that he made file note of the said
statement which was brought on record. He further stated that he had a discussion
with Senior Managers of SCB but since no particulars were given by HPD, it was felt
that no reliance could be placed on the said statements made by HPD.
35. PW3 - Mr. N. Srinivasan has been examined to bring on record two documents viz
(i) original file note dated This Order is modified/corrected by Speaking to Minutes
Order 7/11/1991 which was unsigned by him and (ii) letter dated 11/3/1996
addressed by Industrial Credit Company Ltd to SCB signed by Mr. N. Srinivasan. He
was examined to prove that the said documents were prepared as record of meeting
which took place on 7/11/1992 and confirmation in respect of transactions was
mentioned in the documents. He has stated that the said memo of meeting was not
signed by him. One Mr. Sanjeev Chugh from SCB sometime in 1996 inquired from
him as to whether copy of the minutes forwarded by Chugh to Srinivasan was in fact
prepared by Mr. Srinivasan and whether they reflected what had transpired at that
meeting. He has stated that he confirmed to the said Mr. Sanjeev Chugh that the
memo of the meeting reflected the correct position and Mr. Chugh asked him to
confirm the same to the Bank in writing. He had addressed a letter dated 11/3/1996
to SCB, stating that due to inadvertence, he has not signed the note and confirmed
that the original of the said note reflected a true and correct statement of what
transpired on 7/11/1992.
21
36. PW4 - Mr. David Loveless was also an ex-employee of This Order is
modified/corrected by Speaking to Minutes Order the Plaintiffs - Bank and he has
stated the initial scope of his role after he joined Plaintiffs - Bank as Director of
Security and Investigations. He has deposed on a matter concerning some of the
decisions taken in one of the Bank's civil litigation viz the present suit and he had
been shown various documents in para 4 to refresh his memory. He has also stated
that he was appointed as Head of the Office of the Special Representative for India
(OSRI) in November, 1994.
He has also stated that the Bank had to file all its civil litigations within a short space
of time in the High Court since it was widely assumed that Original Side, Civil Side
Jurisdiction was going to transfer to the City Civil Court and the Bank was advised
that all these civil suits should be filed before 30/11/1992 so that they could be heard
in the High Court at Bombay. He has also stated the circumstances under which
certain other facts became known to the Plaintiffs on 7/11/1992 and that the Plaintiffs
on that day became aware of the fact that CMF claimed to have received original LOA
from HPD and accordingly the Plaintiffs realized that the suit bonds were diverted to
CMF on 27/2/1992 and that the CMF had fraudulently converted the said bonds. He
This Order is modified/corrected by Speaking to Minutes Order has also stated as to
how, though the meeting was held on 23/5/1992, HPD had not fully cooperated with
the Plaintiffs and had refused to furnish any details regarding diversion and the
manner and circumstances thereof and he has, therefore, stated that under these
circumstances, Plaintiffs took steps to amend its Plaint and make alternative prayer
against CMF for conversion. He has further stated that Plaintiffs learnt in the course
of hearing of Misc. Petition No. 81 of 1995 that at all material time, there was only
one set of NPCL bonds issued by NPCL at the relevant time and, therefore, an inquiry
was made with NPCL under the Right to Information Act, 2005 which confirmed the
said fact.
37. Finally, Plaintiffs examined PW5 - Mr. R.R. Kakde who was working as Central
Public Information Officer. He stated that pursuant to the letter written by M/s
Hariani & Co., he has inquired from the concerned Department and has provided the
information by letter dated 1/6/2007. He has further stated that they had a Finance
Group which maintains all records and from the information given by this Finance
Group, he has conveyed the information to M/s This Order is modified/corrected by
Speaking to Minutes Order Hariani & Co., stating therein that there was only one set
of 17% NPCL bonds issued by the NPCL.
38. Neither Defendant No.2 nor Defendant Nos. 3 to 10 have examined any witness.
39. It is pertinent to note that all these witnesses have been very extensively
cross-examined by the learned Senior Counsel appearing on behalf of Defendant Nos.
3 to 10. The said cross-examination essentially is on the credibility of the witness
about his selective memory and attempt is made to demonstrate as to how the best
22
evidence has not been produced by the Plaintiffs and for the purpose of putting the
case of the Defendants that the entries were sham and bogus and that actually there
was a 15% arrangement between HPD and SCB and the transactions were of HPD
and not SCB and that these transactions were fictitious and, therefore, opposed to
public policy and that, in fact, there was no hole in the transaction pertaining to
26/2/1992 and that the Plaintiffs had not purchased the bonds from ABFSL and were
therefore not the owners since the relevant This Order is modified/corrected by
Speaking to Minutes Order documents were not produced to prove their ownership.
The witnesses have been cross-examined also on the point of discharge of the BR by
ABFSL and how non-production of the reverse side of the BR was fatal to the
Plaintiffs' case and, lastly, on the point of limitation also, PW2, PW3 and PW4 have
been cross-examined at length. Since the issue of 15% arrangement and the
transactions being fictitious and therefore opposed to public policy and other related
issues have been held by me as barred by principles of res judicata including the issue
No.3 between the SCB and HPD, the cross-examination on that point including the
question in respect of the report given by Janakiraman Committee is not relevant for
the purpose of deciding the said issue. The cross-examination on the point of
limitation has been considered wherever it is necessary. Since most of these issues
have been held to be barred by res judicata by the Apex Court in the appeal from
judgment in Suit No.11 of 1996, the said finding is binding on this court and,
therefore, in view of the said finding, question of considering the crossexamination on these points does not arise. Therefore, I have not referred to the
cross-examination by the Counsel This Order is modified/corrected by Speaking to
Minutes Order for Defendant Nos. 3 to 10 at great length since it is not relevant for
the purpose of deciding the issue of res judicata.
I have considered the evidence on each issue and the arguments and counter
arguments by the Counsel for parties in the findings recorded hereinafter.
FINDINGS:
ISSUE NO. 1 BETWEEN SCB & CMF:
1. Whether the suit as against Defendant Nos. 3 to 10 is barred by
limitation?
ISSUE NO.2 BETWEEN SCB and HPD:
2. Whether the suit is barred by limitation as against Defendant No.2
as alleged in para 2 of the Written Statement of Defendant No. 2?
40. Shri Ram Jethmalani, the learned Senior Counsel appearing on behalf of
Plaintiffs has urged that the period of limitation started running against them from
23
07/11/1992. He submitted that, on this date, a meeting took place in the Office of
CMF and it was attended by CBI Officers. CMF was This Order is modified/corrected
by Speaking to Minutes Order represented by their employee Shri S.R. Ramraj. P.W.
3 Mr. Srinivasan was also present in this meeting and in this meeting Shri Ramraj
informed the SCB that CMF had acquired suit bonds from HPD on 27/02/1992. It is
submitted that this was a date on which the Plaintiffs had acquired sufficient degree
of credibility regarding the person in whose possession the letter of credit had passed
and who was the person who could be sued. He submitted that Article 91 of the
Limitation Act, 1963 would govern the question of limitation in the present suit. He
submitted that the word "learns" in Article 91(a) had been construed by various
judgments of the Apex Court, High Courts and the Supreme Court to mean certain
knowledge and not merely suspicion, surmise or conjecture. He relied upon the
judgments in Seshappier Vs. Subramania Chettiar & Ors1, K.M. Talyarkhan vs.
Gangadas Dwarkadas & Ors2 and in Allareddi Sudarsanamma vs. B.V. Ragavaiah &
Ors3. It is then urged that the dates which were suggested by Defendants viz
18/3/1992, 10/04/1992, 20/05/1992, 23/05/1992 and 20/06/1992 could not
possibly be the dates on which it could 1 ILR 40 Madras 678 2 ILR 60 Bombay 848 3
(1966) 1 Andhra Weekly Reporter 218 This Order is modified/corrected by Speaking
to Minutes Order reasonably be argued that Plaintiffs' knowledge was adequate and
as such it could be said that from these dates the period of limitation would start.
41. It is then submitted that though it was pleaded in para 16 of the Written
Statement that the claim against Defendant Nos. 3 to 10 was barred by limitation, the
earlier date prior to 07/11/1992 was not disclosed or alleged as the starting point of
limitation. It is, therefore, submitted that burden of proving this fact was on the
defendants. It is further urged that no suggestion was made to the three witnesses
examined by SCB in cross-examination that SCB had acquired credible information
and knowledge on an earlier date on the basis of which they could have reasonably
sued CMF. Further, no witnesses were examined by Defendants. The learned Senior
Counsel for Plaintiffs relied upon the judgment of the Calcutta High Court in AEG
Carapiet vs. A.Y. Derderian 1 and judgment of the Supreme Court in Sarwan Singh vs.
State of Punjab2.
42. On the other hand, Shri Rohit Kapadia, the learned 1 AIR 1961 Calcutta 359 2 AIR
2002 SC 3652 This Order is modified/corrected by Speaking to Minutes Order Senior
Counsel appearing on behalf of Defendant Nos. 3 to 10 submitted firstly that Article
91 of the Limitation Act was not applicable to the facts of the present case. He
submitted that (a) Article 91 was applicable to the specific movable property (b) that
bonds are not movable property but are "chose in action" and (c) "Chose in action" is
not a thing capable of being produced. It is then submitted that the argument of the
Plaintiffs in this case is contrary to the argument of the Plaintiffs before the Supreme
Court in appeal from Judgment in Suit No.11 of 1996 and, therefore, the finding given
by the Apex Court also is binding on the Plaintiffs. It is also submitted that the
reliance placed by Plaintiffs on the judgment of the Apex Court in Shivanarayan
24
Laxminarayan Joshi & Ors vs. State of Maharashtra & Ors 1 and on the judgment in
Manchersha Ardeshir Devierwala vs. Ismail Ibrahim Patel & Ors2 cannot be placed in
civil suits to decide the nature of suit bonds since the observation made by the Apex
Court was in respect of provisions of section 403 of the Indian Penal Code. Reliance
was also placed on the Judgment of the Apex Court reported in Raghunath Das v.
1 AIR 1980 SC 439 2 AIR 1936 Bombay 167 This Order is modified/corrected by
Speaking to Minutes Order Gokal Chand and another1. It is then urged that assuming
that provisions of Article 91 apply to the facts of the said case, the word "learn" had to
be construed literally. It is submitted that the expression such as subjective, primary,
derivative knowledge etc. was not used in Article 91 and, therefore, mere first
information was enough for starting point of limitation. It is further urged that on the
following dates the Plaintiffs had learnt about possession by CMF viz 18/03/1992,
10/4/1992, 23/05/1992 and the last week of May 1992. It is further urged that the
word "learn" cannot could not be construed as complete knowledge since the word
"known" is also used in Articles 56 to 59 and the word "knowledge" is used in Article
123 and, therefore, if the Legislature intended to use the word "knowledge" in Article
91, it would have done so. It is, therefore, submitted that the meaning of the word
"knowledge" cannot be given to the word "learn" in Article 91. Reliance was placed on
the judgment of the Apex Court in The Member, Board of Revenue vs. Arthur Paul
Benthall. It is then urged that the word "wrongful" could not be read with the word
"conversion". In support of the said submission, reliance 1 AIR 1958 SC 827 This
Order is modified/corrected by Speaking to Minutes Order was placed on the
judgment of the Privy Council reported in Lewis Pugh Evans Pugh vs. Ashutosh Sen
and others1. It is then urged that the fraud was not a relevant ingredient for an action
in conversion. In support of this submission, reliance was placed on the judgment in
Champalal vs. Ramchander and another2, and on the judgment in Dhian Singh
Sobha Singh and another vs. Union of India3. It is submitted that ratio of the
judgment of Privy Council ig in Rahimbhoy Hubibbhoy vs. Turner4 and that of the
Judgment in K.M Talyarkhan vs. Gangadas Dwarkadas & others5 on which the
reliance is placed by the Plaintiffs, is not applicable to the facts of the present case
since those cases were based on fraud under section 18 of the then Limitation Act
which is now section 17. It is further urged that the Plaintiffs' case was not based on
fraud or on section 17 of the Limitation Act. It is then urged that on the basis of the
evidence led by Plaintiffs itself the Plaintiffs had first learnt on the following dates
viz. 18/03/1992, 10/04/1992, 23/05/1992 and on 29/05/1992. On the question of
onus of 1 AIR 1929 Privy Council 69 2 AIR 1976 Rajasthan 75 para 9 3 AIR 1958 SC
274 para 15.
4 1892 (20) IA PC 1 5 ILR 1935 (60) Bom 848 This Order is modified/corrected by
Speaking to Minutes Order proof it is urged that burden was on the Plaintiffs to plead
exemption from limitation under Order VII Rule 6 and Plaintiffs had to prove its
pleading in para 7E. Lastly, it is urged that various circumstances indicated that, in
fact, the alleged meeting did not take place on 07/11/1992 and the said meeting was
25
imaginary meeting created to bring the claim against CMF in limitation. It is urged
that the evidence of Plaintiffs' witness Sriniwasan (P.W.3) is not reliable and no
veracity could be placed on the unsigned minutes of the alleged meeting dated
07/11/1992 and lastly it is submitted that if Plaintiffs had said knowledge about
conversion on 07/11/1992, yet, when the suit was filed on 27/11/1992, no claim was
made against the HPD and CMF. It is, therefore, submitted that setting up of
07/11/1992 as a date for running of time for limitation is an after thought to bring
time barred claim within limitation.
43. For the purpose of deciding issue of limitation, it will be necessary first to
ascertain whether Article 91 of the Limitation Act applies to the facts of the present
case.
Secondly, it will have to be ascertained what is the true This Order is
modified/corrected by Speaking to Minutes Order meaning and import of the word
"first learns". Thirdly, it will have to be ascertained whether limitation had started
running from 07/011/1992 or on the earlier dates as alleged by Defendant Nos. 3 to
10. Before I consider the aforesaid aspects, one important question regarding burden
of proof has to be resolved. It is now well settled by catena of judgments that the
initial burden of establishing that the suit is within limitation is on the Plaintiff and if
he has alleged that the period of limitation, particularly in a case which falls within
the parameters of Article 91, starts running from a particular date and establishes
this fact then the burden shifts on the Defendant to prove that the period of
limitation had started running from an earlier date. The first judgment on this point
is in the case of K.M. Talyarkhan vs. Gangadas Dwarkadas & Ors1 It has been fully
approved by the Supreme Court by its judgment in K.S. Nanji & Co. vs. Jatashankar
Dossa & Ors2. In para 12 of the said judgment the Apex Court has observed as
under:"12. Let us now consider some of the decisions cited at the Bar. A
Division Bench of the Patna High Court in Sundari 1 ILR 60 Bombay
848 at page 860.
2 AIR 1961 SC 1474 This Order is modified/corrected by Speaking to Minutes Order
Shivaji v. Secretary of State of Inida1 held that "when a defendant in an action based
on tort seeks to show that the suit is not maintainable by reason of the expiry of the
statutory period of limitation, it is upon him to prove the necessary facts". There the
suit was for conversion of property, and the learned Judges applied Article 48 of the
Limitation Act to the said suit. After noticing the words in the last column of the
article, the learned Judges proceeded to observe thus at p. 360:
"The starting date of limitation in the case of conversion is the date when the person
who has the right to possession first learns of the act of conversion."
26
Adverting to the burden of proof, the learned Judges observed:

"There is nothing in the pleadings which would show precisely at what period the
plaintiff or the plaintiff's agent, which is the same thing, became aware of the sale and
its wrongfulness, that is to say, became aware of the fact of conversion. The
defendant was unable to provide us with any materials to fix that date and therefore
his plea of limitation fails altogether, because he is unable to show a date outside the
period of three years which would entitle him to succeed."
With great respect to the learned Judges, we hold that this case had not been
correctly decided. The burden of proof, as we have explained earlier is on a 1 (1934)
ILR 13 Pat 752, 760 This Order is modified/corrected by Speaking to Minutes Order
plaintiff who asserts a right, and it may be, having regard to the circumstances of
each case, that the onus of proof may shift to the defendant. But to say that no duty is
cast upon the plaintiff even to allege the date when they had knowledge of the
defendant's possession of the converted property and that the entire burden is on the
defendant is contrary to the tenor of the article in the Limitation Act and also to the
rules of evidence. A Division Bench of the Calcutta High Court in Kalyani Prasad
Singh v. Borrea Coal Co. Ltd.1 did not accept the view of the Patna High Court, but
followed that of the Bombay High Court in the Bank of Bombay v.
Fazulbhoy Ebrahim2. In the context of the application of Article 48 of the Limitation
Act, the learned Judges of the Calcutta High Court observed at p. 127 thus:
"The burden of proof rests upon the party who substantially asserts the affirmative of
the issue..... We are of opinion that the onus is upon the plaintiff in these suits to
prove that the knowledge of his father was within three years of the suit."
In Talyarkhan v. Gangadas 3 Rangnekar, J., formulated the legal position thus at p.
860:
"The onus is on the plaintiff to prove that he first learnt within three years of the suit
that the property which he is seeking to recover was in the possession of the
defendant. In other words, he has 1 AIR 1946 Cal 123 2 (1922) 24 Bom LR 513 3
(1935) ILR 60 Bom 848 This Order is modified/corrected by Speaking to Minutes
Order to prove that he obtained the knowledge of the defendant's possession of the
property within three years of the suit, and that is all. If he proves this, then to
succeed in the plea of limitation the defendant has to prove that the fact that the
property was in his possession became known to the Plaintiff more than three years
prior to the suit."
We accept the said observations as representing the correct legal position on the
subject."
27
From the ratio of the aforesaid judgments it is thus obvious that initial burden is on
the Plaintiffs to prove that the period of limitation started running from 07/11/1992
and not on 18/03/1992 as alleged in para 7E by the Plaintiffs which reads as under:"On 18 March 1992, it appears that 2nd Defendant arranged the return
of Plaintiff BR bearing No.1939 favouring ANZGB by delivering to
ANZGB the original Letter of Allotment in respect of the said bonds
from 3rd Defendant. .... Had 3rd Defendant, delivered to Plaintiff
against the transaction of 17th March, 1992, the original letter of
allotment, which was in possession of 3rd Defendant, Plaintiff would
have immediately realized the fraud that had been played on the
Plaintiff."
This Order is modified/corrected by Speaking to Minutes Order Once this fact is
proved by the Plaintiffs then the Defendants would have to prove from the evidence
on record that, in fact, the limitation did not start running from 07/11/1992 but on
the earlier dates mentioned by them during the course of their arguments.
44. Before I consider the evidence on record on this aspect, it would be relevant to
briefly deal with the judgment on which reliance is placed by the Plaintiffs viz the
judgment of the Privy Council in Rahimbhoy Hubibbhoy vs. Turner1 (hereinafter
referred to as "Rahimbhoy Hubibbhoy") in support of the contention that the word
"first learns" means knowledge which is not mere suspicion but knowledge and
certain information. It is urged that the principle laid down by the Privy Council in
this case also applies to the dishonest conversion by bailee and to any other person
benefiting by such dishonest conduct. In my view, ratio of the judgment on the said
aspect in Rahimbhoy Hubibbhoy would not apply to the facts of the present case.
Admittedly, the said case was regarding proving the knowledge of fraud as laid down
1 1892(20) IA PC 1 This Order is modified/corrected by Speaking to Minutes Order
under section 18 of the old Limitation Act which, after an amendment, now relates to
section 17 of the Limitation Act and in this context it was held that by virtue of
section 18 of the Limitation Act right of person who was defrauded was extended by
the said section for the period when the Plaintiff had been kept in dark by means of
fraud from the knowledge of such right or title or where any document which is
necessary to establish such right had been fraudulently concealed from him. In this
case, a suit was brought by the Official Assignee against Rahimbhoy Hubibbhoy for
recovery of the property of his insolvent brother, which was alleged to have been
privately transferred to him in fraud of the creditors under the insolvency. In this
context, it was observed by the Privy Council as under:
"It is not disputed that the transfer was voluntary one, that it cannot
be maintained, and that if this action had been brought in 1867 the
assets must have been recovered. But it is said that as the action was
not brought till 1887, it is barred by time. The answer is that the
28
transfer was not only a voluntary one and bad against the creditors,
but that it was committed in pursuance of a fraud, and was concealed
from the creditors, that it was a fraud which This Order is
modified/corrected by Speaking to Minutes Order prevented the
assignee from having knowledge of his right to recover the assets, and
therefore falls within the 18th section of the Limitation Act XV.of 1877,
which directs that in such a case the time for instituting an action shall
be computed from the time when the fraud first became known to the
person injuriously affected thereby.
The assignee is positive that he did not know anything about this fraud
until the year 1885, when he learnt it in the course of a suit brought
against Ahmedbhoy to recover a number of other items, in
conjunction with this one, belonging to the insolvent's estate.
Their Lordships consider that when a man has committed a fraud and
has got property thereby, it is for him to show that the person injured
by his fraud and suing to recover the property has had clear and
definite knowledge of those facts which constitute the fraud, at a time
which is too remote to allow him to bring the suit. That is attempted in
the present case. But their Lordships consider, and in this they agree
with both the Courts below, that all that the Appellant Rahimbhoy has
done is to show that some clues and hints reached the assignee in the
year 1881, which perhaps vigorously and acutely followed up, might
have led to complete knowledge of the fraud, but that there was no
disclosure made which informed the mind of the assignee that the
insolvent's estate had been defrauded by Rahimbhoy of these assets in
the year 1867."
45. It is evident, therefore, that the observation made by This Order is
modified/corrected by Speaking to Minutes Order the Privy Council about complete
knowledge is in respect of the fraud which prevented the official assignee from having
knowledge of his right to recover the assets and, therefore, the said observation has
been made in the light of the provisions of section 18 of the Limitation Act (XV of
1877). In my humble view, the said observation cannot be of any assistance to the
Plaintiffs for the purpose of interpreting the word "learn" which is used in Article 91
of the Limitation Act, 1963. Admittedly, fraud had not been pleaded by the Plaintiffs
in this suit nor any evidence has been led on this aspect and consequently it has not
been argued. It will, therefore, not be possible to derive the said analogy which has
been used by the Privy Council in the context of section 18 of the Limitation Act (XV
of 1877) to a case of conversion as pleaded by the Plaintiffs in this case. For the same
reasons the other judgments in respect of fraud will not apply to the facts of the
present case.
29
46. It will have to be seen now as to whether Article 91 of the Limitation Act applies
in this case. Article 91 reads as under:This Order is modified/corrected by Speaking to Minutes Order Description of suit
Period of Limitation Time from which period beings to run
91. For compensation When the person
(a) for wrongfully having the right to taking or detaining the possession of the any
specific movable Three years property first learns property lost, or in whose
possession acquired by theft, or it is.
dishonest misappropriation or conversion.
(b) for wrongfully taking or injuring or When the property is wrongfully detaining
any other specific movable property ig Three years wrongfully taken or injured, or
when the detainer's possession becomes unlawful.
47. It is the case of Plaintiffs that their case falls under Article 91(a) and that the
bonds in question are a specific movable property. It is secondly argued that the word
"dishonest" which is used to describe misappropriation would also apply to
conversion and it is, therefore, argued that the ratio of the judgment in Rahimbhoy
Hubibbhoy would also apply to the facts of this case. In my view, taking into
consideration the averments in the plaint, the provisions of Article 91 are applicable
in this case. Taking into consideration the provisions of section 3(36) of the General
Clauses Act, even incorporeal property would fall within the This Order is
modified/corrected by Speaking to Minutes Order definition of the movable property.
Movable property has been defined under General Clauses Act, 1897 under section
3(36) as under:"movable property, shall mean property of every description, except
immovable property;"
Immovable property has been defined under General Clauses Act, 1897 under section
3(26) as under:"Immovable property shall include land, benefits to arise out of land,
and things attached to the earth, or permanently fastened to anything
attached to the earth."
Since every thing that is not immovable is movable, incorporeal property is also a
movable property under the said Act. Therefore, submission of the learned Senior
Counsel appearing on behalf of Defendant Nos. 3 to 10 that the suit bonds being
"actionable claims" and as such incorporeal rights in property, are not property and
30
therefore not capable of being possessed, cannot be accepted.

48. Secondly, it is further urged by Shri Rohit Kapadia, the learned Senior Counsel
appearing on behalf of Defendant Nos. 3 to 10 that in view of arguments of SCB in
Suit No.11 of 1996 and consequent decision of the Apex Court that bonds are "chose
in action", the said judgment is binding on the Plaintiffs. This submission also, in my
view, cannot be accepted. It must be remembered that SCB's argument in that suit
was in respect of the word "thing" in section 110 of the Evidence Act and, in that
context, it was argued that it did not include the "chose in action". In my view,
perusal of the observations of the Apex Court in Suit No.11 of 1996 clearly reveals that
the said observations are made in the context of section 110 of the Evidence Act and,
therefore, in my view, it cannot be said that those observations are binding on the
Plaintiffs in respect of the facts of the present case. Therefore, in my view the suit
bonds are movable property which is capable of being possessed.
49. Once it is held that the bonds are specific movable property which is capable of
being possessed, the second question which falls for consideration is whether
conversion This Order is modified/corrected by Speaking to Minutes Order could be
treated as dishonest conversion. In my view, on plain reading of the said Article, the
word "conversion"
cannot be split into two parts by classifying it into two parts i.e. "honest conversion"
and "dishonest conversion". The word "dishonest" which is used to describe
misappropriation, in my view, cannot be used to describe conversion either as an
honest conversion or dishonest conversion. The Privy Council in Lewis Pugh Evans
Pugh vs. Ashutosh Sen and others1 while considering this question in the context of
Article 48 of the Limitation Act 1908 which is pari materia with Article 91 of 1963 Act
has observed on page 71 as under:"......Art.48 alone refers to conversion, and their lordships can see no ground for
splitting up conversion into two classes, one dishonest and other not dishonest.---The trust is that if the article is read without commas inserted in the print, as a Court
of law is bound to do, the meaning is reasonably clear...."
From the above observations, therefore, it is clear that the word "wrongful" is
attached to misappropriation and not to conversion.
1 AIR 1929 Privy Council 69 This Order is modified/corrected by Speaking to
Minutes Order
50. Similarly, tort of conversion cannot be split into honest conversion and dishonest
conversion since tort of conversion is a strict liability. Rajasthan High Court has
31
followed the judgment of Privy Council in its judgment in Champalal vs. Ramchander
and another1 Therefore, so having held, the next question which needs to be decided
is regarding meaning of the word "first learns". Mr. Jethmalani, the learned Senior
Counsel appearing on behalf of Plaintiffs has urged that taking into consideration
definition of the word "learn" in the Oxford Dictionary to mean to acquire knowledge
of or skill in (something) through study or experience or by being taught. He has
urged that the word "learn"must be understood in the context of acquiring knowledge
and, therefore, in the ordinary dictionary sense the word "learn" is equivalent to the
knowledge. In support of the said contention, Shri Jethmalani, the learned Senior
Counsel relied upon the judgment of the Bombay High Court in K.M. Talyarkhan vs.
Gangadas Dwarkadas & Ors.2 and the judgment of the Andhra Pradesh High Court in
Allareddi 1 AIR 1976 Rajasthan 75 para 9 2 ILR 60 Bombay 848 This Order is
modified/corrected by Speaking to Minutes Order Sudarsanamma vs. B.V.
Raghavaiah & Ors1
51. On the other hand, Shri Rohit Kapadia, the learned Senior Counsel appearing on
behalf of Defendant Nos. 3 to 10 has urged that the word "learn" appearing in Article
91 of the Act cannot be equated with the complete knowledge or knowledge as argued
by the Plaintiffs. He has further submitted that the Limitation Act, 1963 has used the
word "known" in Articles 56 to 59 and the word "knowledge" in Article 123 and,
therefore, it is urged that if the legislature intended to use the word "knowledge" in
Article 91, it would have done so and, therefore, by analogy meaning of word
"knowledge" cannot be given to word "learn" in Article 91. In support of his
submission he relied upon the judgment of the Apex Court in The Member, Board of
Revenue vs. Arthur Paul Benthall2
52. It is true that in Arthur Paul Benthall (supra) it has been observed by the Apex
Court that when two words of different import are used in a statute in two
consecutive provisions, it would be difficult to maintain that they are used in the
same 1 (1966) 1 Andhra Weekly Reporter 218 2 AIR 1956 SC 35 This Order is
modified/corrected by Speaking to Minutes Order sense, yet it has to be seen that the
word "learn" has an element of knowledge in the sense that when you say that "one
learns" it meas that one gains knowledge about something and though in the
Limitation Act, the word "knowledge" is found in Article 123 and the word "known" is
used in Articles 56 to 59, these words have been used in different context. If,
therefore, it is interpreted to mean the abstract knowledge, it would lead to absurd
consequences.
A negotiable instrument can pass through various hands and unless there is concrete
knowledge about the person who is in possession of the specific movable property, it
will not be possible for the Plaintiffs to file suit for compensation from such person.
In this context, therefore, the submission made by Shri Jethmalani, the learned
Senior Counsel appearing on behalf of the Plaintiffs will have to be accepted that the
word "first learns" would indicate clear and definite knowledge.
32
The Bombay High Court in K.M. Talyarkhan (supra) has also interpreted Article 48
which is pari materia with Article 91 in a similar manner and it has observed as
under:"The plain meaning of Article 48 is that time begins to run against the
owner of This Order is modified/corrected by Speaking to Minutes
Order the property lost, from the time when he first discovered that it
is in the possession of the Defendant. The words "whose possession"
in that Article, mean, the possession of some definite person who can
be identified and against whom effective relief for restoration of the
property in question can be obtained. In such a case the onus is in the
first place on the Plaintiff to prove that he first learnt it within three
years of the suit that the property which he is seeking to recover was in
possession of the Defendant. If he proves this, then to succeed on the
plea of limitation the Defendant has to prove that the fact that the
property was in his possession became known to the Plaintiff more
than three years prior to the suit."
Same view has been taken by the Madras High Court in Seshappier vs. Subramania
Chettiar & Ors.1 wherein it is held that the time began to run "when the Plaintiff came
to know in whose possession" the concerned article was. Same view has been taken
by the Andhra Pradesh High Court in Allareddi Sudarsanamma vs. B.V. Raghavaiah
& Ors.2 wherein the Court has observed as follows:"The onus lies on the plaintiffs to prove that they first learnt of the
Defendant's possession within three years prior to suit which is the
same thing as saying that they had 1 ILR 40 Madras 678 2 (1966) 1
Andhra Weekly Reporter 218 This Order is modified/corrected by
Speaking to Minutes Order knowledge that the defendants took
possession within three years prior to the suit. The question of
knowledge is one of fact and that can be found on the pleadings. If it
can be so found the question of taking evidence may not arise."
From the aforesaid three judgments, it is abundantly clear that all the High Courts
have held that the word "learn"
implies knowledge regarding possession by some definite person. The contention of
Shri Rohit Kapadia, the learned Senior Counsel appearing on behalf of Defendant
Nos. 3 to 10 that the word "first learns" cannot be equated with knowledge of a
definite person, therefore, is unacceptable.
53. Having so held, the next crucial question which is required to be decided is
whether the Plaintiffs prove that they first learnt or had knowledge about possession
of the bonds with CMF for the first time on 07/11/1992 and if it is held that the
33
Plaintiffs have proved this fact then whether on the basis of evidence which is on
record, Defendants prove that, in fact, the Plaintiffs had knowledge about possession
of the bonds in question prior to 07/11/1992.
54. It has, therefore, to be seen as to whether the Plaintiffs have established that they
first learnt on 07/11/1992 that the bonds were in possession of CMF. In my view,
Plaintiffs have not first proved this fact for the reasons mentioned hereinbelow. It is
therefore necessary first to see the chronology of events. Plaintiffs initially filed a suit
only against ABFSL and claimed recovery of the said amount from Defendant No.1.
igHowever, on 25/10/1995, a Chamber Summons was filed by them for amendment
of the plaint in which they gave up their claim against Defendant No.1 and set up a
claim against Defendant Nos. 2 to 10 i.e HPD and CMF. This amendment was
allowed in 2005. By virtue of the amendment, it is now claimed that the Plaintiffs
subsequently came to know more particularly in a meeting held on 07/11/1992 that
the bonds were unauthorizedly delivered and diverted by HPD to CMF. According to
the Plaintiffs on 07/11/1992, a meeting was held in the Office of CMF and which was
attended by Shri S.R. Ramraj representative of CMF, Kannan , Kalyanraman and the
Officers of the CBI and in the said meeting S.R. Ramraj informed the Plaintiffs that
the bonds were diverted by HPD This Order is modified/corrected by Speaking to
Minutes Order to CMF on 27/2/1992. Plaintiffs relied upon the unsigned note Exh.D2-1 of Kannan which had recorded the said event and it was confirmed by him
in March 1996 vide letter Exh.
D2-2. In para 7E of the plaint, it is averred by the Plaintiffs that on 18/3/1992 since
the bonds were directly given to ANZ, the Plaintiffs did not realize that these were the
same bonds which belonged to the Plaintiffs and they were fraudulently not given to
the Plaintiffs by CMF because they had they done so, Plaintiffs would have realized
on 18/03/1992 itself that the bonds belonged to the Plaintiffs were sold by CMF. In
view of these pleadings, therefore, the Plaintiffs will have to establish firstly that such
meeting did take place on 07/11/1992 and and that it was attended by S.R. Ramraj of
CMF, Kannan, Officers of CBI and Kalyanraman amongst others. Secondly, unsigned
note was prepared by Kannan and, thirdly, it was confirmed subsequently by him in
March, 1996.
55. In my view analysis of the evidence on records creates serious doubt regarding the
story of the Plaintiffs about the said meeting dated 07/11/1992. Firstly, if 07/11/1992
was This Order is modified/corrected by Speaking to Minutes Order the date on
which the Plaintiffs had definite knowledge about possession of the bonds with CMF,
the Plaintiffs would have made claim against CMF and HPD at the time of filing of
the suit itself on 27/11/1992. No explanation has been given by the Plaintiffs as to
how and why this discrepancy has arisen.
34
Secondly, no reference has been made about this meeting which was allegedly held
on 07/11/1992 by P.W. 1 Kalyanraman who also was shown to be present when the said meeting was held.
Thirdly, there is no reference about this meeting in the correspondence between
Plaintiffs and NPCL or ABFSL. P.W.4 - Devid Loveless does not make any reference
about this meeting. P.W. 2 - Kannan was in Zambia at the relevant time when he had
confirmed about this meeting by letter Exh.D2-2. Shri Kannan in his evidence does
not mention as to how this note was delivered to him on the basis of which he could
send the confirmation. The evidence of P.W.2 - Kannan itself does not inspire
confidence since though he was a member of the investigation team, he does not
remember anything else about the transaction of the Plaintiffs except the
circumstances under which he has signed the letter of This Order is
modified/corrected by Speaking to Minutes Order confirmation - Exh D2-2
Therefore, in my view, Plaintiffs, in the first place, have not established that such a
meeting, in fact, had taken place and the only evidence on record is the statement of
Kannan - P.W.2 and his letter of confirmation.
The initial burden, in my view, is on the Plaintiffs of establishing the date of their first
knowledge. Since it is not established, it cannot be said that period of limitation had
started running from 07/11/1992 as claimed by the Plaintiffs.
56. Even otherwise, in my view Defendants have, on the basis of evidence of the
Plaintiffs which is on record, established that Plaintiffs had knowledge about
possession of the bonds atleast on 18/03/1992 or 23/5/1992 or last week of May
1992.
57. Plaintiffs, in their amended plaint, in para 7A, have given flow chart of various
transactions which took place in respect of 17% NPCL bonds. Para 7A along with
chart read as follows:7A. The Plaintiffs state that after purchase of the said bond viz. 17%
NPCL bonds of face value of Rs This Order is modified/corrected by
Speaking to Minutes Order 50 crores, the Plaintiffs records reflect the
following further transactions:
Sr. Date Purchase Sale Balance Counter Brok- Plaintifffs' No Party ker Deal Slip No.
1. 26.2.1992 50,00,00,000 50,00,00,000 ABFSL Direct 8682
2. 26.2.1992 50,00,00.000 NIL ANZGB Direct 8683
3. 17.3.1992 50,00,00,000 50,00,00,000 CMF Direct 9054
35
4. 23.3.1992 50,00,00,000 NIL ANZGB Direct 9215

5. 8.4.1992 50,00,00,000 50,00,00,000 ANZGB Direct 9671
6. 10.4.1992 50,00,00,000 NIL ABFSL Direct 9712
58. According to the Plaintiffs, the bonds were purchased initially by ABFSL from
NPCL which were, in turn, purchased by Plaintiffs and, thereafter, they were sold to
ANZ.
Ultimately they were again repurchased by Plaintiffs from CMF in order to given
delivery of bonds to ANZ. According to Plaintiffs, if the bonds had been directly
delivered to Plaintiffs by CMF, they would have come to know that the bonds which
were purchased by them from ABFSL were returned to them and on that date they
would have realized the conversion of bonds at the behest of HPD. Unfortunately, in
my view, there is no material on record to show that the Plaintiffs did not have
knowledge that this was only set of bonds which were used by NPCL and, therefore,
there was no This Order is modified/corrected by Speaking to Minutes Order
question of other bonds being in circulation. The burden of establishing this fact
being on the Plaintiffs, in the absence of any evidence on this point, it will have to be
held that when the bond s were returned by CMF to ANZ on that date itself the
Plaintiffs - SCB became aware of the possession of the bonds by CMF and, therefore,
period of limitation, naturally, would start running from 18/03/1992.
59. Mr. Jethmalani, the learned senior Counsel appearing on behalf of Plaintiffs
strenuously urged that 18/03/1992 could never be the date of knowledge. It is urged
that the burden was on CMF to prove that the bonds did not go directly to ANZ
through HPD but that they had delivered them to SCB and SCB had, in turn,
delivered them to ANZ. In my view, in view of the specific plea of the Plaintiffs in
para 7E to the said effect, the burden of proving that the Defendant No.3 did not
deliver the original letter of allotment to the Plaintiffs and instead delivered the same
to the ANZ was on the Plaintiffs and not on the Defendants. It is the case of the
Plaintiffs that they did not realize on 18/3/1992 hat CMF had sold suit bonds to the
Plaintiffs and in order to conceal the This Order is modified/corrected by Speaking to
Minutes Order said bonds, CMF had issued its BR No.2767 even though CMF was not
in possession of the suit bonds. It is also their case that the BR could not have been
issued by CMF as BR could be issued when physical securities were available. It is
also urged that the BR is issued only when the Bank is in possession of the physical
securities. However, securities cannot be delivered to the counter-party bank. A
contrary stand, however, has been taken by them in the FIR and, therefore, this stand
which has been taken appears to be an afterthought for the purpose of bringing the
suit within a period of limitation. It is also pertinent to note that P.W.1 had adopted
Written statement of Defendant No.1 who has in para 4(k) stated that ANZ Grindlays
received bonds from the Plaintiffs on 18/03/1992. P.W.1 also has stated in his
36
evidence on page 31 as under:Q:
Between
13/11/1992 and
20/11/1992, were you aware of ANZ

saying that LOA was received by
them from Plaintiff?
A:
I say that I was aware of it
earlier on or around 18/3/1992 and it was on account of telephonic conversation

between ABFSL and Grindlays This Order is modified/corrected by Speaking to
Minutes Order Lastly P.W.4 also has stated in his evidence at page 92 that the
Plaintiffs were aware about the alleged fraud on 17/3/1992 itself.
60. It is also strenuously urged by Shri Jethmalani, the learned Senior Counsel
appearing on behalf of Plaintiffs that in para 4 of the affidavit dated 13/7/1993 of S.R.
Ramraj, authorized employee and agent of CMF, which is at ExhibitP-15, it has been stated as under:"(iv) Even in respect of 17% NPCL bonds which were subsequently
sold on 17.3.1992 by the Petitioners to Respondent no.4 as set out in
para A above, the Petitioners had entered into the transaction through
Respondent No.2 who acted as a broker. As set out th hereinabove,
even on 17 March, 1992 there was a netting of transactions against
purchase of 13% NLC bonds by the Petitioner from Respondent No.4
was also brought about by Respondent No.2 acting as broker. The
R.B.I cheque for the net amount of Rs. 15,23,973.61 issued by
Respondent No.4 in favour of the Petitioners was delivered to the
Petitioner by Respondent No.2 and likewise the B.R. in respect of the
sale of 17% NPCL bonds was delivered by the Petitioner to Respondent
No.2 for onwards delivering to the Purchaser. Subsequently, even This
Order is modified/corrected by Speaking to Minutes Order when the
original letter of allotment was exchanged for the B.R., the said
exchange also had taken place through Respondent No.2 and/or his
servants and agents."
In fact, a careful perusal of the said paragraph reveals that the bonds were delivered
through HPD to the Plaintiffs.
37
Defendants, therefore, in my view, on the basis of evidence which is on record have

established that Plaintiffs had the knowledge about possession of the bonds by CMF
on 18/3/1992 when they delivered them to the Plaintiffs, who, in turn delivered them
to ANZ through HPD.
61. The next date on which the reliance is placed by Shri Kapadia, the learned Senior
Counsel appearing on behalf of the Defendants is 10/04/1992. It is urged that
Plaintiffs settled the said transaction of 10/04/1992 with Defendant No.2 against
IRFC bonds for valuable consideration and that they came to know on 09/04/1992
that there was a hole in the Plaintiffs' books pertaining to the transaction of
26/2/1992. It is submitted that the transaction could be settled on 10/4/1992 as per
Exh.D2(1) only if the Plaintiffs were aware that the suit bonds were already dealt by
them This Order is modified/corrected by Speaking to Minutes Order on 18/03/1992
and it could not demand delivery from Defendant No.1. It is also urged that
transaction could be settled with HPD only since they were fully aware that they were
in possession of the LOA and had dealt with the same.
Lastly, it is urged that the Plaintiffs could have learnt about physical stock of 17%
security on physical stock taking of flows of financial year 1991-92 and would have
therefore settled the issue on 10/4/1992 and, ultimately, it is urged that 10/4/1992
would be a relevant date for the purpose of limitation since on 10/4/1992 there was
settlement/adjustment of money payable and receivable under three transactions
under Deal Slip Nos. 9712, 9713 and 9714 and, therefore, it is difficult to conceive
how the Plaintiffs were not aware of the three transactions for the purpose of
settlement.
62. On the other hand Shri Jethmalani, the learned Senior Counsel appearing on
behalf of Plaintiffs submitted that this contention was incorrect in view of HPD's
letter dated 11/5/1992 signed on 18/5/1992 - Exhibit-P-5. It is submitted that by this
letter HPD had acknowledged his liability of more This Order is modified/corrected
by Speaking to Minutes Order than 1200 crores to SCB and this liability did not
include liability for suit bonds. It is, therefore, submitted that it could not be said that
in April 1992 HPD imparted relevant knowledge to SCB.
63. There is much substance in the submission of Mr. Jethmalani the learned
Counsel appearing on behalf of Plaintiffs that the submissions made by Mr. Kapadia
in respect of this date are hypothetical and Defendants have not proved by leading
any cogent evidence or by pointing out from the evidence led by Plaintiffs that they
became aware of the conversion on 10/4/1992. So far as entry dated 10/4/1992 is
concerned, Plaintiffs had averred that this was to cover the hole which they had
noticed and it was a dummy entry made. It has not been established by Defendant
No.2 - HPD that the said transaction was settled against IRFC bonds for valuable
consideration. In my view, therefore, 10/04/1992 cannot be treated as a date on
which Plaintiffs had knowledge.
38
64. The next suggested date by Defendant Nos. 3 to 10 is This Order is

modified/corrected by Speaking to Minutes Order 23/05/1992. Shri Kapadia, the
learned Senior Counsel for Defendant Nos. 3 to 10 submitted that Plaintiffs have
admitted that their Officers had meetings with HPD in May 1992 and specifically in
the meeting of 23/5/1992 there was discussion about 19% NPCL bonds. It is urged
that (a) Plaintiffs have also admitted that HPD had informed Plaintiffs' Officers that
the bonds had been delivered/diverted to CMF; (b) that minutes of the meeting dated
23/5/1992 Exh.D-3(21) reveals that the Plaintiffs had learnt in whose possession the
bonds were by 23/5/1992 ;
(c) that in these minutes apprehension of the Plaintiffs as later on urged by them
about non-cooperation by HPD or doubt about truthfulness of the said conversation
by HPD is not mentioned; (d) that Defendant No.3 had specifically made an
averment in the additional Written Statement that Plaintiffs had learnt about
conversion on 23/5/1992 in the meeting between Plaintiffs and HPD; (e) that
Plaintiffs had not pleaded about meeting of 23/5/1992 and therefore had suppressed
material fact from the court. It is submitted that P.W. 2 - Kannan had stated in his
evidence that HPD told P.W.2 and one Wasim Saifee, an Officer of the Plaintiffs that
This Order is modified/corrected by Speaking to Minutes Order he had diverted suit
LOA to CMF. It is further submitted that P.W.2 stated in his evidence that HPD had
told them that he would deny the said meeting if the Plaintiffs were to use the said
meeting in any legal proceedings. Further P.W.2 and P.W.4 both have stated in their
evidence that no reliance could be placed on what HPD informed the Plaintiffs since
HPD was evasive and became non-cooperative after the said meeting. Shri Kapadia,
learned Senior Counsel submitted that the statement that HPD would deny the
conversaion is not mentioned in the minutes of the meeting. It is submitted that since
HPD had not made any such statement, it was not mentioned in the minutes. It is
further submitted that even in Suit No.17 of 1992 P.W. 2 was examined as witness
and, in his evidence in that suit also he has not mentioned about the statement of
HPD in Exh.D-3(26). It is further urged that Shri Wasim Saifee in his handwritten
note also did not mention the alleged statement of HPD in Suit No.17 of 1994.
Similarly, it is urged that other Officers of Plaintiffs i.e Nat also had not deposed
about it and in the FIR also the denial of HPD is not mentioned. It is further urged
that the story about HPD's statement that he would deny the meeting if This Order is
modified/corrected by Speaking to Minutes Order used in legal proceedings was
added to discard what HPD had informed the Plaintiffs about the conversion.
65. On the other hand Shri Jethmalani, the learned Senior Counsel appearing on
behalf of the Plaintiffs submitted that even on that date i.e on 23/5/1992 HPD had
stated that he had diverted bonds to Canara Bank and the name of CMF was not
mentioned. ig It is further submitted that the word "divert" in its ordinary sense
means preventing something from reaching its normal destination and, therefore, if
the bonds had been diverted before they reached SCB, the cause of action would be
39
against ABFSL and not against CMF and this diversion which was disclosed was
perfectly consistent with the inference from the "photocopy" entry in SCB's books. It
is therefore submitted that when FIR was lodged on 10/6/1992, they had made HPD
as an accused without paying any attention to the disclosure made on 23/5/1992. It
is, therefore, urged that Plaintiffs felt that though HPD had cooperated to some
extent, he was uncooperative after the said meeting which is evident from number of
circumstances and, therefore, Plaintiffs did not have clear and definite This Order is
modified/corrected by Speaking to Minutes Order knowledge about wrongful
conversion. It is, therefore, submitted that the observation of the Privy Council in
1892(2) IA page 1 is applicable to a case of wrongful and dishonest conversion by a
bailee and to any other person benefiting by such dishonest conduct. He submitted
that in the said case Privy Council had held that the onus on the Defendants is not
discharged by saying that some hints and clues had reached Plaintiffs which might
have led to such knowledge.
66. In my view, the Defendant Nos. 3 to 10 have, on the basis of the evidence on
record, have clearly established that the Plaintiffs were aware about conversion of the
suit bonds by Defendant No.2 in favour of Defendant No.3. In para 9 of his
examination in chief P.W. 2 has stated that series of meetings were held between
various officers of SCB with HPD and other brokers in order to sort out the short falls
in SCB's portfolio and in respect of diversion of funds and securities from SCB. He
has referred to meeting dated 23/05/1992 in which he has stated that he, along with
other Officers of SCB, was present along with HPD and also some This Order is
modified/corrected by Speaking to Minutes Order brokers were present in the said
meeting. In para 10, he has stated that this meeting was held to find out how the
bank's assets had been diverted and the people to whom they were diverted. In the
said paragraph in respect of disclosure by HPD about the suit bonds he states as
under:".......in the course of the meeting held on 23rd May 1992 as to what
had really happened in respect of the said transactions with ABFSL on
26th February 1992, H.P. Dalal also informed us that insofar as the
transactions wherein SCB had purchased 9% NPCL Bonds of FV 50
crores and 17% NPCL Bonds of FV 50 crores were concerned and in
respect of which SCB had paid full consideration, but in respect of
which SCB records reflected receipt of only photocopies of the original
LOA's, that he (HPD) had diverted the said bonds to Canara Bank."
In para 11, however, he (P.W.2) has stated as under:"11. In the said meeting, I pressed H.P.
Dalal to furnish me the details and particulars with regard to his
allegations of alleged diversion to Canara Bank of the said NPCL
40
Bonds. HPD was however evasive and did not afford any cogent reply.
I specifically inquired from him as to the manner and circumstances of
the alleged diversion. However, when pressed by me to give
particulars and details, he This Order is modified/corrected by
Speaking to Minutes Order refused to state anything further on the
subject and instead insisted that the said information of the alleged
diversion of the Bonds to Canara Bank was purely informal and that
he would deny his conversation with SCB if SCB were to seek to make
formal use of his statement."
He (P.W.2) has also identified the minutes of the meeting which are now taken on
record as Exh.D2-1. In the minutes of the meeting, however, there is no reference to
the evasive reply given by HPD or that he had stated that the information given was
informal and that he would deny this conversation with SCB if SCB were to seek
formal use of the said statement. In the minutes of the meeting, however, what is
mentioned is as under:".....On the Andhrafina transactions relating to NPCL bonds where
SCB was provided with photocopies of bonds instead of originals, HPD
admitted that he had diverted the bonds to Canbank. He also
attributed the problem in which SCB and Canfina were caught, to
irregularities in the Public Debt Office of the RBI."
It is equally true that in other statements made by various Officers of SCB, there is no
reference to evasive replies given by HPD. P.W. 2 - Kannan who was examined as
witness in This Order is modified/corrected by Speaking to Minutes Order Suit No.17
of 1994 did not mention about the said statement of HPD though he has deposed in
his deposition which is at Exhibit D-3(26) about the meeting of 23/5/1992. Wasim
Saifee who had prepared the handwritten note of the meeting has not deposed about
the alleged statement of HPD in Suit No.17 of 1994. No reference also is made about
it in the FIR lodged by police against HPD on 20/06/1992.
However, the fact remains that HPD did disclose in the meeting on 23/05/1992 about
diversion of the bonds to Canara Bank and Canfina and, therefore, Plaintiffs had first
learnt about the diversion on 23/05/1992 of the suit bonds to Canara Bank and
Canfina and, therefore, that also is a date on which the Plaintiffs had first learnt or
had knowledge about the conversion.
67. Shri Jethmalani, the learned Senior Counsel appearing on behalf of Plaintiffs, on
the other hand, has relied on the affidavit of HPD filed in one of the proceedings
where he has made a similar statement on oath.
68. Though an attempt is made to explain that the word This Order is
modified/corrected by Speaking to Minutes Order "divert" in English language
41
means preventing a thing from reaching its normal destination, that explanation
cannot be accepted. The explanation given by the Plaintiffs that statement of HPD
made on 23/05/1992 intensified SCB's belief in genuineness of the photocopy entry
also cannot be accepted. The fact remains that irrespective of what cooperation which
HPD was willing to give or not give, the Plaintiffs having come to know about the
diversion or having first learnt or had knowledge about the said fact, the period of
limitation, in my view, would start running from that date since the said information
was definite information given by the person who had diverted the original LOA to
Defendant No.3 which is a subsidiary of Canara Bank. In this context, it is relevant to
note that after disclosure by HPD on 23/05/1992, criminal complaint was filed
against him by the Plaintiffs on 20/06/1992. Therefore, even if the statement of
P.W.2 - Kannan is to be accepted in para 11 of his affidavit in examination in chief
that HPD had stated that he would deny his conversation with SCB if they were to
make formal use of his statement, cannot be accepted as an excuse for not proceeding
against the Canbank or Defendant No.3 for This Order is modified/corrected by
Speaking to Minutes Order the conversion of bonds since the Plaintiffs could have
independently sued Defendant No.3 for conversion. The last date for limitation,
therefore, in my view, would start running from 23/05/1992.
69. The last date on which reliance is placed by Shri Rohit Kapadia, the learned
Senior Counsel appearing on behalf of Defendant Nos. 3 to 10 is last week of May
1992 or on or about 25/5/1992. It is submitted that since confirmation was not given
by Defendant No.1 in respect of 17% NPCL bonds, that was an additional
confirmation of the fact of conversion after disclosure by HPD of diversion of bonds
in the meeting held on 23/05/1992. It is, therefore, suggested that, in his letter dated
29/05/1992 by P.W.2, he did not mention about confirmation of 17% NPCL bonds
since he was aware of the diversion of bonds by the HPD.
70. In my view, 25/05/1992 cannot be taken as a date for the purpose of holding that
on this date the Plaintiffs had learnt about conversion of bonds. Merely because no
reference is made in the letter written by P.W.2 dated This Order is
modified/corrected by Speaking to Minutes Order 29/05/1992, an inference cannot
be drawn that this was done because Plaintiffs and P.W.2 were aware about
conversion of 17% NPCL bonds by HPD in favour of Defendant No.3.
71. For the aforesaid reasons, therefore, in my view, the period of limitation had
started running from either 18/03/1992 and further from 23/05/1992.
ig The amendment application for impleading defendant Nos. 2 to 10 was filed on
20/10/1995 and, therefore, if the period of limitation is calculated from 18/03/1992
or 23/05/1992, the said period expires either on 18/03/1995 or 23/05/1995. I have
already given by reasons as to why 07/11/1992 cannot be treated as a date on which
Plaintiffs came to know about the conversion by HPD in favour of Defendant No.3
and, therefore, Plaintiffs in my view have miserably failed in filing the suit within a
42
period of limitation. Issue No.2 as against HPD and Issue No.1 as against Defendant
Nos. 3 to 10, therefore, are answered in the affirmative.
This Order is modified/corrected by Speaking to Minutes Order ISSUE NO.2
BETWEEN SCB AND CMF
2. Whether the Defendant No.2 in collusion with one of the employees of the Plaintiff
(viz. Santosh Mulgaonkar) fraudulently misappropriated the Suit LOA as alleged in
para 6A(iii) of the Plaint?
72. Mr. Jethmalani, the learned Senior Counsel fairly conceded that this issue has not
strictly been proved by the Plaintiffs and that the only evidence that Mulgaonkar is
the person involved in the charge-sheet which is filed by the prosecution in criminal
case and that though it makes the belief reasonable, it does not prove the fact. He,
however, submitted that this was partially proved by circumstantial evidence. He
submitted that one of the employees of the Bank made an entry in the ledger at
Exh-T-10 (BRN Register). He submitted that some employee did make a false entry
that the original bonds were not received. He submitted that the entry that photo
copies were received was proved to be the false entry. He submitted that the Bank
believed that it was Mulgaonkar. However, this fact is not proved. He submitted that
the Apex Court in appeal This Order is modified/corrected by Speaking to Minutes
Order from judgment in Suit No.11 of 1996 had held in paragraphs 69, 79 and 99 of
its judgment that it was not the part of the duty of the Plaintiffs to prove this since,
practically, there is no evidence led by the prosecution on this issue to prove that
Santosh Mulgaonkar was responsible for fraudulently misappropriating the Suit
LOA. Issue No.2 is, therefore, answered in the negative.
ISSUE NO.3 BETWEEN SCB AND CMF
3. Whether the Plaintiffs were unaware that the series of transactions involving
Canbank Mutual Fund (CMF), ANZ Grindlays Bank, Defendant No. 1 and the
Plaintiffs themselves were "based on the very same Letter of Allotment" as alleged in
para 7 of the Plaint?
ISSUE NO.5 BETWEEN SCB AND CMF
5. Whether the Plaintiffs prove that the 3rd Defendant choose to issue its BR with a
view to conceal the alleged "misappropriation" of Bonds as alleged in para 7D & 7E of
the Plaint?
73. It is submitted by Mr. Jethmalani, the learned Senior Counsel appearing on
behalf of the Plaintiffs that 17% NPCL This Order is modified/corrected by Speaking
to Minutes Order bonds were acquired on 26/02/1992 from Defendant No.1 and they
had agreed to sell these bonds to ANZ Grindlays Bank. Plaintiffs issued BR to ANZ
43
and, therefore, they were under an obligation to deliver bonds to them. This
obligation was discharged because ANZ returned the BR to Plaintiffs on 18/3/1992
when the bonds were delivered on 18/3/1992 to ANZ since Canbank themselves
arranged to deliver bonds to ANZ. It is urged that nobody knew how many bonds
were issued. It is further urged that Plaintiffs did not know that only one series of
bonds was issued. It is submitted that the Plaintiffs bought these bonds from 3rd
Defendant and Canbank issued the BR on 17/3/1992. It is, therefore, submitted that
Plaintiffs did not physically see the bonds. It is further submitted that BR No.2767
issued by Canbank which is at Exh-P-16 did not mention the number of bonds or any
other identification. It is, therefore, submitted that from these facts, two inferences
could be drawn; firstly, that it was an intentional act on the part of Canbank since
though they had bonds in their possession, they did not want the Plaintiffs to know
that they were selling the very same bonds to Plaintiffs and the second inference was
that it was This Order is modified/corrected by Speaking to Minutes Order possible
that it was an unintentional act. Even then the Plaintiffs were prevented from
realizing that they were the same bonds. In any event, it is further submitted that
Plaintiffs had agreed to sell the bonds to ANZ Grindlays and if ANZ Grindlays had not
received these bonds, it would have created problem for the Plaintiffs and, therefore,
the Canbank quietly sent the LOA to ANZ. It is, therefore, submitted that Plaintiffs
did not realize that they were buying their own bonds. It is submitted that the
Plaintiffs later on realized this fact. Reliance was placed on the evidence of P.W.5 Mr. Kakde. My attention was invited to Exh-P-11 - letter dated 1st June 2007 written
by NPCL. It is submitted that on 17/3/1992, Defendant No.3 dealt with these bonds
as if they were their own. In my view, Plaintiffs have partly proved this issue though
this issue is not very relevant for the purpose of proving the case of the Plaintiffs
against the Defendants. Plaintiffs, initially, when they filed the suit against Defendant
No.1 only, had come out with a case that they had not received the original LOA but
had received a photo copy of the LOA. Later on, however, by way of amendment, this
plea was given up and it was This Order is modified/corrected by Speaking to
Minutes Order contended in the plaint that, in fact, the original LOA was received by
the Plaintiffs and it was surreptitiously handed over by HPD to Canbank. In either
case, therefore, Plaintiffs had an occasion to see the LOA and it is difficult to accept
the proposition that the same LOA was purchased by them from Canbank. In my
view, there is no evidence on record to prove this fact that Plaintiffs were unaware
that series of transactions involving ig CMF and ANZ Grindlays Bank, Defendant
No.1 and Plaintiffs were based on the very same Letter of Allotment. In my view, no
evidence has been led by the Plaintiffs to establish this fact and, therefore, no
inference can be drawn as submitted by the learned Senior Counsel appearing on
behalf of the Plaintiffs. Issue Nos.3 and 5 are, therefore, answered in the negative
ISSUE NO.4 BETWEEN PLAINTIFFS AND CMF
4. Whether the Plaintiffs prove that they had purchased 17% taxable NPCL Bonds on
26th February, 1992 of the FV of Rs. 50 Crores from the Defendant No.1 or acquired
any title to the Suit LOA as alleged by the Plaintiffs in para 5 of the Plaint?
44

74. Mr. Jethmalani, the learned Senior Counsel appearing on behalf of the Plaintiffs
submitted that the Plaintiffs had examined R. Kalyanraman (PW1), an employee of
ABFSL. It is submitted that in the Written Statement filed by ABFSL, they had
admitted the transaction of purchase by SCB from ABFSL. It is submitted that R.
Kalyanraman(PW1) had admitted issuing Bank Memo No.058 dated 26/2/1992 and
also BR issued in favour of SCB of the same date. It is submitted that delivery of the
bonds also was admitted by covering letter dated 26/2/1992 and the actual delivery
of the bonds to the Plaintiffs on 27/2/1992. It is further submitted that the SCB had
purchased 17% NPCL bonds and 9% NPCL bonds. It is submitted that this was by
way of single transaction and the bonds were bought in the same manner and on the
same date as a part of the same transaction. He submitted that the Counsel appearing
on behalf of CMF had admitted this fact in the suit which was filed in respect of 9%
NPCL bonds. He submitted that the Supreme Court in its said judgment dated
5/5/2006 in Standard Chartered Bank vs. Andhra Bank Financial Services This
Order is modified/corrected by Speaking to Minutes Order Ltd.1 held that SCB had
title to the 9% NPCL bonds and the very same documents which were produced in
the present case were also produced in the said case. He relied upon paragraphs 63,
64 and 67 of the said judgment of the Apex Court.
75. On the other hand, it is submitted by the Mr. Kapadia, the learned Senior Counsel
appearing on behalf of Defendant Nos. 3 to 10 that the pleadings of the Plaintiffs in
the suit were mutually destructive. Secondly, it is submitted that the claim against
Defendant Nos. 3 to 10 was only contingent claim. It is submitted that no damage or
loss was caused to the Plaintiffs. After pointing out discrepancies in the original
plaint and amendment, it is submitted that the plea in the green amendment was
completely contrary to the plea in the original plaint. It is then contended that the
admission in the original plaint that the original LOA was not received by the
Plaintiffs was binding on the Plaintiffs. Thirdly, it is submitted that the admission
made in the plaint stood on a higher footing. It is then submitted that the Plaintiffs'
own case in the plaint is that unless and until claim against 1 (2006) 6 SCC 94 This
Order is modified/corrected by Speaking to Minutes Order Defendant No.1 fails,
Plaintiffs are not seeking decree against Defendant Nos. 3 to 10. It is further
submitted that since essential pre-condition to any claim against Defendant Nos. 3 to
10 was absent, claim against these defendants was no longer maintainable. It is then
submitted that Kalyanraman (PW1) had not produced any documentary proof to
show by whom the LOA was delivered to the Plaintiffs on 27/2/1992. It is then
contended that though the Plaintiffs maintained inward/outward book, they did not
produce the same and it was also not shown that Plaintiffs in their office received the
LOA on 27/2/1992 from Defendant No.1. It is submitted that the documents which
were produced by the Plaintiffs were not sufficient to prove that they had purchased
the suit bonds from Defendant No.1.
45
76. In my view, the submissions made by the learned Senior Counsel appearing on
behalf of Defendant Nos. 3 to 10 cannot be accepted. It is a matter of record that
NPCL had issued two types of bonds viz. (i) 17% NPCL bonds and
(ii) 9% NPCL bonds. In respect of 9% NPCL bonds also suit was filed by SCB against
Defendant Nos. 3 to 10 vide Suit This Order is modified/corrected by Speaking to
Minutes Order No.11 of 1996. The said suit was dismissed by the Special Court and in
the appeal which was filed by the SCB, Counsel appearing on behalf of Defendant
Nos. 3 to 10 had submitted that both these bonds were part of the same transaction.
The submission of the learned Senior Counsel as reproduced by the Apex Court in
para 67 of its judgment is as under:"67.
He also pointed out that both 17% NPCL bonds and 9% NPCL bonds
(suit bonds) were bought in the same manner and on the same day as
a part of the same transaction and suit is filed for 17% NPCL bonds
also being Suit No.3809 of 1992 only against ABFSL and only for
money decree............"
In the said suit also, the very same documents which are produced by the Plaintiffs in
this suit for the purpose of proving the title over the said 9% NPCL bonds have been
produced to prove their title over 17% NPCL bonds. In paragraphs 63 and 64 of the
said judgment, the Apex Court has observed as under:This Order is modified/corrected by Speaking to Minutes Order "63. It is the case of
SCB that it had the title to the suit bonds as it obtained the suit bonds under a
contractual agreement by paying consideration for the suit bonds. This transaction is
based on documentary evidence on record.
The cost memo (Exhibit B) dated 26-2-1992 issued by ABFSL evidences that the suit
bonds were offered to SCB at the consideration indicated in the document. The cost
memo indicates the details of the transactions such as the description of the bonds,
the number of bonds sold, the rate at which they were sold and the total
consideration payable.
This is accompanied by a BR. Against this, there is a pay order dated 26-2-1992
issued by SCB in favour of ABFSL in the sum of Rs 42,52, 50,000 evidencing that
such consideration had been paid. BR No.23728 dated 26-2-1992 evidences that
upon receipt of the agreed consideration, being the cost of the suit bonds sold to SCB,
the BR was issued to undertake that bonds of the face value of Rs 50 crores would be
delivered when ready, in exchange for the BR duly discharged and that in This Order
is modified/corrected by Speaking to Minutes Order the meantime the suit bonds
would be held on account of SCB. The letter dated 26-2-1992 from ABFSL to SCB
46
shows that the LOA of the suit bonds was forwarded to SCB, inter alia, with a request
for discharging the corresponding BR No.23728 on receipt of the LOA. The register of
SCB shows that with reference to BR No.23728, the bonds had been received,
although, the word "photocopies" appears to have been inserted therein. It is the case
of SCB that one of its employees, Mulgaonkar, had acted fraudulently by inserting
this word and causing misappropriation of the suit bonds. We find that this part of
the case was not part of the pleadings of SCB either in its plaint or in the written
statement filed in reply to CMF's petition. There was also no reference to it at any
time when evidence was led by the parties. The first time this part of the case appears
is in the copy of the charge-sheet filed by CBI against certain employees of SCB and
HPD for several criminal offences. Mr. Jethmalani contended that since this
charge-sheet was produced on record This Order is modified/corrected by Speaking
to Minutes Order at the instance of CMF, the averments in the charge-sheet must be
taken to have been proved before the court. Even assuming Mr Jethmalani is right in
characterising the charge-sheet as a public document within the meaning of Section
35 of the Evidence Act, 1872, we cannot accept all that is stated in the charge-sheet as
having been proved. All that we can say is that it is proved that the police had laid a
charge-sheet which such allegations have been made in against the accused. We need
not delve further into it since the criminal proceedings against HPD and others are
still pending and it will be up to the appropriate court to decide the correctness or
otherwise of the charges in the charge-sheet. All that can be said at this stage is that
there are serious allegations that the original LOA went out of the possession of SCB
by some nefarious means."
"64. Learned counsel for CMF contended that even as on 26-2-1992 SCB had no title
to the suit bonds since the suit bonds were under the 15% This Order is
modified/corrected by Speaking to Minutes Order arrangement and that under the
15% arrangement the transaction was one merely of funding; in other words, that
there was no real buyer or seller and it was mere paper work intended as a cover for
lending money to HPD. We are unable to accept this argument for more than on
reason. The documents which we have referred to above clearly evidence a
transaction of sale and purchase of the suit bonds by SCB upon payment of
consideration. Secondly, ABFSL, who was the other party to the transaction, has
come forward and accepted the transaction unhesitatingly.
There is no reason why all this evidence should be discarded by choosing the chimera
of the 15% arrangement theory. We, therefore hold that SCB validly acquired title to
the suit bonds as a result of the transaction entered into between itself and ABFSL on
26-2-1992.
And that the suit bonds were in fact handed over to SCB although, it is not evident as
to how the suit bonds went out of the possession of SCB. Therefore, the contention of
CMF that SCB never acquired title to the suit bonds cannot This Order is
modified/corrected by Speaking to Minutes Order be accepted. Even the Special
47
Court finds that the contract of 26-2-1992 with regard to the suit bonds had been
proved by the evidence on record.
However, the Special Court goes on to say that merely proving the suit contract was
not sufficient because it had to be further proved that the suit bonds had been
acquired by SCB, in its view, the mystique of the 15% arrangement made HPD the
real owner of the bonds."
Further, in paragraph 69 of the said judgment, the Apex Court has observed as
under:"69.................. We are, therefore, satisfied that there was transfer of
the property in the suit bonds to SCB and the evidence on record is
sufficient to arrive at such a conclusion. It was wholly unnecessary for
SCB to go further and prove how the BR was discharged and how the
LOA went out of its possession, which were the facts emphasised on
behalf of CMF. Nor was it necessary for SCB to lead evidence as to how
HPD had intercepted the original This Order is modified/corrected by
Speaking to Minutes Order LOA, when and in what manner."
In the present case also, the very same documents which were produced in the earlier
suit have been brought on record. Over and above that, the Plaintiffs have examined
R.
Kalyanraman(PW1) who was working with Defendant No.1, who has also in his
evidence admitted that the suit bonds were sold by ABFSL to SCB. This fact is also
admitted by Defendant No.1 in their Written Statement. The contentions raised by
Defendant Nos. 3 to 10, therefore, cannot be accepted. Issue No.4, therefore, is
proved and is answered in the affirmative.
RES JUDICATA
77. Following issues have been framed between SCB and CMF on the point of res
judicata or constructive res judicata.
BETWEEN PLAINTIFFS & CMF:
10. If the answer to the above issue is in the affirmative whether such transactions are
illegal and/or opposed to the public policy?
11. Whether the contention that the transactions are opposed to public policy is
barred by the principles of res judicata and/or constructive res judicata having regard
48
to the judgment of the Spl. Court dated 13-3-1995 in Suit No.13 of 1994 and the
decision of the Supreme Court in CA 4456/95 dated 30th October, 2001 and in CAs
2275 & 2276 dated 5th May, 2006?
15. Whether the transactions under the 15% arrangement were transactions of HPD &
not of SCB and HPD was entitled to deal with bonds at his discretion as alleged in
para 7(g) of Defendant No.3's WS?
16. Whether the Defendant No.3's allegations that transactions under 15%
arrangement were transactions of HPD, are barred by res judicata by the judgment of
the Special Court in 13/94 dated 13-3-1995 and the decision of the Supreme Court in
CA No.4456 of 1995 dated 30-10-2001 as alleged in para 7(L)
(i) to 7(L)(v) of the Plaint and denied in This Order is modified/corrected by
Speaking to Minutes Order 32, 33, & 34 of additional Written Statement and by the
judgment of the Supreme Court dated 5-5-2006 in Appeal from Suit No.11 of 1996 as
alleged in paras 7(L)(vii) to 7(L)(xv) of the Plaint?
17.
allegation
Whether
that
Defendant
transactions
of
No.3's
the
Plaintiff under the 15% arrangement were actually transactions of HPD, is barred by
constructive res judicata as alleged in para 7(L)(v) of the Plaint & denied in para 36 of
the Additional Written Statement?"
ISSUE NO.3 BETWEEN PLAINTIFFS & DEFENDANT NO.2 - HPD:
78. So far as issues between SCB and HPD are concerned, issue No.3 raises the issue
of res-judicata and which reads as under:3. Whether allegations of Defendant No. 2 that the LOA was lent to
him on 27th This Order is modified/corrected by Speaking to Minutes
Order February, 1992 and/or that he purchased the same on 9th May,
1992 in the circumstances and manner set out in para 4 of his written
statement are barred by res judicata as alleged in para 6B of the
Plaint?
79. The issue of res judicata, therefore, can be divided in three different categories viz
(i) transactions which are illegal and are opposed to public policy, (ii) transactions
under 15% arrangement were transactions of HPD and not of SCB and (iii) payment
49
of consideration by the 3rd Defendant qua HPD lending LOA to HPD on 27/2/1992
and/or purchase by him of the said bonds on 9/5/1992.
80. So far as the issue of res judicata is concerned, Mr. Jethmalani, the learned
Senior Counsel appearing on behalf of the Plaintiffs submitted that the said issue
does not depend only upon the cause of action in two suits being the same or subject
matter being the same. He submitted that it would also arise if issues raised in earlier
suit and the subsequent suits were same and were relevant. He submitted that, in the
present case, the transaction in This Order is modified/corrected by Speaking to
Minutes Order respect of purchase of 9% NPCL bonds and 17% NPCL bonds was
composite transaction and the bonds were from the same consideration and,
therefore, the matter in the suit pertaining to 9% NPCL bonds was directly and
substantially in issue in the present suit also. He relied upon the following
judgments:(1) AIR 1938 Nagpur page 401 [Mt. Sitabai w/o Ratiram Powar V/s
Hari & Ors] (2) AIR (29) 1942 Bombay 309 [Rama Maruti Chaugule
vs. Mallappa Krishna Chaugule] (3) AIR 1959 Bombay 396 [Head-note
(C)] [Chiranjilal Ramchandra Loyalka & Ors vs. Life Insurance
Corporation of India] (4) AIR 1935 PC 139 [Kedar Nath Goenka vs.
Munshi Ram Narain Lal and others (5) AIR 1953 SC 33 [Srimati Raj
Lakshmi Dasi and others vs. Banamali Sen and others] He also relied
upon the said judgment of the Apex Court in appeal from judgment in
Suit 11 of 1996 and the various paragraphs in which these issues were
discussed. He then invited my attention to Suit No.13 of 1994 and the
decision This Order is modified/corrected by Speaking to Minutes
Order given by the Special court on the said issues and the judgment
of the Apex Court in appeal from judgment in Suit 11 of 1996
particularly paragraphs 36, 37, 38 and 39. He also invited my
attention to the Written Statement of Defendants - CMF and more
particularly paragraphs 22 and 29 of the Written Statement in Suit
No.11 of 1996 and para 14(2) in the present suit. It is, therefore,
submitted that all these issues were barred by principles of res
judicata and or constructive res judicata.
81. On the other hand, it is submitted by Mr. Kapadia, the learned Senior Counsel
appearing on behalf of Defendant Nos. 3 to 10 that there are number of differences
between Suit No.11 of 1996 and the present suit. He has submitted a Chart pointing
out the differences between Suit 6 of 1994 and Suit No.11 of 1996 which is annexed at
Annexure-VIII to the written arguments submitted by him. It is submitted that, in
case, there is a difference in facts of a case, the said judgment cannot be used for the
purpose of relying on the principles of res judicata or as a judgment having
precedential value. He relied upon the judgment of the Apex This Order is
modified/corrected by Speaking to Minutes Order in Bank of India and another vs. K.
50
Mohandas and others 1 (paras 58 and 59). He further submitted that in order to fall
within the parameters of section 11 of the Civil Procedure Code, two requisite criteria
were (a) issue raised in a suit must be directly and substantially in issue in the former
suit and (b) such an issue in the former suit has also been decided finally by the court.
He relied upon the judgment of the Apex Court in ig Sajjadanashin Sayed Md. B.E.
Edr. vs. Musa Dadabhai Ummer2 (paras 13, 14 and 16).
82. It is then submitted that : (i) in Suit No.13 of 1994 CMF had pleaded that there
was an informal arrangement (15% arrangement) between Plaintiffs and HPD
whereby Plaintiffs lent monies to HPD under the guise of securities transactions, (ii)
CMF in suit No.13 of 1994 wanted to lead evidence to show that this informal
arrangement was against the public policy being in contravention of RBI Circulars
and, therefore illegal, (iii) the Special Court in its ruling dated 2-3/3/1993
[Exh-D-3(32)] at page 77 held that there was no pleading that informal arrangement
was against public policy and, therefore, illegal. In view thereof, Special Court did not
1 (2009) 5 SCC 313 2 AIR 2000 SC 1238 This Order is modified/corrected by
Speaking to Minutes Order allow CMF to lead evidence on this aspect for want of
pleadings, (iv) the issue as to whether the 15% arrangement between Plaintiffs and
HPD was against public policy and illegal was not adjudicated upon by Special Court
in Suit No. 13 of 1994, (v) as regards to CMF's contention that transactions were
fictitious or at derived structured rates, the Special Court in its judgment dated
3/3/1995 observed in para 38 as under. "However, it must be immediately stated that
if there was fictitious transactions, it could possibly construed as being against public
policy, even de horse these circulars. It is also possible that the practice, if any of
arriving at a derived price, which is different from contract rate can be termed as
against public policy.......". It is submitted that these observations have been quoted
with approval by the Supreme court in its decision in C.A. 4456 of 1995, (vi) the
Supreme Court in its judgment dated 5/05/2006 in C.A. No.2275 and 2276 of 2002
has considered observations of Supreme court in para 36 in CA No.4456 of 1995.
However, observations considered are only from para 37 and not from para 38 of CA
No. 4456 of 1995, (vii) the Supreme court in its judgment in Civil Appeal No.2275
and This Order is modified/corrected by Speaking to Minutes Order 2276 of 2002
does not decide the issue of whether 15% arrangement being against the public policy
but relied upon observation of the Supreme Court in C.A. No.4456 of 1995 to hold
that it operates as res judicata in that case, (viii) after judgment in CA 2275 and 2276
of 2002 was pronounced for the first time in 2006, the Plaintiffs came out in open
about its arrangement with HPD and admit that HPD was to assure/guarantee 15%
return to the Plaintiffs irrespective of profit or loss in securities transactions. My
attention is invited to para 7A of the plaint. It is therefore submitted that, in the
present case, the Plaintiffs have specifically pleaded in para 41 of the Plaint that it
had 15% arrangement with HPD and, therefore, the question which is to be decided is
whether it is against the public policy.
51
83. So far as the issue of fictitious transactions and all these transactions being
against the public policy is concerned, it is submitted by the learned Senior Counsel
appearing on behalf of Defendant Nos. 3 to 10 as under:(i) On the perusal of transactions set out in para 7A, it is clear that transaction at Sr.
No.4 This Order is modified/corrected by Speaking to Minutes Order and 5 are
funding transactions, the Plaintiff had in fact admitted in para 7F and 7G that the
Plaintiff did not have physical security or BR of third party to enter into sale
transaction with ANZ on 23/03/1992. The said transaction was reversed on
8/04/1992.
(ii) The Plaintiff sold securities on 23/03/1992 at the rate of Rs 96.00 whereas it
bought the securities on 8/04/1992 at the rate of Rs 95.87.
(iii) Similarly, the Plaintiff has consistently bought the securities at higher rates and
sold them at lower rates (Refer Annexure VII).
(iv) It is submitted that in para 7 of the Plaint, the Plaintiff had specifically sated that
Defendant No.2 has undertaken series of transactions mentioned in para 7A of the
Plaint. In the list of transactions set out in para 7A, the word "direct" is mentioned in
column "broker".
(v) The PW4 has deposed, at Pg. 202 Vol.II, that "direct" means HPD is involved in
capacity as principal or broker. Thus, the Plaintiff had allowed the Defendant No.2 to
This Order is modified/corrected by Speaking to Minutes Order undertake a series of
transactions mentioned in para 7A and transactions were executed at a price, which
was totally different from the market price as discussed in para (ii) above.
(vi) Thus, it is clear that the price at which the Plaintiff entered into transactions
mentioned in para 7A of the Plaint were at behest of HPD and did not have bearing
on the market price. In view of these facts Issue No.10 and 15 is not res-judicata
having regard to judgment of Special Court dated 13/3/1995 in Suit No.13 of 1994
and decision of the Supreme Court in C.A. No.4456 of 1995 dated 30/10/01 and in
C.A. No.2275 and 2276 of 2002 dated 5/5/06.
84. It is then submitted that the judgment dated 5/5/2006 in C.A. No.2275 and 2276
of 2002 does not independently adjudicate whether arrangement between Plaintiffs
and HPD is against the public policy and, therefore, illegal. It is submitted that for
holding the issue of res-judicata the Supreme Court had relied upon the judgment of
the Supreme Court in C.A. No.4436 and the Special Court Judgment in Suit No.13 of
1994. It is, therefore, submitted that the said issue was not res-judicata as it was not
decided This Order is modified/corrected by Speaking to Minutes Order since CMF
had not pleaded that the arrangement was against the public policy.
52
85. Lastly, on the question of issue of consideration by CMF for acquisition of suit
bonds it is submitted by the learned Senior Counsel appearing on behalf of Defendant
Nos. 3 to 10 that :
(i)
consideration
ig
of
CMF
material for adjudication of the present Suit;

is really not
(ii) in the present Suit, the inquiry relevant is only concerning the alleged title of the
Plaintiffs;
(iii) without prejudice to this, it is submitted that consideration of CMF is not barred
by constructive res-judicata;
(iv) it is submitted that a issue to become res judicata, that issue should have been
necessary for decision in the said suit and it should not be merely ancillary to main
issue. The consideration of CMF for acquisition of Suit bond (i.e. 17% NPCL) was not
necessary for deciding suit No.11 of This Order is modified/corrected by Speaking to
Minutes Order 1996. The issue was not directly and substantially in issue in Suit
No.11 of 1996;
(v) It is submitted that there are number of differences between Suit No. 11 of 1996
and the present suit, which are set out at Annexure VIII hereto (tendered to the
Hon'ble Court on 7/01/2010). It is submitted that in case there is a difference in the
facts of a case, it cannot be used for res judicata or as having precedential value.
behalf reliance is placed on the observations In this of the Supreme Court in 2009 (5)
SCC 313 para 58.
86. It is then submitted that Defendant No.3, in the present suit, had specifically
pleaded that the suit bonds were purchased on 27/2/1992 from HPD and, therefore,
consideration paid by CMF to HPD for acquisition of suit bonds is good consideration
and, for the aforesaid reasons, the issue of payment of consideration by Defendant
No.3 (CMF) for acquisition of suit bonds on 27/2/1992 is not barred by virtue of
principles of res-judicata as alleged in para 11(e) of the Plaint or for any other reason.
87. Mr. M. P. S. Rao, the learned counsel appearing for Defendant No.2 submitted
that the said plea raised on the basis of the judgment of Hon'ble Supreme Court in
Civil Appeal No. 2275 of 2002 and 2276 of 2002 would not be applicable in the
present case; firstly, since Defendant No.2 was not a party to Suit No. 11 of 1996 and
53
though Defendant No.2 had taken out the Chamber Summons for impleading him as
a necessary party in Suit No. 11 of 1996, the said Chamber Summons was opposed by
the Plaintiffs and, as such, the Chamber Summons was dismissed; and, secondly,
Hiten Dalal was not allowed to participate in Suit No. 11 of 1996. He, therefore,
submitted that Defendant No.2 was denied an opportunity to defend or prove his
case and Misc.
Petition No. 81 of 1995 to which he was a party was never tried on merits.
88. After having heard all the counsel at length on the issue of 'res-judicata', before
referring to the rival contentions, it would be necessary to consider the legal position
on this aspect. Section 11 of the C.P.C. lays down the circumstances under which
finding recorded in another This Order is modified/corrected by Speaking to Minutes
Order proceedings is binding on the parties in the subsequent proceedings. In the
present case, it has been urged by Mr. Jethmalani, learned Senior Counsel appearing
on behalf of the Plaintiffs that certain issues which were the subject matter of earlier
proceedings were decided by the Special Court and the Supreme Court and in view of
the finding given by the Special Court and the Supreme Court in these cases, it was
not open for the Defendants to re-agitate these issues in this suit and the said issues
were barred by the principles of res-judicata.
89. In my view, there is much substance in the submissions made by the learned
Senior Counsel appearing on behalf of the plaintiffs. In this connection, it would be
relevant to take into consideration the ratio of the judgments on which reliance is
placed by the plaintiffs, in support of the said contentions. The first reliance is placed
on the judgment in Rama Maruti Chaugule Vs. Mallappa Krishna Chaugule 1. The
question raised in the appeal was whether the finding about the plaintiff's adoption in
the former execution proceedings operates as res judicata in a subsequent suit
between the 1 AIR (29) 1942 Bombay 309 This Order is modified/corrected by
Speaking to Minutes Order same parties. Following observation was made by the
learned Single Judge"In the present case, the order was passed by the Executing Court after
hearing both sides as to whether the plaintiff was entitled to continue
the darkhast on the strength of his adoption and it was held in
evidence that he was adopted. I do not see why that decision should
not operate judicata in the present suit between the same as the res
parties with reference to a part of the same estate. The principle of res
judicata would apply even though the subject matter of the two
proceedings may be different, provided the issue is the same; vide 12
IA 16, which was case of adoption. In my opinion, therefore, the
defendant's contention that the plaintiff was not a validly adopted son
of Shivubai is barred by res judicata. The decree of the lower appellate
Court is therefore, correct and the appeal is dismissed with costs."
54
The second judgment on which reliance has been placed is in Chiranjilal Ramchandra
Loyalka & Ors. Vs. Life Insurance This Order is modified/corrected by Speaking to
Minutes Order Corporation of India1. In this case, the trial Court had held that suit
which it was considering was barred by res-judicata and against the said order, an
appeal has been preferred.
The suit that was held to be barred was a suit filed under Rule 8 of Order I of the
C.P.C. and the plaintiffs represented Hindu community of Bombay. The suit was for a
declaration that members of the Hindu community have acquired vested rights to use
Mumbadevi ig Tank for various religious ceremonies. The suit was filed against the
defendants who were purchasers from the defendants in the earlier suit, being Suit
No. 438 of 1994. That suit was filed by the plaintiffs as relators under S. 92 of the
C.P.C. and in that suit, the plaintiff alleged that there was dedication by one Putlibai
in 1976 in respect of the very property which was the subject matter of the present
suit and as a result it was claimed that the Hindu community has the rights which
they asserted in the subsequent suit. The defendants claimed that they were absolute
owners of the property, claiming title from Putlibai and, therefore, there was no Trust
and no rights were created in the Hindu community. Consent terms were filed in the
said suit and decree was passed in terms of the 1 AIR 1959 Bombay 396 This Order is
modified/corrected by Speaking to Minutes Order consent terms. By virtue of the
consent terms, an area of 3000 sq. yards was set apart and Trustees were appointed
and the scheme was sanctioned. So far as rest of the property is concerned, a
declaration was sought that the defendants were absolute owners. The short issue
which was raised in the subsequent suit was whether the consent decree constitutes
bar to the filing of the subsequent suit under S. 11 of the C.P.C. In this context it was
held in paragraph 7 as under"7. But the real and substantial point that has been urged by Mr. Laud
is that the cause of action in Suit No. 438 of 1934 and in the present
suit are different and therefore, S.11 of the Civil Procedure Code has no
application. Now, what S. 11 requires is not that the cause of action in
the two suits must be identical, but that the matter directly and
substantially in issue in the subsequent suit should also be directly and
substantially in issue in the former suit. It will be noticed that under S.
11, not only the suit itself may be barred but also an issue, and
therefore what we have to consider is whether a particular issue which
the This Order is modified/corrected by Speaking to Minutes Order
plaintiffs seek to be tried in this suit was directly and substantially the
same in the earlier suit ..." (Emphasis supplied) It was further held
that the matters in issue in two suits was the same.
90. In the case of Jambu Tavanappa Adake & Ors. Vs. Gopalkrishnacharya
Rangcharya Karvir1, in this context, in a suit for rent, question of title was
incidentally raised and it was held that decision of that question would operate as res
55
judicata to the subsequent suit based on title. The Court however, while deciding the
said question has made following observations :"..........But apart from this, in my opinion, there is no substance in the
contentions. The plaint in the rent suit is not before me, but as is the
practice in the Moffusil it is set out in the decree which is an exhibit.
Now, before a matter can be set to operate as res judicata, it is
necessary inter alia, to establish that the matter was directly and
substantially in issue in the earlier suit, and further, that the matter
which is relied 1 AIR 1938 Bombay 291 This Order is
modified/corrected by Speaking to Minutes Order upon has been
directly and substantially in issue was heard and finally disposed of by
the Court in the earlier suit. In order to determine whether a
particular issue or matter is res judicata, the Court can only look at the
pleadings, the judgment and the decree. In this case, there is no
judgment before me. Admittedly, there is nothing to show what issues
were raised. It is, of course, not necessary that before a matter can be
said to be res judicata, it should form the subject matter of the definite
issue. If the Court can gather from the materials before it, namely the
pleadings, judgment and the decree, that the matter was directly and
substantially in issue and form the basis of the judgment arrived at in
the earlier suit, either expressly or by necessary implication, then the
principle of res judicata would apply."
It was, therefore, held in this case that it was not necessary that before a matter could
be said to be res judicata, it should form the definite matter of subject issue and this
could be noticed after going through the pleadings, judgment and the decree to find
out what was directly and substantially in issue and what was the basis on which the
judgment was arrived at in the earlier suit.
91. The next judgment on which a reliance is placed is in the case of Mt. Sitabai w/o
Ratiram Powar Vs. Hari & Ors. 1 In this case a widow of a deceased incurred debts
and the creditor obtained a decree and attached the property of the deceased. The
suit was instituted by reversioner claiming release of the property from attachment
on the ground that the debts were without legal necessity and not binding on his
reversionary interest and secondly because he had become owner of the property,
pursuant to the gift in favour of the widow. The issue of legal necessity was decided
against the plaintiff and the suit was dismissed. Subsequently, the plaintiff brought a
suit for declaration that the sale was binding on his reversionary interest as the debts
were without legal necessities. Under these circumstances, it was held that the suit
was barred by res judicata.
56
92. From the aforesaid cases on which reliance is placed by the learned Counsel
appearing on behalf of the Plaintiffs, it is abundantly clear that if the issue in the
prior suit is directly and substantially heard and decided by the Court in the 1 AIR
1938 Nagpur 401 This Order is modified/corrected by Speaking to Minutes Order
earlier suit and if the said issue is raised again in subsequent suit though cause of
action in the two suits is not identical even then the finding given in the earlier suit
on that issue would be barred by principles of res judicata in the subsequent suit.
93. In the present case, the issue that the transactions under 15% arrangement were
transactions of HPD and not SCB directly fell for consideration in the earlier suits
and the said issue was decided. The very same issue has been raised now. Apart from
that, the Apex Court has in its judgment in appeal from judgment in Suit No.11 of
1996 has given a clear finding that the said issue of 15% arrangement was clearly
barred by principles of res judicata. The very same issue has been raised in this suit
and, therefore consequential issue of 15% arrangement cannot be agitated either by
Defendant No.2 or Defendant Nos. 3 to 10. It is inconsequential that Defendant No.2
was not a party to the earlier suit and his Chamber Summons for adding him as party
defendant was rejected by the Court. It would be relevant to take into consideration
the said observations of This Order is modified/corrected by Speaking to Minutes
Order the Apex Court on this issue. The Supreme Court in its judgment dated
5/5/2006 in appeal from judgment in Suit No.11 of 1996 has exhaustively dealt with
this issue in paragraphs 35 to 39 which read as under:"35
........
arrangement"
The
was
so-called
an
"15%
informal
arrangement with HPD under which SCB bought securities from other counterparties, as directed by HPD, and also sold them to such parties at such rates as
designated by HPD. A desired sale price was arrived at so as to ensure that SCB
obtained a return of 15% of the transaction. The evidence on record consisting of the
Janakiraman Committee Report (the report of a high-powered committee appointed
by RBI to investigate into the irregularities in the funds management in commercial
banks and financial institutions, in particular in relation to the dealings in
government securities) has examined this arrangement and report upon it in paras
8.1 to 8.7 of its Fourth Interim Report (March 1993), particularly with regard to the
way in which the arrangement This Order is modified/corrected by Speaking to
Minutes Order operated in SCB. The Joint Parliamentary Committee Report
(hereinafter referred to as "the JPC Report") (Exhibit 26) vide paras 8.49-8.51 has
also explained this arrangement. There is also the evidence tendered on record in the
57
form of replies to interrogatories in which SCB has explained the details of the
scheme and how the 15% arrangement worked. The agreement between HPD and
SCB was that, if SCB followed the instructions of HPD in the matter of which
securities are to be bought or sold, from or to which parties, at what rates and when,
SCB was assured of a net return of 15% of the outlay in the purchase of the securities
concerned. If the return was less than 15%, HPD would bear the difference; if the
return happened to be higher than 15%, HPD would be paid the difference. The
evidence on record clearly bears out that this is how the 15% arrangement worked
between SCB and HPD.
"36 Mr. Jethmalani invited our attention to an earlier judgment of this Court in
Canara Bank v. Standard Chartered Bank where the nature of the 15% arrangement
This Order is modified/corrected by Speaking to Minutes Order was carefully
considered by this Court. Incidentally, the said judgment was delivered in a dispute
between the same parties and after analysing the nature of the 15% arrangement, this
Court categorically rejected the argument that it was opposed to public policy. This
Court upheld the judgment of the Special court rejecting the contention that the 15%
arrangement was contrary to public policy.
While rejecting the contention that the 15% arrangement was opposed to public
policy, the Special Court had made the following findings : (SCC p. 701 para 4) "The
object and consideration of the suit contracts are purchase/sale of the securities and
payment of price. Such securities contracts are normally entered into by banks. These
may be for SLR purposes or in the normal course of business of the bank. It is the
business of the bank to try and make profit. Thus even if these were part of the 15%
arrangement, provided there was such an arrangement, would not make them against
public policy if it was a genuine This Order is modified/corrected by Speaking to
Minutes Order security transaction. None of the circulars relied upon by Mr. Salve
prohibit such transactions. In my opinion none of the circulars have any bearing on
the point under consideration. The suit transactions or transactions under the alleged
15% arrangement are not against the subject-matter of these circulars. They are also
not even against any policy laid down therein. I thus see no illegality."
"37 These were expressly approved by this Court in the judgment. It appears to us
that much of the controversy about the nature of 15% arrangement could have been
avoided if the judgment in Canara Bank case had been kept in mind. We notice from
the impugned judgment that the decision of this Court in Canara Bank was
specifically brought to the notice of the Special Court, but it appears to have been
brushed aside on the grounds, first, that the doctrine of res judicata would not apply
as Section 13 of the Act had an overriding effect; second, the exact scope of the 15%
arrangement was not determined by evidence in the This Order is modified/corrected
by Speaking to Minutes Order previous suit; and third, that an arrangement by which
banks and public financial institutions are enabled to earn a return higher than what
is stipulated by the Government/RBI, would cause inflation and the Government
58
would not be able to control its deficit, hence it was opposed to public policy. The
Special Court said: "In the economic sense, they are not legitimate. On this point also,
therefore ig there is arguments advanced on behalf of SCB."
no merit in the
38. We are afraid that the Special Court was wrong on all the counts. On the question
of res judicata, the Special Court failed to notice that the doctrine of res judicata is
not merely a matter of procedure but a doctrine evolved by the courts in larger public
interest. What is enacted in Section 11 of the Civil Procedure Code ("CPC") is not the
fountainhead of the doctrine, but merely the statutory recognition of the doctrine,
which rests on public policy. (See in this connection Daryao v. State of U.P. Guda
Vijayalakshmi v. Guda Ramachandra Sekhara Sastry1 and Hopte Plantations 1 5
(1981) 2 SCC 646 : 1981 SCC (Cri) 574 This Order is modified/corrected by Speaking
to Minutes Order Ltd. v. Taluk Land Board1) In the previous suit to which both SCB
and Canara Bank were parties, the same issue with regard to "15% arrangement" with
HPD was urged by CMF as a non-suiting factor, but was negatived both by the Special
Court and by this Court. Issue 10 in the previous suit was the relevant issue dealing
with 15% arrangement, which was as follows: (Canara Bank case, SCC p. 699, para 3)
"3. (10) Whether the suit transactions entered into by the plaintiffs with Canbank
Mutual Fund were in fact entered into by the Plaintiffs on behalf of Hiten Dalal as
alleged in para 5(d) of the written statement of Defendant 1?"
"39. This was an issue raised by CMF which was Defendant No.1 in that suit (Special
Court Suit No.13 of 1994) The burden of proving this issue was on the defendant and
the Special Court answered the issue in the negative and observed that the counsel
for Defendant 1 had admitted that there was no evidence to support this issue.
1 (1999) 5 SCC 590 This Order is modified/corrected by Speaking to Minutes Order
Consequently, the Special Court held that the issue was answered in the negative i.e
against Defendant 1. Since the Special Court findings were finally upheld by this
Court in the judgment in Canara Bank and a review petition thereagainst was also
dismissed, we are of the view that it is not open for this Court to again raise the issue
and take a view contrary to what had already been decided in the previous there has
suit, particularly in view of the fact that been no new revelatory evidence on this
issue.
94. In view of the clear observations of the Supreme Court on this issue, therefore, it
will have to be held that issue regarding 15% arrangement is clearly barred by
principles of res judicata.
95. So far as issue No.3 is concerned between SCB and HPD, it is submitted by Mr.
Jethmalani, the learned Senior Counsel appearing on behalf of Plaintiffs that the
contention of HPD of borrowing of bonds on 27/02/1992 and subsequent purchase
59
by him of the suit bonds on 09/05/1992 being denied by the SCB, it was the duty of
the HPD to have This Order is modified/corrected by Speaking to Minutes Order
established his case by leading positive evidence. It is submitted that HPD did not
lead any evidence. He further submitted that, even otherwise, the story relating to
purchase of NPCL bonds against sale of Can-Triple Units of the face value of Rs 35
crores is negatived by the affidavit dated 23/5/1992 affirmed by HPD which affidavit
is annexed as Exhibit-A to Misc. Petition No. 36 of 1993 being Exhibit P-31. It is
submitted that in the said affidavit, HPD had expressly taken up a stand that
Can-Triple units were forcibly seized from him by the SCB and, therefore, it is
contended that story of sale of Can-Triple Units against the alleged purchase of NPCL
bonds is clearly belied by the said affidavit and the stance of the HPD. It is further
submitted that story relating to the sale of Can-Triple Units against purchase of
NPCL bonds was considered by the Special Court and the Supreme Court in various
judicial proceedings viz (a) Suit No. 17 of 1994; (b) Misc. Petition No.36 of 1993; (c)
Suit No.9 of 1994; and (d) Suit No.11 of 1996. It is submitted that in view of the
finding of the Apex Court in appeal against judgment of the Special Court in Suit
No.11 of 1996 and in other suits and petition, the said finding would operate as res
judicata This Order is modified/corrected by Speaking to Minutes Order against the
HPD and he would be barred from raising the same issue again in this suit.
96. Mr. M.P.S. Rao, on the other hand, submitted that the plea of res judicata based
on the judgment of the Apex Court would not be applicable in the present case for the
following reasons viz (a) HPD - Defendant No.2 was not a party to Suit No.11 of 1996;
(b) Defendant No.2 took out Chamber Summons for impleading him as a necessary
party to Suit No.11 of 1996. The said Chamber Summons was opposed by SCB and, as
such, the Chamber Summons was dismissed and, therefore, HPD was not allowed to
participate in Suit No. 11 of 1996; (iii) by virtue of order dated 21/04/1998 passed by
the Apex Court in various appeals, the orders passed in Suit No.11 of 1996 and Misc.
Petition No.81 of 1995 were set aside and the matters were remanded back to the
Special Court. It is submitted that, therefore, finding in Suit No.11 of 1996 and Misc.
Petition No.81 of 1995 would not operate as res judicata as against HPD - Defendant
No.2 since no opportunity was given to him to defend his case.
97. In the present case, it is an admitted position that number of proceedings were
filed in respect of Can-Triple Units. HPD did file an affidavit in Petition No.36 of
1993 Exhibit P-31 in which he took up a stance that Can-Triple Units were forcibly seized
from him by SCB. So far as Suti No.11 of 1996 and Misc. Petition No.81 of 1995 which
were tried together, an issue came to be framed as follows:-
60
"6 Whether on 9-5-1992 the Plaintiffs purchased Cantriple units of the

face value of Rs 42.50 crores for Rs. 266.18 crores (approximate) and
against which various securities including the suit bonds of the face
value of Rs 50 crores and whether the plaintiffs have applied for and
got the said Cantiple Units of face value Rs 45.50 crores transferred in
their name in January 1993 disclosing a sale consideration of about Rs
266.18 crores as stated in paras 14 and 15 of the written statement?"
The said issue was answered by the Special Court in the following manner:This Order is modified/corrected by Speaking to Minutes Order "This
issue is divisible into three parts;
(i) CMF has proved that SCB has purchased Cantriple Units of the face
value of Rs 45.50 crores on 9-5-1992. To that extent, issue is answered
in the affirmative, (ii) however, CMF has not proved that the said
purchase was against sale ig of the suit bonds on 9-5-1992. To that
extent the sub-issue is answered in the negative, (iii) CMF has proved
that in January 1993 SCB applied for and have got the said Cantriple
Units of the face value of Rs 45.50 crores transferred in their name.
Therefore, to that extent, the sub-issue is answered in the affirmative."
In Appeal, the Supreme Court while dealing with this aspect in paras 80 and 81 on
page 135 and 136 of its judgment dated 5th May 2006 has held as under:This Order is modified/corrected by Speaking to Minutes Order "80. It is the stand of
CMF that SCB lost its title to the suit bonds as a result of sale of the suit bonds on
9-5-1992 as consideration for its purchase of Cantriple Units worth Rs 205 crores.
While answering Issue 6, the Special Court has clearly held that purchase of the
Cantriple Units on 9-5-1992 had been proved but CMF had not been able to prove
that the said purchase was against sale of the suit bonds on 9-5-1992. In the face of
this finding, the argument of CMF that SCB lost title because it had sold the suit
bonds in lieu of which it purchased Cantriple Units, has been rejected by the Special
Court itself."
"81. For these reasons, we are clearly of the view that whatever might have been the
conjectures on the part of the Special Court, whatever might have been the suspicion
generated on account of sham entries made by one or the other party, when it came
to the crux of the issue, the Special Court This Order is modified/corrected by
Speaking to Minutes Order has correctly answered it and negatived the case of CMF
that SCB lost title of the suit bonds because the suit bonds were sold in consideration
of purchase of Cantriple Units."
61
The case of the HPD has been expressly rejected by the Special Court and the Apex
Court in Misc. Petition No.36 of 1993 and Suit No.9 of 1994. Apart from that it was
the duty of Defendant No.2 to have led evidence to prove his case.
His contention that the Plaintiffs have admitted his case as alleged by him cannot be
accepted. His contention that because he was not party to the said suit No.11 of 1996,
observations made by the Apex Court in respect of the said issue will not be binding
on him also cannot be accepted since the said issue has been heard and decided by
the Apex Court in the said suit and would be binding on him.
98. It is submitted by the learned Counsel appearing on behalf of Defendant No.2
that the Plaintiffs had mentioned three proceedings other than Suit No. 17 of 1994
filed by This Order is modified/corrected by Speaking to Minutes Order Plaintiffs
against Defendant No.2 for a declaration and the Special Court upheld the liability of
Plaintiffs - SCB towards Defendant No.2 for Rs 205 crores in Cantriple transaction. It
is submitted that other three proceedings are M.A. 36 of 1993, Suit No.9 of 1994 and
Suit No.45 of 1995. It is then submitted that Suit No.45 of 1995 is still pending.
However, M.A. No.36 of 1993 and Suit No.9 of 1994 have been disposed of. It is
submitted that the reliance was placed on the finding in M.A. No.36 of 1993 in
support of the contention that Plaintiffs are not liable to pay Rs 205 crores to
Defendant No.2. It is submitted that in view of findings of the Special Court in Suit
No.11 of 1996, the said finding is misplaced. It is then submitted that finding of the
Special Court on issue No.6 had been upheld by the Apex Court while deciding Civil
Appeal Nos.2275 and 2276 of 2002. It is, therefore, submitted that Plaintiffs' liability
of Rs 205 crores on Cantriple transaction has been crystallized. It is, however,
submitted that this was without prejudice to his contention that Defendant No.2 was
not party to Suit No.11 of 1996 and any observation adverse to the interest of
Defendant No.2 in Civil Appeal No.2275 and 2276 of 2002 is This Order is
modified/corrected by Speaking to Minutes Order not binding on him.
99. In my view, the said contention of the learned Counsel appearing on behalf of
Defendant No.2 cannot be accepted.
The Special Court in appeal from judgment in Suit No.11 of 1996 and in Civil Appeal
No.2275 & 2276 of 2002 has clearly observed as under:"80. It is the stand of CMF that SCB lost its title to the suit bonds as a
result of sale of the suit bonds on 9-5-1992 as consideration for its
purchase of Cantriple Units worth Rs 205 crores. While answering
Issue 6, the Special Court has clearly held that purchase of the
Cantriple Units on 9-5-1992 had been proved but CMF had not been
able to prove that the said purchase was against sale of the suit bonds
on 9-5-1992. In the face of this finding, the argument of CMF that SCB
lost title because it had sold the suit bonds in lieu of which it
62
purchased Cantriple Units, has been rejected by the Special Court

itself."
This Order is modified/corrected by Speaking to Minutes Order "81.
For these reasons, we are clearly of the view that whatever might have
been the conjectures on the part of the Special Court, whatever might
have been the suspicion generated on account of sham entries made
by one or the other party, when it came to the crux of the issue, the
Special Court has correctly answered it and negatived the case of CMF
that SCB lost title of the suit bonds because the suit bonds were sold in
consideration of purchase of Cantriple Units."
Since this was the observation of the Special Court which has been confirmed by the
Apex Court, it is not open for Defendant No.2 to allege that the said liability of Rs 205
crores was to be adjusted against sale of suit bonds on 09/05/1992. Defendant No.2
has not led any evidence to prove this fact in this case. The contention of the learned
Counsel appearing on behalf of Defendant No.2, therefore, cannot be accepted.
100. The submissions made by Mr. Kapadia, the learned This Order is
modified/corrected by Speaking to Minutes Order Senior Counsel appearing on
behalf of Defendant Nos. 3 to 10 and Mr. M.P.S. Rao, the learned Counsel appearing
on behalf of Defendant No.2 for the aforesaid reasons cannot be accepted. Mr.
Kapadia, the learned Senior Counsel has relied upon the judgment in Bank of India v.
K. Mohandas 1 He submitted that since there are number of differences between Suit
No.11 of 1996 and the present suit more particularly mentionedig in Annexure-VIII to
the written submissions filed by Defendant Nos. 3 to 10, the observations made by
the Apex Court on this issue would not be barred as res judicata. This submission
cannot be accepted. Firstly, since the judgment in Bank of India (supra) was a
judgment on the precedential value of a judgment by the Supreme Court and in that
context the Apex Court has observed that if facts in two cases are different then the
observations of the Apex Court or High Court are not to be treated as precedent in the
subsequent case. In the present case, the issue involved is that of res judicata and as
observed hereinabove if the issue involved in earlier suit was conclusively decided in
that suit, the said issue cannot be reagitated even though the cause of action in both the suits is 1 (2009) 5 SCC 313 This
Order is modified/corrected by Speaking to Minutes Order different. The ratio of the
judgment therefore in Bank of India (supra) would not apply to the facts of the
present case. Similarly, ratio of the judgment in Sajjadanashin Sayed Md. B.E. Edr.
vs. Musa Dadabhai Ummer 1 also will not apply to the facts of the present case. In the
said judgment, the Apex Court has observed in paragraphs 13, 14 and 16 as under:"13. As pointed out in Halsbury's Laws of England (Vol. 16 1538) (4th
Ed), the fundamental rules is that a judgment is not conclusive if any
63
matter came collaterally in question (R v. Knaptoft Inhabitants (1824)

2 B & C 883; Heptulla Bros v. Thakore (1956 (1) WLR 289 (297) (PC);
or if any matter was incidentally cognizable (Sanders (otherwise
Saunders) v. Sanders (otherwise Saunders) (1952) 2 ALL ER 767 at
771.
"14. A collateral or incidental issue is one that is ancillary to a direct and substantive
issue; the former is an auxiliary issue and the latter the principal issue. The
expression 'collaterally or incidentally' in 1 AIR 2000 SC 1238 This Order is
modified/corrected by Speaking to Minutes Order issue implies that there is another
matter which is 'directly and substantially' in issue (Mulla, CPC 15th Ed., p. 104)"
"16 ......... It is suggested by Dixon J. that even where this inquiry is answered
satisfactorily, this inquiry is still another test to pass; viz whether the determination
is the 'immediate foundation' of the decision as opposed to merely a ig proposition
subsidiary only, i.e not more than part of collateral or the reasoning supporting the
conclusion." It is well settled, say the above authors, "that a mere step in reasoning is
insufficient. What is required is no less than the determination of law, or fact or both,
fundamental to the substantive decision".
In the aforesaid case, therefore, what was observed is that the collateral or incidental
issue which is ancillary to a direct and substantive issue, would not be barred by res
judicata.
In the present case, the issue as to whether it is opposed to public policy or whether
the transactions were covered by 15% arrangement was directly in issue in the earlier
suits This Order is modified/corrected by Speaking to Minutes Order and the Apex
Court had held that it was barred by res judicata in view of the finding given on that
issue in the earlier suit. The ratio of the said judgment, therefore, would not apply to
the facts of the present case.
101. Even otherwise, no evidence has been led by the Defendants in respect of 15%
arrangement and, therefore it has not been proved that there was 15% arrangement
between HPD and Plaintiffs or other banks. Reliance was sought to be placed by Mr.
Kapadia, the learned Senior Counsel appearing on behalf of Defendant Nos. 3 to 10
on certain averments made in the plaint. However, these averments in paragraphs 6
and 7 do not admit the so-called 15% arrangement between Plaintiffs and HPD or
other banks.
The said issues are therefore accordingly answered.
102. Hence, issue No.15 is answered in the negative and issue Nos 16 and 17 are
answered in the affirmative. On the same ground, issue No.10 is answered in the
negative and the issue No.11 is answered in the affirmative. For the aforesaid reasons,
64
the This Order is modified/corrected by Speaking to Minutes Order Issue No.3

between Plaintiffs and Defendant No.2 is also answered in the affirmative.
ISSUE NO.12 BETWEEN PLAINTIFFS & CMF
12. Whether the Defendant No.2 was the broker for Defendant No.1 in the alleged suit
transaction and Defendant No.1 handed over the original LOA to Defendant No.2 as
alleged in para 6(c) and 11(a) of the Plaint?
103. This issue has become redundant in view of subsequent amendment of the
Plaint by the Plaintiffs. Hence, Issue No.12 does not arise.
ISSUE
CMF
NO.13
BETWEEN
PLAINTIFFS
&
13. Whether the Plaintiffs are estopped from making any claim as alleged in para 2
read with para 14 of the Written Statement of the Defendant No.3?
104. It has been submitted by Mr. Jethmalani, the learned Senior Counsel appearing
on behalf of Plaintiffs that this issue was squarely raised in the earlier Suit No.11 of
This Order is modified/corrected by Speaking to Minutes Order 1996 by the CMF and
the Special Court had decided the said issue in favour of CMF. However, in appeal,
the Supreme Court reversed the said finding and it held in favour of the SCB. It is
submitted that issue in Suit No.11 of 1996 was similar to the issue No.13 which is
raised in this suit.
105. In my view, there is much substance in the submission made by Mr. Jethmalani,
the learned Counsel appearing on behalf of the Plaintiffs. The said issue was raised as
Issue No.5 in the earlier suit No.11 of 1996 which reads as under:"Whether the Plaintiffs are estopped from making any claim as alleged
in paragraph 1 read with paragraph 22 and 29 of the Written
Statement".
Perusal of paragraphs 21, 22 and 29 of the Written Statement of CMF in Suit No.11 of
1996 and the averments made in para 14(ii) of the Written Statement of CMF in the
present suit indicate that they are almost identical. The Apex Court in appeal from
judgment in Suit No.11 of 1996 has considered the said issue in paragraphs 55 to 59
of its This Order is modified/corrected by Speaking to Minutes Order judgment,
which read as under:Indian Kanoon - http://indiankanoon.org/doc/2943423/
65
"55. Issue No.5 framed by the Special Court was whether SCB was
estopped from making any claim to the suit bonds by denying the
authority of HPD to deal in the suit bonds, as SCB had actually,
ostensibly or negligently permitted HPD to deal with the suit bonds.
Although the Special Court answered the issue in the affirmative i.e in
favour of CMF and against SCB, there does not seem to be an specific
discussion on this issue nor any reason supporting the said finding. It
is, however, true that the Special court took the view that the direct
fallout of the 15% arrangement was that HPD became the owner of the
suit bonds and had the right to deal with the suit bonds as he pleased,
and since this was done to the knowledge of and with acquiescence of
SCB, SCB was estopped from denying that HPD had acquired any such
right to deal with the suit bonds or to transfer them to any other
person."
"56 The Special Court has taken the view that the transactions reflected in the
security ledger (Exhibit 11), indicated funding of the broker by SCB and that it was
something like a This Order is modified/corrected by Speaking to Minutes Order
"running account" of HPD in the books of SCB, which had opened with an entry of
26-2-1992 and was settled on 9-5-1992. It then observed:
"Under Exhibit 11, the suit scrip of 9% NPCL bonds was made available to HPD for
raising finances either by sale, pledge or ready forward. It was bought for HPD as he
had assured a fixed return to SCB. The (sic) HPD was entitled to trade. He was
entitled to take position in the market on the suit bonds bought for him as he has
assured a fixed return. He was entitled to take a position on suit bonds. He took that
position through SCB.
Therefore, SCB had taken his position under Exhibit 11. Under the above
arrangement, SCB could claim return of the security or equivalent money value only
from HPD as the transactions in Exhibit 11 are under 15% arrangement. Therefore,
SCB cannot claim any relief against CMF. They can only claim relief against HPD.
SCB is estopped from claiming any relief against CMF. SCB, therefore, has no right to
object to the transfer of bonds by NPCL in favour of CMF."
"57 Learned counsel for SCB however This Order is modified/corrected by Speaking
to Minutes Order criticised the impugned judgment of the Special Court on the
ground that this finding, though not made specifically, but diffusely over the
impugned judgment arises from misapprehension as to the exact nature of the
doctrine of estoppel. Learned counsel contended that estoppel would require a
representation by SCB, by acting upon which CMF should have altered its position to
its prejudice. Since the burden of proving the issue was on CMF, CMF had to show
what the representation was, to whom it was made, how CMF had altered its position
66
as a result of such representation and what prejudice it had suffered. It was

contended that no evidence was led by CMF on any of these aspects and, therefore,
the Special court had no material whatsoever before it to make any finding on the
issue of estoppel other than pure conjecture and speculation based upon its
understanding of the 15% arrangement. Further, learned counsel contended that if
HPD had obtained the suit bonds by theft or by committing any other offence, then
there would be no question of estoppel of SCB from denying the title of HPD or of
anyone else who claimed to have obtained title to the suit bonds from HPD. In
Mercantile Bank of India This Order is modified/corrected by Speaking to Minutes
Order Ltd v. Central Bank of India Ltd.1 it was observed : (IA pp.85, 86 & 92)
"[Though estoppel has been described as a mere rule of evidence, it may have the
effect of creating substantive rights as against the person estopped. Of the many
forms which estoppel may take, it is here only necessary to refer to that type of
estoppel which enables a party as against another party to claim a right of property
which in fact he does not possess. Such estoppel is described as estoppel by
negligence, or by conduct, or by representation, or by a holding out of ostensible
authority......
* * * '.......that it must be the neglect of some duty that is owning to the person led
into that belief, or, what comes to the same thing, to the general public of whom the
person is one, and not merely neglect of what would be prudent in respect to the
party himself or even of some duty owning to third persons, with whom those seeking
to set up the estoppel are not privy.' * * * There is a breach of the duty if the party
estopped has not used due precautions to 1 (1937-38) 65 IA 75 : AIR 1938 PC 52 This
Order is modified/corrected by Speaking to Minutes Order avert the risk. The
detriment may entitle the innocent third person either to prosecute or to defend a
claim. His identity may be ascertainable only by the event, in the sense that he has
turned out to be the member of the general public actually reached and affected by
the conduct, negligence, representation or ostensible authority.
"58. It was thus held that a plea of estoppel could not be availed of if there was no
duty owned by the person sought to be estopped, nor any representation made by
such person. In New Marine Coal Co. (Bengal) (P) Ltd. v. Union of India1 this Court
had occasion to examine the doctrine of estoppel and cited (at SCR p.873) with
approval the following observations in Halsbury's Laws of England2, "before anyone
can be estopped by a representation inferred from negligent conduct, there must be a
duty to use due care towards the party misled, or towards the general public of which
he is one", that, it was required that 1 (1964) 2 SCR 859 : AIR 1964 SC 152, paras 19,
20 2 Vol 15, p.243, para 451.
This Order is modified/corrected by Speaking to Minutes Order "the negligence on
which it is based should not be indirectly or remotely connected with the misleading
effect assigned to it, but must be the proximate or real cause of that result"1.
67
The judgment of the Privy Council 2 was approvingly cited by this Court, which also
observed, "before invoking a plea of estoppel on the ground of negligence, some duty
must be shown to exist between the parties and negligence must be proved in relation
to such duty". (SCR p. 876) "59 Mr. Jethmalani, therefore, is justified in his
submission that there was no such duty owned by SCB to CMF. At any rate, none was
shown to have existed. Hence, there is no substance in the plea of estoppel raised by
CMF."
106. In my view, therefore, the observations made by the Apex Court in the said
appeal in Suit No.11 of 1996 would operate as res judicata and, therefore, Defendant
Nos.
3 to 10 are barred by the principles of res judicata from 1 Ibid., at para 453 2
Mercantile Bank of India Ltd. v. Central Bank of India Ltd, (1937-38) 65 IA 75 : AIR
1938 PC 52 This Order is modified/corrected by Speaking to Minutes Order raising
this issue again in this suit. The said issue No.13 is accordingly answered in the
affirmative.
CAUSE OF ACTION:
107. Following issue is framed between SCB and HPD in respect of cause of action:ISSUE NO.1 BETWEEN PLAINTIFFS AND DEFENDANT NO.2-HPD:
1 Whether the Plaint fails to disclose any cause of action against the
Defendant No.2 as alleged in para 1 of the Written Statement of
Defendant No.2.?
108. Mr. Kapadia, the learned Senior Counsel appearing on behalf of Defendant Nos.
3 to 10 also during the course of arguments argued that the Plaintiffs had no cause of
action to maintain the present suit. He submitted that, initially, the suit was filed
against ABFSL and subsequently it was amended on 20/10/1995 in which a case of
conversion was pleaded against HPD and CMF. He submitted that the claim This
Order is modified/corrected by Speaking to Minutes Order against ABFSL was
abandoned and the cause of action was restricted against CMF/HPD on the basis of
the alleged conversion. It is submitted that the claim against Defendant Nos. 3 to 10
was only a contingent claim. Secondly, it is submitted that the pleadings of the
Plaintiffs were mutually destructive. It is submitted that the subsequent amendment
of the plaint was completely contrary to the pleadings in the original plaint viz that
the original LOA was not received by the Plaintiffs. It is submitted that the admission
in the original plaint that the original LOA was not received by the Plaintiffs was
binding upon the Plaintiffs. It is further submitted that the admission made in the
pleadings stood at a higher footing than the admission given in evidence.
68
Reliance was placed on the Judgment of the Apex Court in Nagindas Ramdas vs.
Dalpatram Iccharam alias Brijram and others1 and also upon the Commentary on
Law of Evidence by Phipson, 16th Edition and Sarkar on Evidence, 16th Edition.
It is further submitted that no evidence was led in support of its alleged impression
that the LOA was not handed over and, therefore, this admission was purposely not
explained by leading evidence.
109. Mr. Jethmalani, the learned Senior Counsel appearing on behalf of Plaintiffs,
however, submitted that in view of Order VI Rule 7 and Order XII Rule 1, it was
always open for the Plaintiffs to give up its earlier case after amending its plaint. He
also relied upon the judgment of the Apex Court in appeal from judgment in Suit
No.11 of 1996.
110. The aforesaid submission made by Mr. Kapadia, the learned Senior Counsel
appearing on behalf of Defendant Nos. 3 to 10 cannot be accepted in view of clear
provisions of Order VI Rule 7 and Order XII Rule 1 which read as under:"ORDER VI PLEADINGS GENERALLY
7. Departure.- No pleadings shall, except by way of amendment, raise
any new ground of claim or contain any allegation of fact inconsistent
with the previous pleadings of the party pleading the same."
"ORDER XII ADMISSIONS
1. Notice of admission of case.- Any party to a suit may give notice, by
his pleading, or otherwise in writing, that he admits the truth of the
whole or any part This Order is modified/corrected by Speaking to
Minutes Order of the case of any other party."
A conjoint reading of the said two rules clearly reveals that it is always open for the
party to admit whole or part of the case of any other party and by making an
amendment raise any new ground of claim which may be inconsistent with the
previous pleadings. In the present case, though, initially, the Plaintiffs had filed a suit
against ABFSL, after the Written Statement was filed by Defendant No.1, an
application for amendment was made and the claim against Defendant No.1 was
given up and a new claim was made against Defendant Nos. 2 to 10. The said
application for amendment was allowed by this Court and pursuant to the
amendment made, further additional Written Statement also has been filed. The
submission of Mr. Kapadia, the learned Senior Counsel, therefore, that the admission
made in the original pleadings, therefore, is binding on the Plaintiffs cannot be
69
accepted in view of subsequent amendment whereby the earlier claim was given up
and a new claim was made against Defendant Nos. 2 to 10. Having given up the
earlier claim, therefore, any averment made in the pleadings in respect of prior claim,
obviously, was given up by the Plaintiffs and it cannot This Order is
modified/corrected by Speaking to Minutes Order be relied upon as an admission.
Order XII Rule 1 also permits a party to amend its pleadings or accept in writing the
truth of whole or any part of the case of any other party. In the present case,
therefore, the Plaintiffs, at a subsequent stage, admitted the claim of Defendant No.1
that, in fact, the original LOA was delivered by Defendant No.1 and they were,
therefore, not liable to make any payment to the Plaintiffs. Plaintiffs, ig therefore,
having accepted the contention of Defendant No.1, after they had filed Written
Statement, always had an option of applying for an amendment of the plaint to make
a claim against Defendant Nos. 2 to 10. The Apex Court also in its judgment in appeal
from judgment in Suit No.11 of 1996 has accepted this position which is evident from
observations made by the Apex Court in para 71 and 72 of its judgment which read as
under:"71. Mr. Jethmalani rightly contended, that when these admissions
were placed on record formally, there was no objection by CMF to
these admissions being taken on record nor was there any challenge by
CMF to the ruling given by the Special Court, This Order is
modified/corrected by Speaking to Minutes Order overruling the
framing of the aforesaid two issues. In the circumstances, he submits
that it is not open to CMF to raise an objection at this stage. Apart
therefrom, Mr. Jethmalani also relied on Order 12 Rule 1 of the Civil
Procedure Code to contend that it is open to a party at any time to give
notice, by his pleading, or otherwise in writing, that he admits the
truth of the whole or any part of the case of any other party.
This was precisely what happened during the trial on 2-7-1997. Merely because such
a situation arises, the rest of the case does not get affected and has to be tried in
accordance with law. In Bhagwati Prasad v. Chandramaul 1 while dealing with the
argument that it would not be open to a party to sustain a claim on a ground which is
entirely new or not pleaded, this Court rejected the contention and held that it was a
general doctrine which could not be applied irrespective of the facts of the case on
hand and observed thus (vide AIR para 10): (SCR p.291) "But in considering the
application of this doctrine to the facts of the present case, it is necessary to bear in
mind the 1 (1966) 2 SCR 286:AIR 1966 SC 735 This Order is modified/corrected by
Speaking to Minutes Order other principle that considerations of form cannot
override the legitimate considerations of substance. If a plea is not specifically made
and yet it is covered by an issue by implication, and the parties knew that the said
plea was involved in the trial, then the mere fact that the plea was not expressly taken
in the pleadings would not necessarily disentitle a party from relying upon it if it is
satisfactorily proved by evidence. The general rule no doubt is that the relief should
70
be founded on pleadings made by the parties. But where the substantial matters
relating to the title of both parties to the suit are touched, though indirectly or even
obscurely, in the issues, and evidence has been led about them, then the argument
that a particular matter was not expressly taken in the pleadings would be purely
formal and technical and cannot succeed in every case. What the court has to
consider in dealing with such an objection is : did the parties know that the matter in
question was involved in the trial, and did they lead evidence about it? If it appears
that the parties This Order is modified/corrected by Speaking to Minutes Order did
not know that the matter was in issue at the trial and one of them has had no
opportunity to lead evidence in respect of it, that undoubtedly would be a different
matter. To allow one party to rely upon a matter in respect of which the other party
did not lead evidence and has had no opportunity to lead evidence, would introduce
considerations of prejudice, and in doing justice to one party, the court cannot do
injustice to another."
"72. We respectfully concur with the said observations and reject the contention of
Mr. Kapadia that SCB could not be permitted to rely on its changed stand."
111. It is then submitted by Mr. Kapadia, the learned Senior Counsel appearing on
behalf of Defendant Nos. 3 to 10 that the suit bonds being actionable claim and, as
such, incorporeal rights to property are not property and are not capable of being
possessed. It is then submitted that in order to allege conversion, the SCB had to first
establish that it had title or possession to the suit bonds at the time of This Order is
modified/corrected by Speaking to Minutes Order alleged conversion. Reliance was
placed on the two judgments of the Apex Court in L.J. Leach and Co. Ltd. and
another vs. Messrs. Jardine Skinner and Co.1 and in K.S. Nanji and Co. vs
Jatashankar Dossa2. So far as the first submission that the suits bonds are not
property is concerned, it is urged that in the earlier suit, it was contended by Mr.
Jethmalani the learned Senior Counsel appearing on behalf of Plaintiffs that it was a
chose in action.
He invited my attention to para 84 of the judgment of the Apex Court in appeal from
judgment in Suit No.11 of 1996.
He, therefore, submitted that it is now not open for the Plaintiffs to argue that
Defendant Nos. 3 to 10 had converted the suit bonds since conversion of incorporeal
property is not permissible.
112. On the other hand, it is submitted by Mr. Jethmalani, the learned Counsel
appearing on behalf of the Plaintiffs that the submission made in the appeal from
judgment in Suit No.11 of 1996 was made in the context of section 110 of the Evidence
Act and, therefore, no reliance could be placed by the Defendants on the said
submissions 1 AIR 1957 SC 357 2 AIR 1961 SC 1474 This Order is modified/corrected
by Speaking to Minutes Order made in the said paragraph of the judgment of the
71
Apex Court in appeal from judgment in Suit No.11 of 1996.

Secondly, it is submitted that the property could be either movable or immovable and
the General Clauses Act, 1897 defines the movable property under section 3(36) as
every property except immovable property. It is also submitted that the immovable
property is also defined under section 3(26) of the General Clauses Act, 1897.
ig It is, therefore, submitted that since every thing that is not immovable is movable,
the incorporeal property also is a movable property in every statute passed after the
General Clauses Act.
Reliance in this context was placed on the judgments of the Apex Court in
Shivanarayan Laxminarayan Joshi and others vs. State of Maharashtra and others 1
and in Manchersha Ardeshir Devierwala vs. Ismail Ibrahim Patel and others2
113. The submission made by Mr. Kapadia, the learned Senior Counsel appearing on
behalf Defendant Nos. 3 to 10 cannot be accepted on this point. So far as the question
whether the bonds are actionable claim and, as such, incorporeal rights to property is
concerned, the said 1 AIR 1980 SC 439 2 AIR 1936 Bombay 167 This Order is
modified/corrected by Speaking to Minutes Order submission cannot be accepted for
the following reasons.
114. The "movable property" has been defined in General Clauses Act, 1897 under
section 3(36) as under:"movable property, shall mean property of every description, except
immovable property;"
The "immovable property", on the other hand, is defined under the Transfer of
Property Act, 1882 under section 3 as under:"Immovable Property" does not include standing timber, growing
crops or grass"
The "immovable property" also has been defined under the General Clauses Act, 1897
under section 3(26) as under:"Immovable property shall include land, benefits to arise out of land
and things attached to the earth, or permanently fastened to anything
attached to the earth."
In view of definition of immovable property under section This Order is
modified/corrected by Speaking to Minutes Order 3(26) of the General Clauses Act,
1897, all other properties other than immovable property are movable and, therefore,
72
even the incorporeal property is movable property. As such, movable property

includes both, corporeal and incorporeal rights in property and, therefore, bonds are
movable property and a suit for conversion can be filed on the basis of conversion of
the suit bonds. Though the judgments on which reliance is placed by the Plaintiffs are
in respect of the definition of the word "property" under section 409 of the Indian
Penal Code or under section 421 since the judgments deal with the definition of the
word "property" observations made in the said judgments would be relevant for the
purpose of deciding this question. The Supreme Court in its judgment in Shivnarayan
Laxminarayan Joshi & Ors vs. State of Maharashtra and others1 in para 11 has
observed as under:"11........... "The property being an actionable claim against Rekchand
Gopaldas, accused No.1 as the Managing Director was entrusted with
complete dominion over the right to recover the same under the said 1
AIR 1980 SC 439 This Order is modified/corrected by Speaking to
Minutes Order articles and as such he was capable of committing
dishonest misappropriation or conversion of that actionable claim.
..................."
"12. ........... the word "property" is wide enough to include a chose in
action."
Then in the judgment in Manchersha Ardeshir Devierwala vs. Ismail Ibrahim Patel
and others1, it has been observed that the definition of the word "movable property"
is inclusive one and it does not mean only corporeal property. It is further observed
that it includes every description of property except immovable property. Similarly
while considering the question of the meaning of the word "property" in section 421
of the Indian Penal Code, it has been observed in the said judgment that the word
"property" in section 421 is wide enough to include a chose in action. Similarly, so far
as the reference made by Mr. Kapadia, the learned Senior Counsel to the observations
made by the Apex Court in para 84 of its judgment in appeal from judgment in Suit
No.11 of 1996, it has to be noted that 1 AIR 1936 Bombay 167 This Order is
modified/corrected by Speaking to Minutes Order submissions made by Mr.
Jethmalani, the learned Senior Counsel for Plaintiffs, were in the context of section
110 of the Evidence Act regarding burden of proof. Para 84 of the said judgment of
the Supreme Court in appeal from judgment in Suit No.11 of 1996 reads as under:"84. Rebutting these arguments, Mr. Jethmalani contends that Section
110 is contained in Chapter VII of the Evidence Act, 1872, which deals
with the burden of proof. As a matter of fact, Section 110 merely
enunciates the burden of proof as to ownership. He rightly submits
that any rule of burden of proof is irrelevant when the parties have
actually led evidence and that evidence has to be considered.
73
Reliance is placed by him on Sita Ram Bhau Patil v. Ramchandra Nago Patil1 for the
proposition that when the entire evidence is before the court, the burden of proof
becomes immaterial. Even assuming that the rule of burden of proof in Section 110 is
relevant, Mr. Jethmalani contended that Section 110 would be applicable only to a
"thing", which is capable of being possessed. He rightly 1 (1977) 2 SCC 49 This Order
is modified/corrected by Speaking to Minutes Order submits that a chose-in-action is
not a "thing", as, by definition, it is not in the possession of someone, but that
possession has to be acquired by some action which is why it is called as chosein-action. He rightly distinguished the judgment of this Court in Chuharmal 1 as
wholly inapplicable to a situation of a chose-in-action. In the said judgment, the
possession was with respect to certain wrist watches, which were obviously not
choses-in-action. According to him, Section 137 of the TP Act makes Section 132
inapplicable to debentures but the principles of common law and equity must surely
govern even such transactions of transfer of debentures."
and in that context it was contended that section 110 would be applicable only to a
thing which is capable of being possessed. There is, therefore, no substance in the
submissions made by Mr. Kapadia, the learned Counsel appearing on behalf of
Defendant Nos. 3 to 10 on this aspect also.
1 (1988) 3 SCC 588 : AIR 1988 SC 1384 This Order is modified/corrected by Speaking
to Minutes Order
115. So far as submission of Mr. Kapadia that SCB had to establish title or possession
to the suit bonds at the time of alleged conversion and only if it was established that
they had title or possession at the time of the alleged conversion, they could seek
compensation is concerned, it is contended that the suit bonds were sold to ANZ on
26/2/1992 itself and, therefore SCB had no title in the suit bonds on 27/2/1992 when
the alleged conversion took place. In the original plaint it was alleged that they had
never received possession of the bonds but they had received only photo copy. It is
contended that the SCB had failed to prove receipt of bonds on 27/2/1992. It is also
alleged that since SCB had failed to produce the discharged BR, the receipt of the suit
bonds by SCB on the strength of the alleged discharged BR was not established.
Lastly, it is contended that even if title or possession is assumed by virtue of SCB
having received BR and Cost Memo even then since the title and possession was
transferred to ANZ on 26/2/1992, Plaintiffs would be in possession as Trustee for
ANZ and not as an owner. Mr. Kapadia relied upon the judgments in L.J. Leach and
Co. Ltd.
This Order is modified/corrected by Speaking to Minutes Order and another vs.
Messrs. Jardine Skinner and Co.1 and in K.S.
Nanji and Co. vs Jatashankar Dossa2.
74
116. On the other hand Mr. Jethmalani, the learned Senior Counsel appearing on
behalf of Plaintiffs submitted as under on this question.
It is firstly submitted by the learned Senior Counsel appearing on behalf of the
Plaintiffs that the Plaintiffs had title to the suit bonds pursuant to the purchase of suit
bonds by the SCB from ABFSL. Secondly, it is submitted that Plaintiffs also had
possession of the suit bonds which is evident from the evidence of Kalyanraman
(PW1). It is then submitted that SCB continued to be a bailee of the bonds holding the
same for ANZ and even assuming that title therein had passed to ANZ, Plaintiffs, as a
bailee, were entitled to possession of the suit bonds. Reliance was placed on section
180 of the Contract Act, Section 7, Explanation-2 of the Specific Relief Act and
section 117 of the Evidence Act. Reliance was also placed on the following judgment:1 AIR 1957 SC 357 2 AIR 1961 SC 1474 This Order is modified/corrected by Speaking
to Minutes Order
1. AIR 1965 Raj 121 [Kanhaiyalal vs. Badrilal & Anr.
2. AIR 1916 Calcutta 788

[Ramnath Gagoi vs. Pitamber
Deb
Goswami]
3. 1902 ALL ER Rep 346
[The Winkfield]
4. 1976 (3) ALL ER 129

[The Albazero vs. Owners of the Ship
or Vessel Albazero]
5. AIR 1984 Calcutta 230

(Sm. Umarani Sen & Ors vs. Sudhir
Kumar Dutta & Ors)
75
117. In rejoinder, Mr. Kapadia, the learned Senior Counsel appearing on behalf of
Defendant Nos. 3 to 10 submitted that a question of statutory bailment would not
arise in this case and the contractual bailment was not pleaded and could not arise
since there was no delivery from bailor (ANZ) to the bailee (Plaintiffs). Secondly, it is
submitted that upon issuance of BR to ANZ, Plaintiffs became the bailee of the suit
bonds and, therefore, they could maintain action against the Defendants. It is
submitted that the goods were deliverable by Plaintiffs to ANZ pursuant to sale of
bonds by Plaintiffs to ANZ and its obligation was as a seller of the bonds and not
because of any bailment. So far as reliance by Plaintiffs on section 180 This Order is
modified/corrected by Speaking to Minutes Order of the Contract Act is concerned, it
is submitted that the Plaintiffs could not claim to be in possession either actual or
constructive and to become a bailee, Plaintiffs ought to have had BR in its possession
on 27/02/1992 or the original LOA of the suit bonds. It is lastly submitted that even
assuming that Plaintiffs held the position of a bailee on 27/02/1992, it ceased to have
that position on or after 27/02/1992 when the Plaintiffs discharged and returned to
Defendant No.1 its BR 27372 dated 26/02/1992 and, secondly, on/ or after
18/03/1992 the Plaintiffs' BR to ANZ having been discharged and returned, the
Plaintiffs cannot claim to be a bailee under that BR.
118. So far as this issue is concerned, Defendant No.2 in his Written Statement has
raised an issue of cause of action in para No.1 as under:
"1. At the outset, this Defendant states that the plaint discloses no
cause of action against this defendant and therefore the suit deserve to
be dismissed."
Similarly, Defendant Nos. 3 to 10 in their Written Statement in paragraph 1 have
stated as under:This Order is modified/corrected by Speaking to Minutes Order "1.
The plaint does not disclose any cause of action in as much as on the
basis of the allegations in the plaint the Plaintiffs did not acquire any
title or right to or in the suit bonds"
A specific issue was framed regarding cause of action qua Defendant No.2 vide Issue
No.1. However, it appears that the similar issue qua Defendant Nos. 3 to 10 has not
been framed but it has been argued at length and reply also has been given by the
learned Senior Counsel appearing on behalf of the Plaintiffs. Hence I proceed to
decide this issue.
119. In my view, Plaintiffs have established that they do have cause of action against
Defendant No.2 and Defendant Nos. 3 to 10 for filing a suit against them. Plaintiffs,
76
initially, had filed a suit against Defendant No.1. However, by way of subsequent
amendment, the claim against Defendant No.1 was dropped and it is now alleged that
Defendant Nos. 2 to 10 are liable to pay compensation to Plaintiffs. In the plaint, it is
alleged that Plaintiffs purchased the suit bonds from Defendant No.1 and made
payment of the sale consideration This Order is modified/corrected by Speaking to
Minutes Order to Defendant No.1. It was initially contended that the original LOA
was not delivered by Defendant No.1 and only photo copy of the LOA was on record.
But, subsequently, they realized their mistake after it was brought to their notice that
the original LOA was, in fact, delivered by Defendant No.1 and some employee of the
Plaintiffs had given original LOA to Defendant No.2, who, in turn had given it to
Defendant Nos. 3 to 10. According to Plaintiffs, after the bonds were sold by them to
ANZ and the original LOA was not available, they had to purchase the bonds from
Defendant Nos. 3 to 10 for the purpose of delivering it to ANZ and, at that time, they
did not know that they had purchased the very same bonds which they had sold to
ANZ and, therefore, they had paid the consideration twice and CMF had received the
sale consideration from the Plaintiffs though they did not legally own or were not
entitled to the possession of the said bonds. Mr. Kapadia, the learned Senior Counsel
appearing on behalf of Defendant Nos. 3 to 10 has also urged that Plaintiffs neither
had title nor possession of the suit bonds after their transaction with ANZ and, in that
context, has relied upon two judgments; one in This Order is modified/corrected by
Speaking to Minutes Order L.J. Leach and Co. Ltd. and another vs. Messrs. Jardine
Skinner and Co.1 and other in in K.S. Nanji and Co. vs Jatashankar Dossa2. to show
that only in cases where title and possession is established, a suit for conversion can
be filed.
120. On the other hand, Mr. Jethmalani, the learned Senior Counsel for Plaintiffs has
relied upon the extract from the Commentary of Winfield and Jolowicz on Torts 17th
Edn.
2006 at pages 52 to 55 @ paras 2.2. and 2.3. He also relied on the book by the same
author 17th Edn. 2006 at pages 760 to 765 @ paras 17-16 to 17-18.
121. In my view it would be relevant to site passages from Winfield on Torts 17th Edn.
2006 @ paras 17-16 to 17-18 which read thus :"17-16 E. Title of Claimant What kind of right to the goods must be
claimant have in order that interference with it may amount to
conversion? The answer is that he can maintain the 1 AIR 1957 SC 357
2 AIR 1961 SC 1474 This Order is modified/corrected by Speaking to
Minutes Order action if at the time of the defendant's ac he had (1)
ownership and possession of the goods, or (2) possession of them or
(3) an immediate right to possess them, but without either ownership
or actual possession. This seems to be the law, but it can be elicited
only from some confusion of terminology in the reports. Thus it is said
77
in several cases that the claimant must have "a right of property in the
thing and a right of possession" and that unless both these rights
concur the action will not lie. If "right of property" means
"ownership", this might lead one to infer that no one can sue for
conversion except an owner in possession at the date of the alleged
conversion. But that is not so, for a bailee has only possession and not
ownership (which remains in the bailor), and yet the bailee can sue a
third party for conversion. And, as we shall see, one who has mere
possession at the date of the conversion can generally sue, and so can
one who has no more than a right to possess."
"17-17 i) Examples of right to possess.
This Order is modified/corrected by Speaking to Minutes Order There is no need to
enlarge upon (1) ownership and possession, or (2) possession, for possession was
analysed in Chapter 13. But (3), the immediate right to possess must be briefly
examined. A reversionary owner out of possession certainly has not got it, for
example in the case of a landlord of premises let together with furniture to a tenant
whose term is still unexpired: if the furniture is wrongfully seized by the sheriff, it is
the tenant and not the landlord who can sue for conversion.
Again, an employee in custody of his employer's goods has not possession of them,
for it is constructively in the employer. But if the employer has made him a bailee of
them so as to vest him with exclusive possession, then, like any other bailee of this
sort, he has it; so, too, if goods are delivered to him to hand to his employer, he has
possession of them until he has done some act which transfers it to his employer, for
example a shop-assistant has possession of money paid to him by a customer until he
puts in the till. Up to This Order is modified/corrected by Speaking to Minutes Order
that moment the employer has only the right to possess. These examples are tolerably
plain, but it must depend to a large extent on the facts of each case whether the law
will attribute to a person the immediate right to possess.
A bailor had it against a mere bailee at pleasure even if he never himself had actual
possession of the goods and only acquired title by virtue of an illegal but too,
completely executed contract of sale.
So, where furniture dealers transferred furniture on hire-purchase to X with an
express proviso that the hiring was a terminate without any notice if the goods were
taken in Execution for debt, they could sue the sheriff for conversion when he levied
execution on them. The wrongful sale of goods subject to a hire-purchase agreement
will constitute a repudiation and hence vest a right to immediate possession in the
finance company even though the agreement does not expressly provide for this.
However, in modern conditions legislation may restrict the enforcement of the
creditor's rights under a hire- purchase agreement.
78
This Order is modified/corrected by Speaking to Minutes Order In a simple bailment,

i.e. one which does not exclude the bailor from possession, an action for conversion
against a third person is maintainable by either bailor or bailee: by the bailee because
he is in possession, by the bailor because it is said that his title to the goods draws
with it the right to possession, that the bailee is something like his servant and that
the possession equivalent to that of the other.
of the one is [A buyer of goods can sue the seller or a third party for conversion if Tie
has ownership of the goods even though he has not yet got possession of them, but he
cannot sue the third party if ownership has passed to such third person by reason of
exceptions to the rule nemo dat quod non habte, under ss. 21 to 25 of the Sale of
Goods Act 1979 under the factors Act, 1889; the seller, however, is liable for
conversion to the original buyer.
A person who is entitled to the temporary possession of a chattel and This Order is
modified/corrected by Speaking to Minutes Order who delivers it back to the owner
for a special purpose may, after that purpose is satisfied and during the existence of
his temporary right, sue the owner for conversion of it; a fortiori he can sue anyone
else.
A person who has a merely equitable right in property and who does not have an
immediate right to possession for the purposes of conversion, even though the legal
owner is a mere nominee who has to transfer the property to the beneficiary on
demand. Though there may be some cases be little practical difference between them,
the legal distinction between bailor and bailee on the one hand and beneficiary and
trustee on the other hand, is fundamental."
"17-18
Once
F. Jus Tertii
system
of
law
accepts
possession as sufficient foundation for a claim for recovery of personal property it is

faced with the question of how far This Order is modified/corrected by Speaking to
Minutes Order the defendant should be allowed to raise the issue that a third party
has a better right to the property than the claimantthe jus tertii. There are arguments either way. On the one hand, refusal to admit the
jus tertii allows recovery by a claimant who may have himself wrongfully
dispossessed the true owner and also exposes the wrongdoer to the risk of multiple
liability. On the other hand, it may be argued that a person who has dispossessed
another should have no right to raise such issues concerning the relationship between
the dispossessed and some other party having a claim over the goods, for there is a
serious risk of abuse and of the interminable prolongation of actions.
79
The common law compromised. If the claimant was in possession at the time of the
conversion, the defendant could not set up the jus tertii, unless he was acting under
the authority of the true owner. Where, however, the claimant was not in possession
at the time of the conversion but relied on his right to possession, jus tertii could be
pleaded by the defendant. To this rule there was This Order is modified/corrected by
Speaking to Minutes Order an exception where the defendant was the claimant's
bailee, for the defendant was regarded as being estopped from denying the claimant's
title unless evicted by title paramount or depending the action on behalf of the true
owner.
These rules were fundamentally changed by the Torts ((Interference with Goods) Act,
1977. Since then, in an action for "wrongful interference with goods" the defendant is
entitled to show, in accordance with Rules of Court, that a third party has a better
right than the claimant as respect all or any part of the interest claimed by the
claimant or in right of which he sues. The Rules require the claimant to identify any
other person whom he knows to have a claim on the goods. The defendant may apply
for directions as to whether any third person with a competing claim should be joined
and if that person fails to appear on such a successful application the court may
deprive him of any right of action against the defendant."
This Order is modified/corrected by Speaking to Minutes Order From the aforesaid
passages as also the passages @ paras 2.2. and 2.3, it can be seen that the author had
traced the origin of the forms of action and in view of subsequent change in English
Law, it did not become necessary to structure the claim on the basis of any particular
forms of action. From the subsequent discussion in paras 17-16 to 17-18, it can be
seen that the Plaintiff could maintain action against Defendants in three cases viz (i)
if he had ownership and possession or (ii) possession or (iii) immediate right to
possess but without either ownership or actual possession.
The examples of right to possession have been enumerated in para 17-17.
122. From the averments made in the plaint, therefore, it can be seen that the claim
of the Plaintiffs is that it had title as well as possession of the suit bonds or, in any
case, immediate right to possess them for the purpose of giving delivery to ANZ. The
contention of the learned Senior Counsel appearing on behalf of Defendant Nos. 3 to
10, therefore, that there was no cause of action to file the suit cannot be accepted. In
the judgment in L.J. Leach and Co.
This Order is modified/corrected by Speaking to Minutes Order Ltd. and another vs.
Messrs. Jardine Skinner and Co.1 on which the reliance is placed by the learned
Senior Counsel for Defendant Nos. 3 to 10, the facts were that the Plaintiffs had sued
the Defendants for damages for conversion of their goods. The court came to the
conclusion that the Plaintiffs had not become the owners of the goods because the
Defendants had imported goods on their own account and for themselves and,
80
therefore, the case of the Plaintiffs was dismissed since it was established that the
Defendants had not imported the goods as agents of the Plaintiffs. As rightly
contended by Mr. Jethmalani, the learned Senior Counsel appearing on behalf of the
Plaintiffs, this case does not lay down the proposition that only full owner can sue for
conversion. It also does not decide that the person whose possession or right to
possession is interfered with cannot sue for possession. So far as the second
judgment in K.S.
Nanji & Co. vs. Jatashankar Dossa & Ors2 on which reliance is placed by the Counsel
for Defendant Nos. 3 to 10 is concerned, the said case was decided on interpretation
of Article 48 of the old Limitation Act. This case also, in my view, is not based on the
definition of conversion or the 1 AIR 1957 SC 357 2 AIR 1961 SC 1474 This Order is
modified/corrected by Speaking to Minutes Order person or persons who can be sued
for conversion. In this view of the matter, in my view, it is not necessary to go into the
question as to whether the Plaintiffs were bailee on behalf of ANZ as argued by the
Plaintiffs alternatively.
123. Issue No.1 between Plaintiffs and Defendant No.2 - HPD and Plaintiffs and CMF
on the cause of action therefore, answered in the affirmative.
ISSUE NOS. 6, 7 & 9 BETWEEN PLAINTIFFS & CMF:
6. Whether the Plaintiffs prove that on 9-4-1992 there was a "hole" pertaining to the
transactions of 26-2-1992 between the Plaintiffs and the 1st Defendant as alleged in
para 7H of the Plaint?
7 Whether the Plaintiffs prove that the then Dealers of the Plaintiffs entered into a
dummy transaction dated 10-4-1992 with the 1st Defendant to cover-up the said
"hole" as alleged in para 7 I of the Plaint?"
9 Whether the Suit transaction and the This Order is modified/corrected by Speaking
to Minutes Order transactions referred to in para 7(a), 7(f) and 7(g) of the Plaint
reflect that the same were fictitious transactions for funding and/or they were
transactions at structured price and/or they were transactions involving difference
between the actual rate (as transacted) and the derived rate as alleged in para 25 and
27 of the further Written Statement?
submitted that Issue Nos. 3, 6, 7 and 12 are entirely irrelevant and do not survive.
He submitted that Issue Nos. 3, 6 and 7 are pertaining to transactions entered into by
SCB with third parties which transactions were either "genuine" transactions or were
"dummy" transactions and that, in either event, such subsequent dealings would not
absolve the CMF or HPD of their liability for converting SCB's property and,
81
therefore, it is submitted that they are irrelevant for the purpose of determining the
main issue in controversy. It is contended that, in any case, an averment was made
that there was an unilateral entry effected in SCB's books which showed that there
was an alleged sale of 17% NPCL bonds to ABFSL and This Order is
modified/corrected by Speaking to Minutes Order this was done to cover up the
hole/loss arising out of the purchase on 26/02/1992 by the SCB from ABFSL which
had arisen since SCB was holding only a photocopy of the said LOA. It is contended
that this entry was made by SCB's then employee since there was no real transaction
and this was done to conceal the loss arising out of the transaction dated
26/02/1992. It is contended that this case of the Plaintiffs is supported by the
ex-employee of Defendant No. 1 - ABFSL Mr. Kalyanraman who, in his evidence, has
stated that there was no transaction between ABFSL and Plaintiffs on 10/04/1992 in
respect of the said 17% NPCL bonds. It is contended that since SCB have established
that the bonds were diverted on 27/2/1992 by HPD to CMF, as a natural consequence
and conclusion, it has to be held that on 10/04/1992 there was a hole in SCB's
records in connection with NPCL bonds. HPD has filed an additional Written
Statement in which he has alleged that the entitlement of Plaintiffs to 17% NPCL
bonds under the transaction dated 26/02/1992 with ABFSL was adjusted against
delivery by HPD of certain Cantriple units on 09/05/1992 and an averment was
made in HPD's additional Written Statement in para This Order is
modified/corrected by Speaking to Minutes Order 11(f) read with para 4 of his first
Written Statement.
125. CMF also in the Written Statement at paras 26 and 27 has dealt with averments
of SCB at paras 7(H) to 7(I) in which it is alleged that in the event the transaction
dated 10/04/1992 was a bogus transaction then, in that case, initial transaction dated
26/02/1992 was also a bogus transaction and, therefore, it established 15%
arrangement with HPD which was, therefore, illegal and opposed to public policy.
126. It is urged by Mr. Jethmalani, the learned Senior Counsel appearing on behalf of
the Plaintiffs that in view of evidence of Kalyanraman(PW1), fictitious entry dated
10/04/1992 is established and it is further fortified in view of similar allegations
made by CMF in respect of Suit No.11 of 1996. He relied upon para 76 of the
Judgment of the Apex Court in appeal from judgment in Suit No.11 of 1996 at page
134 which reads as under:"76........ Further, there is evidence of M.Q. Aksari (PW3), an officer of
AB in terms denying that there was any sale This Order is
modified/corrected by Speaking to Minutes Order of purchase
transaction between SCB and AB during the period 1-5-1992 to
10-5-1992. In fact Askari produced the purchase register of AB in
which there was no entry showing purchase of the suit bonds by AB
from SCB on 9-5-1992. Mr. Jethmalani contended rightly that the
evidence of Askari had remained totally unchallenged, particularly
82
with reference to the absence of any purchase of the suit bonds b AB.
Mr. Jethmalani criticized the impugned judgment of the Special Court
as having singularly failed to consider any part of the crucial evidence
of the officer of AB. We think that this criticism is justified. While the
Special Court's inferences are based upon its understanding of what
the 15% arrangement was and its analysis of Exhibit 11, it totally fails
to give any reason as to why the evidence of a witness from AB about
there being no such transaction on 9-5-1992, backed by the purchase
register of AB, should be rejected. In our view, in the face of the
positive evidence of AB that no such transactions were there, there
This Order is modified/corrected by Speaking to Minutes Order was
no justification for not accepting the stand of SCB that entry dated
9-5-1992 pertaining to the suit bonds was a sham entry intended to
introduce the money into the books of SCB to cover a wide gap."
127. On the other hand, Mr. Kapadia, the learned Senior Counsel appearing on behalf
of CMF and Mr. M.P.S. Rao the learned Counsel appearing on behalf of Defendant
No. 2 HPD have submitted that the alleged hole in SCB's record was adjusted by receipt of
certain IRFC bonds on 10/04/1992 and, therefore, the Plaintiffs are entitled to
recover damages as sought by them. In this connection, it is urged by the learned
Counsel appearing on behalf of Plaintiffs that Defendants could not raise this defence
because, firstly, no such case had been raised by the Defendants in their pleadings.
No issue in connection therewith had been raised and squaring off the transaction by
delivering IRFC bonds was directly contrary to the case pleaded by HPD and lastly
CMF was bound by admissions of HPD; he being the predecessor in title of CMF.
Reliance was placed by the Plaintiffs on the following judgments:This Order is modified/corrected by Speaking to Minutes Order
(1)AIR 1966 SC 735 @ paras 8,9 and 10 [Bhagwati Prasad vs.
Chadramaul] (2) AIR 1958 SC 255 @ 14.
[Shi Venkataramana Devaru & Ors vs. State of Mysore & Ors] (3) AIR 1956 SC 231 @
para 24 [J.K. Iron & Steel Co. Ltd. vs. The Iron & Steel Mazdoor Union, Kanpur] (4)
1956 PC 218 (House of Lords) [Esso Petroleum Co. Ltd. vs. Southport Corporation]
(5) AIR 1953 Nagpur 154 @ para 52 [The Bombay Agarwal Co., Akola vs. Ramchand
Diwanchand & Anr] Mr. Kapadia, the learned Senior Counsel appearing on behalf of
CMF relied upon Exhibit D-2(2) which is a letter addressed by David Loveless(PW4)
to CBI dated 3/5/1994 along with a note given by Mr. Ganapathi to the police
(hereinafter referred to as "Ganapathi Report").
83
128. In reply, it is contended by Mr. Jethmalani, the learned Senior Counsel

appearing on behalf of Plaintiffs that Ganapathi Report could not be relied upon on
number of grounds. It is submitted that the Report being given by Ganapathi on
explanation asked by the police, could not be treated as admission by Plaintiffs since
it was a report given in the course of investigation. Secondly, it is submitted that this
Report was annexed to the covering letter of Mr. David Loveless(PW4). Thirdly, it is
submitted that no averment was made in respect of the said Report in their Written
Statement and, lastly, it is submitted that no cross-examination was made on the said
question of squaring off the said transaction. Reliance was placed by Plaintiffs on the
following judgments:(1)AIR 2002 SC 3652 [Sarwan Singh vs. State of Punjab] (2) AIR 1961
Cal 359 [AEG Carapiet vs. A.Y. Derderian[ (3) AIR 1953 Nagpur 154
This Order is modified/corrected by Speaking to Minutes Order [The
Bombay Agarwal Co. Akola vs. Ramchand Diwanchand & Anr] (4) AIR
1973 Gujarat 57 [Sajjanraj Swarupchand vs. Mehta Commercial Co.]
(5) AIR 1967 SC 1058 [Chandradhar Goswami & Ors vs. Gauhati Bank
Ltd.]
129. So far as the evidence in respect of this issue is concerned, Plaintiffs have
examined Mr. Kalyanraman (PW1), an ex-employee of ABFSL. He has in clear terms
stated that there was no transaction between ABFSL and Plaintiffs on 10/04/1992 in
respect of 17% NPCL bonds. There is no material on record to show either there was
delivery of any security or receipt of consideration. The averments made in the Plaint
in para 7(H) and 7(I) are as under:"7-H. Accordingly, on 9 April 1992, there was a "hole", i.e shortfall in the Securities
Account reflected in Plaintiff's books pertaining to the transaction of This Order is
modified/corrected by Speaking to Minutes Order 26 February 1992 between
Plaintiffs and 1st Defendant in view of Plaintiff's then belief that the said bonds under
the said transaction had not been received from 1st Defendant."
"7-I.
It appears that in order to cover
the said hole, the then dealers of
Plaintiffs
entered
into
transaction
dated
10
April
dummy
1992
84
purportedly with 1st Defendant. In fact, the said purported transaction was a mere
unilateral set of entries effected in Plaintiff's books. No such transaction, in fact, took
place."
Neither the CMF nor HPD have led any evidence though at the time of final
arguments, very elaborate submissions have been made by the learned Senior
Counsel appearing on behalf CMF that Plaintiffs, firstly, have not produced best
evidence for the purpose of proving the alleged hole.
Secondly it is submitted that relevant books of accounts have not been produced
either by Plaintiffs or by ABFSL and thirdly it is contended that if the last transaction
was a fictitious or dummy transaction then the first transaction This Order is
modified/corrected by Speaking to Minutes Order dated 26/02/1992 was also a
bogus or fictitious transaction.
For that purpose, elaborate submissions have been made pointing out the flow chart
of the suit LOA and the chart of transaction with price rate. So far as the evidence of
Mr. Kalyanraman (PW1) is concerned, he has made a categorical statement that there
was no transaction between Plaintiffs SCB and ABFSL on 10/04/1992. In view of this evidence, therefore, in my view,
Plaintiffs have established that there was a hole/loss which had resulted in making of
fictitious entry dated 10/04/1992. On the other hand, in my view, Defendants - CMF
and HPD have not established that the alleged borrowing of the original LOA by HPD
from SCB was squaring off as a result of receipt of 9% IRFC bonds.
130. Mr. Kapadia, the learned Senior Counsel for CMF has relied on Ganapathi
Report as also the observations made in Janakiraman Committee Report. First of all,
it would be necessary to see the probative value of Ganapathi Report which is
annexed to the covering letter addressed by David Loveless(PW4) to CBI at Exhibit
D-2(2). In the covering letter which is at Exhibit-D-2(2), Mr. Loveless has stated as
under:This Order is modified/corrected by Speaking to Minutes Order "Bhupinder Kumar,
3-5-94 Deputy Superintendent of Police, Central Bureau of Investigations, White
House, Walkeshwar Road, Bombay Dear Sir, Re: Investigation of Case RC U
(9)//92/CBI/SCB/BOM
i) and your letter of 14th February, 1994 re transactions between SCB & Andhra Bank
and
ii) your letter of 21st February, 1994, re transactions between SCB and Bank of Karad.
85
_____________ I write with reference to your above mentioned letters and the
attached schedules. First of all, let me thank you for the extension of time you
granted the Bank to prepare our response.
Secondly, please find attached a note, which has been prepared in the format you
have requested, by Mr. R. Ganapathy, Senior Manager of the Forensic Banking team.
This note has been prepared following an extensive review of our existing records;
where possible, the note has been cross referenced to the specific underlying
documents. Where it has not been possible to trace and support by way of
documents, every element of each and every transaction, Mr. Ganapathy has
expressed his personal opinion, which is based upon his extensive banking
experience per se and upon his detailed knowledge of this case gained over the past
two years.
I am mindful of the fact that a considerable period of time has elapsed since the Bank
first discovered that it had been defrauded and filed its First Information This Order
is modified/corrected by Speaking to Minutes Order Report, which included
schedules of transactions in support of the Bank's claims. During the intervening two
years, a firm of independent chartered accountants has been continuously reviewing
the Bank's position. Given the complexity of the case and the importance of accuracy,
I have asked for an independent validation of Mr. Ganpathy's note by that same firm
to be undertaken immediately. In any event, this validation has always been viewed
by the Bank as essential for any forthcoming trial, where the need for impartial and
totally independent experts of the highest caliber is a perquisite. Mr. Westall will
keep you fully informed of the progress in this area.
In the meanwhile, may I thank you once again for your patience and assure you that
Standard Chartered Bank wishes to extend to you every assistance and cooperation in
this matter. If you have any queries, please do not hesitate to contact either me or Mr.
Talwar.
Yours faithfully, Sd/D. A. Loveless Head, OSRI"
The letter obviously has been written because of the query raised by CBI and the first
part of the reply is to the copy of the report given by Mr. Ganapathi. Ganapathi
Report also has been tendered by Ganapathi during his interrogation by police and as
an answer to the question asked by CBI.
Reliance has been placed by CMF on the said Report as, according to them, the said
Report shows that SCB received consideration in the form of IRFC bonds on
10/04/1992 against its sale of NPCL bonds to ABFSL on 10/04/1992. In This Order is
modified/corrected by Speaking to Minutes Order my view, no reliance can be placed
86
by CMF on the said Report and it cannot be treated as an admission on the part of
Ganapathi which would bind the Plaintiffs - SCB. It cannot be forgotten that this
Report was given during the course of investigation of Ganapathi by CBI and,
therefore, hardly any reliance could be placed on such statement made to the police,
as, even otherwise, it would be hit by section 162 of the Criminal Procedure Code.
ig Secondly, there is no crossexamination by CMF on this aspect of squaring off when the Plaintiffs witnesses were
examined. Hence, it is not now open for CMF to rely on Ganapathi Report without
making suggestion to that effect to David Loveless (PW4) since otherwise he would
have been in a position to offer an explanation and, lastly, there is no plea to that
effect in the Written Statement on the aspect of squaring off of the transaction in
view of Ganapathi Report. In this context ratio of the judgment in Sarwan Singh vs.
State of Punjab 1 - para 8 would squarely apply wherein it has been held that if the
opponent has not put his case in cross-examination, the evidence tendered on that
issue ought to be accepted. The Calcutta High Court in para 10 of its judgment in
A.E.G.
Carapiet v. A.Y. Derderian1 has observed as under:"(10) The law is clear on the subject.
Wherever the opponent has declined to avail himself of the
opportunity to put his essential and material case in
cross-examination, it must follow that he believed that the testimony
given could not be disputed at all. It is wrong to think that this is
merely a technical rule of evidence. It is a rule of essential justice. It
serves to prevent surprise at trial and miscarriage of justice, because it
gives notice to other side of the actual case that is going to be made
when the turn of the party on whose behalf the crossexamination is being made comes to give and lead evidence by
producing witnesses. It has been sated on high authority of the House
of Lords that this much a counsel is bound to do when
cross-examining that he must put to each of his opponent's witnesses
in turn, so much of his own case as concerns that particular witness or
in which that witness had 1 AIR 1961 Calcutta 359 This Order is
modified/corrected by Speaking to Minutes Order any share. If he
asks no question with regard to this, then he must be taken to accept
the plaintiff's account in its entirety. Such failure leads to miscarriage
of justice, first by springing surprise upon the party when he has
finished the evidence of his witnesses and when he has no further
87
chance to meet the new case made which was never put and secondly
because such subsequent testimony has no chance of being tested and
corroborated."
Apart from that, admittedly, Ganapathi Report cannot be equated with entries in the
Books of Account which are maintained in the regular course of business and,
therefore, provisions of section 34 would not apply in the present case.
In view of this, issue Nos. 6, 7 are answered in the affirmative and issue No.9 is
answered in the negative.
ISSUE NOS.14 & 18 BETWEEN PLAINTIFFS AND CMF:
14
Whether the Defendant No.3 proves
that
it
had
on
27th
February,
purchased
the
said
17%
NPCL
1992
bonds
This Order is modified/corrected by Speaking to Minutes Order through the

Defendant No.2 who was allegedly acting as a mercantile agent of the Plaintiff and/or
Defendant No.1 for consideration in good faith and without notice as alleged in
paragraph 11 of the Written Statement of the said Defendant?
"18 Whether the issue of payment of consideration by the 3rd Defendant for
acquisition of Bond on 27-2-1992 is barred by virtue of the principles of res-judicata
as alleged in para 11(e) of the Plaint?"
submitted that CMF had not led any evidence to prove their case on payment of
consideration and, therefore, on this ground alone the said question has to be
answered in the negative. It is, however, submitted that an affidavit of S.R. Ramraj is
on record at Exh-P-15 in which it is alleged that the consideration was paid by CMF
to ABFSL for the purchase of the suit bonds. So far as this affidavit is concerned, it is
submitted by Mr. Jethmalani, learned Senior Counsel for Plaintiffs that ABFSL had
denied the receipt of any consideration from CMF in paragraphs 3 to 7 of their
Written Statement in Misc. Petition No.81 of 1985 which is at This Order is
modified/corrected by Speaking to Minutes Order Exh-P-21 and similarly R.
Kalyanraman (PW1) also had denied the receipt of consideration on page 10 of his
affidavit of evidence at Exh-P (colly). Thirdly, it is submitted that the plea of payment
of consideration by CMF to ABFSL is barred by res judicata. It is submitted that in
Suit No.11 of 1996 the CMF had asserted that payment for 9% NPCL Bonds and 17%
88
NPCL Bonds had been made by CMF as per affidavit of S.R.

Ramraj dated 13th July 1993. It is further submitted that the issue was framed in
respect of payment by CMF of 9% NPCL bonds. It is submitted that, however,
Supreme Court while dealing with the issue of CMF being bonafide purchaser for
value has negatived the said contention in paragraphs 87 to 96 of its judgment dated
5th May 2006 in appeal from judgment in Suit No.11 of 1996. He invited my attention
to the said observations of the Apex Court in the said judgment.
132. On the other hand, Mr. Kapadia, the learned Senior Counsel appearing on behalf
of Defendant Nos. 3 to 10 has firstly submitted that since the claim of the Plaintiffs
was based on tort, title of CMF was not relevant since the Plaintiffs could only
succeed by proving their claim in respect This Order is modified/corrected by
Speaking to Minutes Order of title of the bonds on the date of the suit and could not
rely on the weakness, if any, in the title of the CMF. It is then submitted that the CMF
had purchased the suit bonds from Defendant No.2 on 27/2/1992 and they had also
purchased 9% NPCL bonds from Defendant No.2 and the said consideration was
adjusted against the sale of two other PSU bonds of the aggregate FV Rs 100 crores
by CMF after netting of the purchase and sale consideration and the net sum of Rs
3,87,46,575.35 was payable by Defendant No.2 to CMF which was paid by him by the
cheque on the same day.
It is then submitted that in the affidavit of S.R. Ramraj (ExhP-15, he had explained how the consideration was adjusted by Defendant No.2 and
the adjusted amount was paid by Defendant No.2 to CMF. It is submitted that,
therefore, payment of consideration was proved by Exh-P-15. Reliance was placed on
the observations of the Supreme Court in para 94 of its judgment in appeal from
judgment in Suit No. 11 of 1996. It is submitted that, therefore, the said findings of
the Supreme Court do not constitute res judicata and, in the event, it was held to be
so, it would operate in favour of CMF and against the Plaintiffs. It is then submitted
that This Order is modified/corrected by Speaking to Minutes Order assuming
without admitting that the Plaintiffs had proved purchase of suit bonds on
26/02/1992, the transaction was settled by Plaintiffs with Defendant No.2 on
10/04/1992 on which the Defendant No.2 became absolute owner and the title
passed from Defendant No.2 to CMF on 27/02/1992 became perfect.
133. After having heard both the learned Senior Counsel on this point, in my view,
CMF has failed to prove that it is a bonafide purchase of the suit bonds without notice
from ABFSL on 27/2/1992 for the following reasons.
134. Firstly, the CMF has not led any evidence in support of the said contention.
Secondly, one of their stands during the course of arguments was that burden of
establishing title of the Plaintiffs was on them and not on CMF. Thirdly, reliance has
89
been placed on the affidavit of S.R. Ramraj which is at Exh-P-15 in which he has
stated that an amount of Rs 3,87,46,575.35 was paid by Defendant No.2 after
adjusting the other amount to CMF. A reliance was placed on para 94 of the
judgment of the Supreme Court in This Order is modified/corrected by Speaking to
Minutes Order appeal from judgment in Suit No.11 of 1996. This submission cannot
be accepted. It has to be noted that the Apex Court in para 94 has not given a finding
as alleged by S.R. Ramraj in his affidavit. On the contrary, what is observed by the
Apex Court in para 94 of its judgment is as under:"94. .....In the first place, the transactions of 20-11-1991 and the
transactions of 27-2-1992 appear to be between CMF and HPD.
Assuming they are proved, as held by the Special Court, and the netted
amount of Rs 3,87,46, 575.35 was paid by HPD to CMF, it does not
prove that the consideration of the Suit bonds was paid to Defendant
No.1/the Plaintiff, who alone could have been the antecedent owner of
the suit bonds."
The said observations, therefore, clearly proceeded on the footing of assumption of
proof by CMF and the contention of Mr. Kapadia, learned Senior Counsel, that
affidavit of Ramraj had proved the payment of consideration by CMF to Defendant
No.2 has been accepted by the Apex Court, This Order is modified/corrected by
Speaking to Minutes Order therefore cannot be accepted. On the other hand, the
Apex Court has observed to the contrary in paragraphs 89, 90, 91, 92, 96 and 99 of its
judgment. The observation of the Supreme Court in said paragraphs therefore are
very relevant. The said paragraphs read as under:"89 ......... The crucial question in the present case is : Did CMF
purchase the suit bond for value from the antecedent title-holder?"
"90. This brings us to the last limb of the argument of Mr. Jethmalani
that CMF can never be said to be a purchaser for value, as there is no
evidence to show that any consideration was paid by CMF for
acquisition of the suit bonds."
"91. When the matter was first tried by Variava, J., as the Special Court, the learned
counsel appearing for CMF categorically admitted that there was no evidence by
which it could be established that CMF had paid consideration for acquisition of the
bonds. It is true that this judgment was subsequently set aside This Order is
modified/corrected by Speaking to Minutes Order by this Court and the matter was
remanded for trial along with the miscellaneous petition. But this is a significant fact
which the Special Court could not have overlooked in appreciation of evidence."
"92. The stand taken by CMF is that on 27-2-1992 it purchased the suit bonds and the
17% NPCL bonds for a total sum of Rs 46,01,23,287.67, of which, Rs 46 crores was
90
the purchase price and Rs 1,23,287.67 was the accrued interest on the bonds for one
day i.e. from 26-2-1992 to 27-2-1992. CMF claimed that the consideration for
acquisition of the suit bonds and 17% NPCL bonds was paid by two sales of 13% NLC
bonds and 13% MTNL bonds. In other words, according to CMF, there were two
purchase and two sales on 27-2-1992. CMF alleged that on 20-11-1991 there were
nineteen sales and four purchases. The four purchases included the 13% NLC bonds
and 13% MTNL bonds, which formed part of the consideration for purchase of the
suit bonds on 27/2/1992. The evidence in support of its alleged purchase of 13% This
Order is modified/corrected by Speaking to Minutes Order NLC bonds and 13%
MTNL bonds is again somewhat convoluted......"
"96 ......The pleadings of CMF on the issue of consideration appear to be most
confusing and shifty. The exercise carried out by the Special Court of analysing
several transactions and discharge of BRs, shows transactions of payment back and
forth between CMF and HPD.
ig The ledger folio produced by CMF in support of its stand is also hardly
reliable............ Considering the evidence as a whole, it appears that the initial stand
taken by the learned counsel of CMF in the first round of the litigation, that there was
no credible evidence on which payment of consideration by CMF could be proved,
was fully justified. The attempt of CMF in picking up and putting forward some of the
documents, out of the several transactions entered into by them to patch up the story
of consideration, in our opinion, has miserably failed. There was no cause for being
charitable to CMF by saying that they could prove only a part of the consideration,
ergo, rest of the This Order is modified/corrected by Speaking to Minutes Order
transactions must be deemed to have been proved. We are of the view that every one
of the arguments put forward by SCB to impugn the story of CMF that it had paid
consideration is justified and the Special Court was wrong in rejecting the arguments
of SCB on this count. We, therefore, hold that CMF has utterly failed to prove its story
that it had paid consideration for purchase of the suit bonds on 27-2-1992."
"99. In these circumstances, we are not satisfied that the evidence on record proves
that HPD became the owner of the suit bonds or that CMF legitimately acquired the
suit bonds from HPD or any other person by paying bona fide purchase value for
them. Consequently, we must hold that CMF acquired no right, whatsoever, to the
suit bonds. The suit bonds always remained the property of SCB irrespective of how
they found their way into the hands of CMF."
The CMF in their affidavit at Exh-P-14 in response to interrogatories by Plaintiffs
have admitted that the This Order is modified/corrected by Speaking to Minutes
Order consideration paid by them to ABFSL for purchase of the suit bonds was the
same as spelt out by it for the purchase of 9% NPCL bonds in its affidavit dated
13/7/1993 filed by S.R.
91
Ramraj. This being the position, it is not now open for CMF to rely on the said
affidavit of S.R. Ramraj for the purpose of proving payment of consideration to
ABFSL.
135. So far as issue of res judicata is concerned, it is submitted by Mr. Jethmalani, the
learned Senior Counsel appearing on behalf of Plaintiffs that SCB had administered
interrogatories to CMF vide their application dated 21/07/1997 being Chamber
Summons No.15 of 1997 which is at Exh-P-13 and the said Chamber Summons was
allowed by the Special Court by its order dated 22/09/1997 and pursuant thereto,
CMF filed its affidavit of September, 1998 which is at Exh-P-14. CMF admitted that
the consideration allegedly paid by it to ABFSL for purchase of suit bonds was the
same as spelt out by it for purchase of 9% NPCL bonds in its affidavit dated
13/07/1993 filed by S.R. Ramraj. In the Chamber Summons which is at Exh-P-13,
following interrogatory was asked in the schedule annexed to the This Order is
modified/corrected by Speaking to Minutes Order Chamber Summons in para 2(iii)
which reads as under:"2] In paragraph 11 of the Written Statement, you have alleged that on February 27,
1992 you purchased, through Hiten Dalal, from Andhra Bank Financial Services Ltd.,
the 17% NPCL Bonds for consideration and you have denied that the alleged purchase
of February 27, 1992 were fictitious transactions.
ig Further, in paragraph 14(ii) you have alleged that you purchased the Letter of
Allotment and received delivery thereof. You are requested to state :(iii) whether the payment of consideration for the alleged purchase by you of 17%
NPCL Bonds was the same as set out in the affidavit of one S. Ramraj, affirmed on
July 13, 1993 in the proceedings before the Hon'ble Company Law Board; which was
subsequently transferred to the Hon'ble the Special Court and numbered as
Miscellaneous Petition No.81 of 1995?"
136. In para 5(a) of the affidavit of Ramesh Nayak which is at Exh-P-14, while giving
reply to interrogatory at item No. 2(iii), it is stated as under:This Order is modified/corrected by Speaking to Minutes Order "5(a)
Interrogatory at item No.2(iii) With reference to para 2(iii), the
payment of consideration for purchase of 17 percent NPCL Bonds was
by way of netting off in respect of four transactions as set out in the
affidavit dated 13th July, 1993 of Shri S. Ramaj. As a result of the
netting off, following the practice no separate cheques were issued for
any of the four transactions including the transaction for purchase of
17 percent NPCL Bonds but only a cheque for the net amount of Rs
3.87 crores was received by CMF............"
92
Thereafter, a detailed explanation has been given as to how Defendant No.1 was
acting through HPD and later on it turned out that HPD was acting on his own or
that the Plaintiffs had a tacit understanding with HPD who was acting on their
behalf. Further particulars have been thereafter mentioned and, therefore, the
answer to the said interrogatory is given with the following rider in the said affidavit
at page 5:This Order is modified/corrected by Speaking to Minutes Order "(b)
The explanation set out in the affidavit dated 13th July, 1993 of S.
Ramraj indicating how as per the records of the CMF consideration for
purchase of 17 percent NPCL Bonds was paid is incomplete unless the
above facts are taken into consideration and it has to be read in the
context and in the manner set out hereinabove."
The fact remains that in spite of the said explanation given in the affidavit of S.R.
Ramraj, the same has not been accepted by the Apex Court in its judgment in appeal
from judgment in Suit No.11 of 1996 in paragraphs 87 to 96, some of which have been
reproduced hereinabove. In view of the clear finding given by the Apex Court on the
theory set forth by CMF in their affidavit of S.R. Ramraj, the said issue, therefore, is
clearly barred by principles of res judicata.
137. It has been vehemently urged by Mr. Kapadia, the learned Senior Counsel
appearing on behalf of CMF that the issue which was determined by the Apex Court
in appeal from judgment in Suit No.11 of 1996 related to purchase of 9% NPCL bonds
and that consideration of 17% NPCL bonds This Order is modified/corrected by
Speaking to Minutes Order was not the subject matter of the said suit and, therefore,
doctrine of res judicata would not apply as a result of the said finding. It would be
relevant to note that issue No.1 in Misc. Petition No.81 of 1995 was as under:"Whether the Petitioners are bonafide purchasers of value without
notice of 9% NPCL Bonds from Respondent No.3 for consideration
paid to Respondent No.3 as set out in the affidavit of S. Ramraj dated
13 July, 1993."
The CMF, in reply to the interrogatories has admitted that the consideration for 17%
NPCL bonds was paid as a result of netting off of the transactions as mentioned in the
affidavit of S.R. Ramraj. In my view, it is rightly submitted by Mr. Jethmalani, the
learned Senior Counsel appearing on behalf of the Plaintiffs that the said affidavit of
S.R. Ramraj has been disbelieved and negatived by the Supreme Court and the story
of netting off is also disbelieved and, therefore, the same question cannot be
re-agitated by the CMF since the issue of netting of fell for consideration before the
Apex Court in the appeal from earlier suit and the said story was This Order is
modified/corrected by Speaking to Minutes Order not accepted by the Apex Court.
The CMF, therefore, cannot re-agitate the said story in this suit in respect of 17%
93
NPCL bonds.
138. The issue No.14 is therefore answered in the negative and the issue No.18 is
answered in the affirmative.
ISSUE NO.8 BETWEEN PLAINTIFFS & CMF:
8. Whether the Defendant No.3 have converted the Bonds/LOA as alleged in para 6A
& 7(k) of the Plaint?
139. In view of the finding given on Issue No.4 between Plaintiffs & CMF & issue
No.14, Issue No.8, therefore, will have to be answered in the affirmative. Plaintiffs
have proved that they had purchased 17% taxable NPCL bonds in view of the reasons
given on the said issue. Similarly, Issue No.14 has been answered in the negative and
Defendant No. 3, therefore, has not proved that it had purchased the suit bonds
through Defendant No.2 on 27/02/1992. Defendant No.2 - HPD also has not
established that he had become This Order is modified/corrected by Speaking to
Minutes Order owner of the suit bonds since his contention is that if he had borrowed
the LOA in respect of the suit bonds from Plaintiffs, he had squared off the
transaction by selling 9% IRFC bonds.
It has also been held while deciding about the Plaintiffs' cause of action to file the suit
that Plaintiffs are entitled to file the suit for conversion against Defendant No.2 and
Defendant Nos. 3 to 10 for the elaborate reasons given on the said issue No.1 raised
between Plaintiffs and HPD and Plaintiffs and CMF and, therefore, for the aforesaid
reasons, Issue No.8 is answered in the affirmative.
ISSUES NO. 4 AND 5 BETWEEN PLAINTIFFS AND DEFENDANT NO.2 HPD:
4. Whether the Defendant No.2 is jointly and severally liable along with the
Defendant Nos 3 to 10 to pay to the Plaintiffs the sum of Rs 55,26,16,438.36 as per
the particulars of claim together with further interest on principal sum of Rs
48,02,50,000.00 @ 20% p.a. from 28th November, 1992 till payment and/or
realisation?
5. Whether the Plaintiffs are entitled to This Order is modified/corrected by Speaking
to Minutes Order any relief and if, what?
ISSUE
NO.
PLAINTIFFS AND CMF:
19
&
20
BETWEEN
94
are jointly and severally liable to pay to the Plaintiffs the sum of Rs 55,26,16,438.36
as per the Particulars of Claim together with further interest on principal sum of Rs
48,02,50,000.00 @ 20% per annum from 28th November, 1992 till payment and/or
realizations?
20
140
What relief?
In view of the finding given to issue No.1 between
SCB and CMF and Issue No.2 between SCB and HPD, the issue Nos.4 & 5 between
Plaintiffs and Defendant No. 2-HPD & issue No.19 between Plaintiffs and CMF are
answered in the negative since it has been held that the suit is barred by limitation.
Issue No.20, therefore, is answered as per final order.
141. Accordingly issues between Plaintiffs and CMF and issues between Plaintiffs and
Defendant No.2 - HPD are answered as under:ISSUES BETWEEN PLAINTIFFS AND CMF ISSUES FINDINGS Issue
No.1 ig In the affirmative Issue No.2 In the negative Issue No.3 In the
negative Issue No.4 In the affirmative Issue No.5 In the negative Issue
No.6 In the affirmative Issue No.7 In the affirmative Issue No.8 In the
affirmative Issue No.9 In the negative Issue No.10 In the negative
Issue No.11 In the affirmative Issue No.12 Does not arise Issue No.13
In the affirmative Issue No.14 In the negative Issue No.15 In the
negative Issue No.16 In the affirmative Issue No.17 In the affirmative
Issue No.18 In the affirmative Issue No.19 In the negative Issue No.20
As per final order This Order is modified/corrected by Speaking to
Minutes Order ISSUES BETWEEN PLAINTIFFS AND DEFENDANT
NO.2 - HPD:
ISSUES
FINDINGS
95
Issue No.1
Issue No.2
Issue No.3
Issue No.4
Issue No.5
In the affirmative
In the affirmative
In the affirmative
In the negative
igIn the negative
142. In the result, the following order is passed:ORDER Suit is dismissed with costs.
(V.M. KANADE, J.) This Order is modified/corrected by Speaking to Minutes Order
96

Standard Chartered Bank Vs Unknown On 13 July, 2010

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Standard Chartered Bank Vs Unknown On 13 July, 2010

Hochgeladen von

Copyright:

Verfügbare Formate

Standard Chartered Bank vs Unknown on 13 July, 2010

Bombay High Court

TRANSACTIONS IN SECURITIES) ACT, 1992 AT BOMBAY

SUIT NO. 6 OF 1994