{"id":226407,"date":"2010-05-05T00:00:00","date_gmt":"2010-05-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/naresh-k-aggarwala-co-vs-canbank-financial-services-ltd-on-5-may-2010"},"modified":"2015-02-08T06:42:44","modified_gmt":"2015-02-08T01:12:44","slug":"naresh-k-aggarwala-co-vs-canbank-financial-services-ltd-on-5-may-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/naresh-k-aggarwala-co-vs-canbank-financial-services-ltd-on-5-may-2010","title":{"rendered":"Naresh K. Aggarwala & Co vs Canbank Financial Services Ltd. & … on 5 May, 2010"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Naresh K. Aggarwala & Co vs Canbank Financial Services Ltd. & … on 5 May, 2010<\/div>\n
Author: S S Nijjar<\/div>\n
Bench: B. Sudershan Reddy, Surinder Singh Nijjar<\/div>\n
                                                                    REPORTABLE\n\n                        IN THE SUPREME COURT OF INDIA\n                         CIVIL APPELLATE JURISDICTION\n\n                        CIVIL APPEAL NO.5173 OF 2004\n\nNARESH K. AGGARWALA & CO.                             ...APPELLANT(S)\n\n\n                                    VERSUS\n\n\nCANBANK FINANCIAL SERVICES LTD. & ANR.               ...RESPONDENT(S)\n\n\n                                J U D G M E N T\n<\/pre>\n
SURINDER SINGH NIJJAR, J.\n<\/p>\n<\/p>\n
   1.   This   Statutory    First   Appeal   under   Section   10   of   the<\/p>\n
   Special Court (Trial of offences relating to Transactions in<\/p>\n
   Securities) Act, 1992 (in short the `Special Court Act’ ) is<\/p>\n
   directed against the judgment and decree dated 15.4.2004 passed<\/p>\n
   by the Special Court at Bombay in Suit No.4 of 1998.<\/p>\n
   2.   The aforesaid suit was initially filed by the appellant in<\/p>\n
   the High Court of Delhi at New Delhi on its original side being<\/p>\n
   Suit No.1827\/1993.      It was transferred to the Special Court in<\/p>\n
   view of the appellant being notified on or about 17.6.1997<\/p>\n
   under the provisions of the Special Court and thereafter the<\/p>\n
   suit was numbered as Suit No.4\/98 before the Special Court.<\/p>\n
   The appellant had prayed for money decree in the amount of<\/p>\n
                                                                               1<\/span>
\nRs.3,18,06,868\/- together with interest at the rate of 24%.<\/p>\n
Respondent     No.1,    Can   Bank   Financial   Services   Limited,   had<\/p>\n
opposed the claim and also lodged a counter claim, claim and<\/p>\n
decree in the amount of Rs.2,53,75,000\/- from the appellant<\/p>\n
with interest w.e.f. 22.4.1992.            The appellant claims to be a<\/p>\n
stock broker, being a sole proprietory concern of Mr. Naresh K.<\/p>\n
Aggarwala.     The respondent No.1, Can Bank Financial Services<\/p>\n
Limited, is a wholly owned subsidiary of Canara Bank.<\/p>\n
3.   The appellant had prayed for a decree against respondent<\/p>\n
No.1 in respect of net amount payable arising out of two sets<\/p>\n
of transactions in shares i.e.; (i) two transactions in the<\/p>\n
shares    of    Reliance      Industries    Limited   (RIL)    (ii)    one<\/p>\n
transaction in respect of Steel Authority of India Limited<\/p>\n
(SAIL).        It is claimed that on 14.2.1992 a contract was<\/p>\n
entered into between the appellant and Can Bank for purchase of<\/p>\n
one lakh shares of RIL at a price of Rs.154 per share inclusive<\/p>\n
of all charges.        On 23.3.1992 another contract was entered into<\/p>\n
by the appellant with Can Bank for purchase of one lakh shares<\/p>\n
of RIL at a price of Rs.375 per share net. On 27.2.1992 another<\/p>\n
contract was entered into by the appellant for purchase of five<\/p>\n
lakh shares of SAIL at a price of Rs.51 per share net and a<\/p>\n
contract note was issued. In the plaint it was averred that of<\/p>\n
the two lakh RIL shares purchased by the appellant only one<\/p>\n
                                                                             2<\/span>
\nlakh shares were delivered by respondent No.1.                       These shares<\/p>\n
according     to    the    appellant      were   appropriated         towards    the<\/p>\n
contract dated 14.2.1992.            It was the case of the appellant<\/p>\n
that the balance one lakh RIL shares pursuant to contract dated<\/p>\n
23.3.1992     have    not     been      delivered     by    respondent          No.1.<\/p>\n
According to the appellant, respondent No.1 had been wrongly<\/p>\n
claiming     that    the    entire      two   lakh   shares     had     been    duly<\/p>\n
delivered to the appellant.               The appellant claims that this<\/p>\n
fact is amply borne out from the various letters written by<\/p>\n
respondent No.1 to the appellant wherein respondent No.1 claims<\/p>\n
to have delivered one lakh shares to its Bombay office and the<\/p>\n
remaining one lakh shares allegedly to a broker\/one Mr. Hiten<\/p>\n
P. Dalal.     The appellant states that on inquiry Mr. Dalal has<\/p>\n
sated that no such shares had been delivered on behalf of<\/p>\n
respondent No.1.          In communication dated 07.08.1992 respondent<\/p>\n
No.1    acknowledges       only   one     delivery    and     seeks     intimation<\/p>\n
whether his broker, Mr. Hiten P. Dalal, on their account has<\/p>\n
delivered one lakh shares or not.                Therefore respondent No.1<\/p>\n
is,    in   fact,   aware    that    no   such   delivery      had     been    made.<\/p>\n
Respondent No.1, in fact, in its communication dated 15.09.1992<\/p>\n
acknowledges the factum of both the contract notes.                     In letter<\/p>\n
dated 28.09.1992, the appellant reiterated that at no stage it<\/p>\n
had received any share from Mr. Hiten P. Dalal on account of<\/p>\n
respondent No.1.          It was also stated that Mr. Hiten P. Dalal<\/p>\n
                                                                                        3<\/span>
\nhad confirmed that he had not given any Reliance shares on<\/p>\n
account of respondent No.1 to the appellant.                       It was also<\/p>\n
averred    that   in    spite   of   assurances       having     been   given    by<\/p>\n
respondent No.1 from time to time, the balance one lakh shares<\/p>\n
were not delivered.\n<\/p>\n<\/p>\n
4.   It was further claimed by the appellant that on 27.07.92<\/p>\n
respondent No.1 was requested that the transaction with regard<\/p>\n
to the SAIL shares should have been squared up at the time when<\/p>\n
the shares were purchased.              They were priced at Rs.51 per<\/p>\n
share.      The   market    rate,    according        to   the   appellant,      on<\/p>\n
27.7.1992 was Rs.130 per share.              Therefore appellant asked the<\/p>\n
respondent No.1 to credit Rs. 79 per share for five lakh shares<\/p>\n
of SAIL to the account of the                        appellant-company.         The<\/p>\n
appellant claimed that by letter dated 17.09.1992 respondent<\/p>\n
No.1 resiled from the contract regarding sale of shares of<\/p>\n
SAIL.     The appellant therefore by letter dated 19.09.1992 once<\/p>\n
again requested for the cooperation of the respondents as the<\/p>\n
delivery had to be effected within reasonable period of time to<\/p>\n
avoid     substantial    losses.        In    this    letter     the    appellant<\/p>\n
reiterated that one lakh shares only had been delivered and no<\/p>\n
other delivery had been made in respect of Reliance shares.<\/p>\n
Against     contract    note    dated    14.02.1992        Rs.1,54,000\/-        was<\/p>\n
                                                                                      4<\/span>
\ncredited to the account of respondent No.1 but the respondent<\/p>\n
No.1 reiterated its stand in the letter dated 17.9.1992.<\/p>\n
5.   The appellant further stated that on 27.05.1993 respondent<\/p>\n
No.1 issued a notice demanding an amount of Rs.2,56,25,000\/- on<\/p>\n
the basis of account maintained up to 08\/02\/1992. By letter<\/p>\n
dated 14.06.1993 the appellant informed the respondent No.1<\/p>\n
that after reconciliation of the account, the appellant was<\/p>\n
liable    to    be     paid      by     respondent      No.1     an     amount      of<\/p>\n
Rs.2,59,75,000\/-.       It was further claimed that according to the<\/p>\n
statement of account of the appellant as on 31.7.1993 an amount<\/p>\n
of Rs.3,18,06,868\/- is due to the appellant from respondent<\/p>\n
No.1.    According to the appellant, respondent No.1 is liable to<\/p>\n
pay this amount to the appellant with interest at the rate of<\/p>\n
24 % per annum.\n<\/p>\n<\/p>\n
6.   Respondent        No.1      in    his    written    statement           took    a<\/p>\n
preliminary     objection         stating      that     the     suit    is    wholly<\/p>\n
misconceived    and     a   fictitious        claim   has     been     put   forward<\/p>\n
solely with the intention of delaying or avoiding payment of a<\/p>\n
sum of Rs.2,53,75,000\/- and interest thereon to the answering<\/p>\n
respondent     No.1.        It   was   also    stated    that    along   with       the<\/p>\n
written statement respondent No.1 is preferring a counter claim<\/p>\n
against the appellant for the recovery of the aforesaid amount.<\/p>\n
                                                                                          5<\/span>
\nThe averments made in paragraph 1 to paragraph 6 of the plaint<\/p>\n
were admitted by the respondents.\n<\/p>\n<\/p>\n
7.   With regard to the other averments, it is however stated<\/p>\n
that as averred by the appellant in the plaint both the parties<\/p>\n
were maintaining running accounts with regard to the business<\/p>\n
transactions with each other.         The contracts dated 14.2.1992<\/p>\n
and 23.3.1992 are admitted.          It is however claimed by the<\/p>\n
respondents that the contract dated 14.2.1992 was cancelled<\/p>\n
rescinded by the appellant on the very day, namely, 14.2.1992.<\/p>\n
It was also claimed that the claim made by the appellant with<\/p>\n
regard to the running account is not correct.                  The running<\/p>\n
account     maintained   by     respondent     No.1    shows    a   sum   of<\/p>\n
Rs.2,53,75,000\/- as due from the appellant on 31.3.1993.              Hence<\/p>\n
the counter claim had been preferred in the written statement<\/p>\n
itself.     It is however, claimed that since the contract dated<\/p>\n
14.2.1992    was   cancelled,    there   was    only    one    contract   in<\/p>\n
existence i.e. contract dated 23.3.1992 against which delivery<\/p>\n
had been made.      Therefore, nothing is payable by respondent<\/p>\n
No.1 to the appellant on account of this contract.             The version<\/p>\n
of the communication between respondent No.1 and Shri Dalal as<\/p>\n
given by the appellant is denied.        The query dated 7.8.1992 was<\/p>\n
necessitated to make sure that no wrong delivery or excess<\/p>\n
delivery was made by the broker, Shri Dalal, in respect of the<\/p>\n
                                                                               6<\/span>
\ncancelled contract dated 14.2.1992.             The appellant has tried to<\/p>\n
take undue advantage of the query made by respondent No.1 for<\/p>\n
the purpose of keeping the record straight.                The appellant had<\/p>\n
admitted the non-existence of the contract dated 14.2.1992 and<\/p>\n
did not show the amount as outstanding.                    This position is<\/p>\n
confirmed by the appellant in the statement of account signed<\/p>\n
on 17.7.1992 and again reconfirmed on 24.8.1992.                    It is only<\/p>\n
after the inquiry by respondent No.1 dated 15.9.1992 about the<\/p>\n
position of one lakh shares that appellant got the mala fide<\/p>\n
idea of seeking illegal advantage of the cancellation entry<\/p>\n
having   been   recorded       in   respondent    No.1     books.         This   is<\/p>\n
particularly so because by then the share prices had gone up.<\/p>\n
Under these circumstances the appellant submitted a revised<\/p>\n
statement of account on 19.9.1992.                According to respondent<\/p>\n
No.1 the averments made in the plaint by the appellant do not<\/p>\n
convey the true position.            Once the contract dated 14.2.1992<\/p>\n
was   cancelled,   the        question    of    delivery    did     not    arise.<\/p>\n
Therefore   nothing      is     payable    by    respondent       No.1    to     the<\/p>\n
appellant on account of the contract dated 14.2.1992.<\/p>\n
8.    With regard to the contract in relation to SAIL shares,<\/p>\n
the fact that the appellant entered into a deal with respondent<\/p>\n
No.1 on 27.2.1992 for purchase of five lakh shares of SAIL at<\/p>\n
the price of Rs.51 is admitted.            It was however denied that a<\/p>\n
                                                                                       7<\/span>
\ncontract note was issued to evidence the transaction.                       It is<\/p>\n
stated that the contract note was neither in accordance with<\/p>\n
the prevalent practice, nor in accordance with the rules and<\/p>\n
bye-laws of the Delhi Stock Exchange and the contract note is<\/p>\n
also opposed to the law including the Securities Contracts<\/p>\n
(Regulation) Act, 1956 and hence void ab initio.                It is further<\/p>\n
stated that the irregularity of the contract note was admitted<\/p>\n
by the appellant himself in his letter dated 27.7.1992.                     It is<\/p>\n
submitted that the contract itself being contrary to law, no<\/p>\n
amount could be claimed by the appellant against this contract.<\/p>\n
9.    In the counter claim it was pleaded that the appellant has<\/p>\n
admitted in paragraph 8(a)(i) that on 23.3.1992 a contract was<\/p>\n
entered    into     between      respondent      No.1    and   the    appellant<\/p>\n
whereunder the respondent No.1 agreed to sell and the appellant<\/p>\n
agreed    to   purchase    one    lakh    shares    of   Reliance    Industries<\/p>\n
Limited on 23.3.1992 at Rs.375 per share.                  This averment is<\/p>\n
affirmed by respondent No.1.             According to the respondent No.1<\/p>\n
the aforesaid one lakh shares were delivered by respondent No.1<\/p>\n
to   appellant     on   22.4.1992.        This     delivery    has   also    been<\/p>\n
admitted by the appellant.          It is further stated that appellant<\/p>\n
had wrongly contended after a long lapse of time that this<\/p>\n
delivery    was    in   respect    of    another    alleged    contract     dated<\/p>\n
14.2.1992.        The appellant, according to respondent No.1, has<\/p>\n
                                                                                    8<\/span>
\nillegally and wrongly accounted for its liability to pay to<\/p>\n
respondent No.1 in respect of one lakh shares sold on 23.3.1992<\/p>\n
only at Rs.154 per share instead of Rs.375 per share.                Thus the<\/p>\n
difference between the rate per share at Rs.375, which was the<\/p>\n
actual contract rate, and the rate at which the appellant has<\/p>\n
accounted for i.e. Rs.154 per share comes to Rs.2,21,00,000\/-.<\/p>\n
According to respondent No.1 this amount is payable by the<\/p>\n
appellant to the respondent No.1 with interest.               It is accepted<\/p>\n
that there were dealings between the appellant and respondents<\/p>\n
and   the    accounts   were    settled    periodically.       Therefore     on<\/p>\n
31.3.1993 the statement of mutual account between the parties<\/p>\n
shows that a sum of Rs.2,53,75,000\/- is due and payable by the<\/p>\n
appellant to the respondent No.1.            The interest at the rate of<\/p>\n
24%        from    22.4.1992       till       31.5.1994        amounts       to<\/p>\n
Rs.1,28,47,397.26\/- which is also due and payable.<\/p>\n
10.   In    its   replication     the     appellant   has    reiterated     the<\/p>\n
averments made in the plaint.             It is stated that the counter<\/p>\n
claim is frivolous and is to delay and avoid payment of the<\/p>\n
contractual obligations, of respondent No.1.                  The appellant<\/p>\n
reiterates that the only one lakh shares of RIL were delivered<\/p>\n
against     contract    dated   14.2.1992.      It    is    denied   that   the<\/p>\n
contract dated 14.2.1992 was cancelled by the appellant.                 It is<\/p>\n
further reiterated that the respondent No.1 is liable to make<\/p>\n
                                                                                  9<\/span>
\ndelivery of the remaining one lakh shares; contract is to be<\/p>\n
purchased by the appellant vide contract note dated 23.3.1992.<\/p>\n
It is further stated that the appellant is still ready and<\/p>\n
willing to perform his part of the contract but the respondents<\/p>\n
are trying to wriggle out of their contractual obligations.<\/p>\n
11.   On the basis of the pleadings the Special Court framed the<\/p>\n
following issues:\n<\/p>\n<\/p>\n
      “1. Whether Plaintiffs prove that Rs.2,59,75,000\/-
\n      money is due from and payable by Defendant No.1 on
\n      account of transactions undertaken on behalf of or with
\n      Defendant No.1 after accounting for all transactions in
\n      the running account as alleged in para 7 of the Plaint?\n<\/p><\/blockquote>\n
      2.   Whether Plaintiffs have correctly appropriated one
\n      Lac shares delivered towards the contract note dated
\n      14.2.1992 (i.e. for Reliance Industries Ltd. shares)
\n      purchased @ of Rs.154\/- as alleged in para 8a (ii) of
\n      the Plaint?\n<\/p><\/blockquote>\n
      3.   Whether the Plaintiffs prove that no shares were
\n      received from the broker of Defendant No.1 towards the
\n      Contract dated 23.3.1992 as averred by the Plaintiffs
\n      in para No.8a (iv) of the Plaint?\n<\/p><\/blockquote>\n
      4.   Whether the Plaintiffs have correctly given credit
\n      of Rs.154\/- per shares for one Lac shares delivered and
\n      since one Lac shares have not been delivered as alleged
\n      in para 8a (v) of the Plaint?\n<\/p><\/blockquote>\n
      5.   Whether the Contract dated 14th February 1992 for
\n      purchase of 1,00,000 shares at the rate of Rs.154\/- per
\n      share of M\/s. Reliance Industries Ltd. placed by the
\n      Plaintiffs on Defendant No.1 was cancelled\/ rescinded
\n      as alleged by Defendant No.1 as alleged in paras 8 and
\n      9of the Written Statement?\n<\/p><\/blockquote>\n
                                                                   10<\/span><\/p>\n
      6.   Whether Plaintiffs’ contract note dated 27.2.1992
\n      (SAIL) had been issued as per prevalent practice as
\n      alleged in para 8b (ii) of the Plaint?\n<\/p>\n
      7.   Whether Defendant No.1 by its letter dated
\n      17.9.1992 has resiled from its contractual obligations
\n      as alleged in para 8b (vi) of the Plaint?\n<\/p>\n
      8.   Whether the Plaintiffs are entitled for a decree
\n      or Rs.3,18,08,868\/-?\n<\/p>\n
      9.   Whether the Plaintiffs are entitled for interest
\n      at the rate of 24% per annum?\n<\/p>\n
      10. Whether Defendant No.1 is entitled to payment of
\n      Rs.2,53,75,000\/- with interest as claimed in paras 1 to
\n      4 and 8 of the Counter Claim?\n<\/p>\n
      11.    What orders and decree?”\n<\/p>\n<\/p>\n
12.   The Special Court notices that both the parties have filed<\/p>\n
documents.     On behalf of the appellant one witness has been<\/p>\n
examined.    The respondent No.1 has not led any evidence.   It is<\/p>\n
also noticed that some documents have been admitted in evidence<\/p>\n
by consent of the parties.       Issues Nos.2 to 5 were taken up<\/p>\n
together as they relate to the transactions in RIL shares.     All<\/p>\n
these issues have been decided in favour of respondent No.1 and<\/p>\n
against the appellant.    It is further held that the transaction<\/p>\n
dated 27.2.1992 was illegal and therefore is not capable of<\/p>\n
being enforced.      Therefore issues No.6 and 7 have also been<\/p>\n
decided against the appellant. Issues Nos. 1, 8 and 9 have also<\/p>\n
been decided against the appellant.     It has been held that the<\/p>\n
appellant is not entitled to make any claim neither in relation<\/p>\n
to RIL shares nor in relation to SAIL shares.     So far as issue<\/p>\n
                                                                     11<\/span>
\nNo.10 is concerned, the Special Court has clearly held that the<\/p>\n
counter    claim     of     respondent        No.1    succeeds      and   is     allowed.<\/p>\n
Therefore, a decree in an amount of Rs.2,53,75,000\/- with an<\/p>\n
interest at the rate of 12% per annum from 22.4.1992 till the<\/p>\n
date of     realisation          is   passed       against   the    appellant.          The<\/p>\n
appellant      was    also       directed     to    pay   costs    entitled       to    the<\/p>\n
respondents.\n<\/p>\n<\/p>\n
13.    The present appeal has been filed by the appellant being<\/p>\n
aggrieved by the aforesaid judgment and decree.                           Mr. Rupinder<\/p>\n
Singh Suri, learned Senior Counsel for the Appellant, had made<\/p>\n
elaborate submissions in Court which have been reiterated in<\/p>\n
the    written      arguments,        filed    later.        He    submits     that     the<\/p>\n
impugned judgment in addition to being totally contrary to the<\/p>\n
facts, records and law in general, is a classic case wherein<\/p>\n
the prejudice against the appellant is writ large, owing to the<\/p>\n
fact    that   he    is     a    notified     person.     The     Special      Court    has<\/p>\n
totally disregarded the evidence adduced by the appellant in<\/p>\n
support of its case.               The counter claim has been erroneously<\/p>\n
decreed    merely      on       surmises      and    conjectures.         It     is    also<\/p>\n
submitted that the interest at the rate of 12% w.e.f. 22.4.1982<\/p>\n
till realisation has been illegally granted without there being<\/p>\n
any evidence in support.                In support of his submission, Mr.<\/p>\n
Suri,    has   relied       on    numerous      documents       which     were    on    the<\/p>\n
                                                                                              12<\/span>
\nrecord.    Mr. Suri has placed heavy reliance on the letter dated<\/p>\n
7.8.1992 which pertains to the statement of account between the<\/p>\n
parties for the period 1.4.1991 to 25.7.1992.                According to the<\/p>\n
learned counsel this letter will show that only one lakh shares<\/p>\n
of RIL had been delivered.              Therefore, respondent No.1 was<\/p>\n
seeking    confirmation        that   only    one   lakh     shares      had   been<\/p>\n
received by the appellant.            This letter would also show that<\/p>\n
respondent      No.1   had     intimated     that   suitable      decision     with<\/p>\n
regard to contentions of the appellant on SAIL shares will be<\/p>\n
given in due course.           He then made a reference to letter dated<\/p>\n
15.9.1992 written by one Ashok Kumar Kini, Executive Vice-<\/p>\n
President of respondent No.1 wherein he stated that there were<\/p>\n
two contract notes.          This letter shows that even according to<\/p>\n
respondent No.1 the physical delivery of one lakh shares at<\/p>\n
Rs.375\/- was made by the office of respondent No.1 at Bombay<\/p>\n
and one lakh shares at Rs.154\/-               of RIL were delivered by Mr.<\/p>\n
Hiten P. Dalal         on its behalf.        The appellant had replied to<\/p>\n
the aforesaid letter on 19.9.1992 and reiterated that only one<\/p>\n
lakh   shares    had    been    received.      According     to    Mr.    Suri    on<\/p>\n
21.9.1992 respondent No.1 wrongly claimed that appellant had<\/p>\n
all    along   been    maintaining     that    there   was     only   one      deal.<\/p>\n
Therefore appellant through letter dated 28.9.1992 reiterated<\/p>\n
its stand that on checking its account there seemed to have<\/p>\n
been no record of receipt of any share from Hiten P. Dalal.<\/p>\n
                                                                                       13<\/span>
\nMr. Suri further submitted that in the written statement in<\/p>\n
paragraph    8   respondent   No.1    had   wrongly   claimed   that    the<\/p>\n
contract dated 14.2.1992 had been cancelled.           In fact there was<\/p>\n
no evidence led by respondent No.1 on issue No.5 which was<\/p>\n
relevant to this claim.        In support of this learned counsel<\/p>\n
relied on extract of the account for the period 1.4.1991 to<\/p>\n
31.3.1992 which shows the existence of both the transactions.<\/p>\n
Therefore according to Mr. Suri the respondent No.1 has wrongly<\/p>\n
claimed that contract dated 14.2.1992 was cancelled.              Finally<\/p>\n
it is submitted by Mr. Suri that one lakh shares were adjusted<\/p>\n
against the contract dated 23.3.1992 on the basis of trade<\/p>\n
practice.     As the appellant is a broker he has corresponding<\/p>\n
commitments to every client.         Mr. Suri submits that the Special<\/p>\n
Court has wrongly concluded that it was for the appellant to<\/p>\n
prove that the contract dated 14.2.1992 was not in existence.<\/p>\n
Mr.   Suri   further   submitted     that   learned   Special   Court   has<\/p>\n
wrongly concluded that the contract with regard to SAIL shares<\/p>\n
being itself illegal could not be enforced in law.                In fact<\/p>\n
respondent No.1 had all along maintained that contract note<\/p>\n
dated 27.2.1992 would be honoured in due course.           It is only on<\/p>\n
17.9.1992     that respondent No.1 for the first time tried to<\/p>\n
wriggle out of the contract by stating that the transaction was<\/p>\n
against law and hence void and unenforceable.           According to Mr.<\/p>\n
Suri this plea is not acceptable and there is no bar in law for<\/p>\n
                                                                              14<\/span>
\nentering into such a contract.           The reliance placed by the<\/p>\n
Special   Court   on   the    circular   dated   27.6.1969    is   totally<\/p>\n
misplaced and contrary to the facts of the case.             According to<\/p>\n
learned senior counsel, Mr. Suri, the circular would not be<\/p>\n
applicable to sale\/purchase of securities on a contract for<\/p>\n
cash.     It was for this reason that statement of account of<\/p>\n
respondent No.1 would show that the contract was alive till at<\/p>\n
least 31.3.1992 when it was reversed in the books of accounts.<\/p>\n
This, according to Mr. Suri, was just a ploy on the part of<\/p>\n
respondent No.1 to escape its liability under the contract<\/p>\n
dated 27.2.1992.       Mr. Suri submitted that the bias of the<\/p>\n
Special Court is evident from the manner in which only selected<\/p>\n
pieces of evidence have been used to decree the counter claim<\/p>\n
of respondent No.1.      The evidence, which was in favour of the<\/p>\n
appellant, had been ignored by the Special Court.            According to<\/p>\n
Mr. Suri this was clearly due to the undue importance attached<\/p>\n
by the Special Court to the facts that appellant is a notified<\/p>\n
person under the Act.        It is further submitted by Mr. Suri that<\/p>\n
there was no legal justification for awarding 12% interest to<\/p>\n
respondent No.1 w.e.f. 22.4.1992 as there was no evidence in<\/p>\n
support of such a claim.        In any event the Special Court could<\/p>\n
only grant interest from the date of the filing of the counter<\/p>\n
claim and not from an earlier date.          Mr. Suri submitted that<\/p>\n
the Special Court also erred in law in coming to the conclusion<\/p>\n
                                                                             15<\/span>
\nthat the requisite averments to constitute a suit for damages<\/p>\n
are absent in the present case.                        According to Mr. Suri a<\/p>\n
perusal of the plaint would clearly show that it is a case for<\/p>\n
damages   arising        out    of     breach   of     contract    on   the     part    of<\/p>\n
respondent No.1.           Mr. Suri then submitted that the Special<\/p>\n
Court    has   wrongly         drawn    an    adverse     inference         against    the<\/p>\n
appellant on account of non-production of the “sauda books”.<\/p>\n
According to the learned senior counsel the sauda books were<\/p>\n
not at all relevant for proving the case of the appellant.<\/p>\n
There was ample evidence on record to show that respondent No.1<\/p>\n
was guilty of breach of contract.                    Therefore, respondent No.1<\/p>\n
was liable to make good the damages suffered by the appellant.<\/p>\n
The appellant having produced the best evidence available, it<\/p>\n
was not necessary to produce the sauda books at all.                          Therefore<\/p>\n
the learned Special Court has wrongly concluded that the best<\/p>\n
evidence rule would be applicable in the facts of the present<\/p>\n
case.\n<\/p>\n<\/p>\n
14.   On the other hand, Mr. Bhushan, learned senior counsel,<\/p>\n
submits that the findings of the Special Court are based on<\/p>\n
clear and cogent evidence.                 He has also made reference to the<\/p>\n
correspondence      between          the     parties    and     submitted     that     the<\/p>\n
entire    claim     of    the     appellant       is     based    on    a    deliberate<\/p>\n
misreading     of   the    same.           Learned     senior    counsel      relied on<\/p>\n
                                                                                             16<\/span>
\nletter    dated      17.7.1992      which     shows      that       by    that       time       the<\/p>\n
Reliance      shares      were    not   on    issue.        This      letter         has       been<\/p>\n
written by the appellant to respondent No.1 and talks only of<\/p>\n
the    SAIL   shares.        In    this      letter     appellant         has,       in    fact,<\/p>\n
admitted      that    the   contract       with    regard       to       SAIL    shares         was<\/p>\n
technically         incorrect      since     contract       relating            to   unquoted<\/p>\n
shares would be outside the purview of Delhi Stock Exchange<\/p>\n
Rules, By-Laws and Regulations.                   It is also admitted that the<\/p>\n
shares at the relevant time were not quoted at any centre.<\/p>\n
This admission is reiterated in the letter dated 18.8.1992<\/p>\n
seeking to make clarification in response to the letter dated<\/p>\n
7.8.1992.      It was confirmed by the appellant that only one lakh<\/p>\n
shares of RIL had been received from the Bombay office of<\/p>\n
respondent No.1 and that no delivery was received from H.P.<\/p>\n
Dalal.     By letter dated 20.4.1992 it was clearly stated that<\/p>\n
barring the outstanding transaction of five lakh shares of SAIL<\/p>\n
there is nothing outstanding.                   Mr. Bhushan submits that the<\/p>\n
letter dated 15.9.1992 is being misinterpreted by the appellant<\/p>\n
which    is    merely       an    observation        made      by     respondent           No.1.<\/p>\n
According      to    Mr.    Bhushan     by    that      time    the       scam       had       been<\/p>\n
discovered, a new management had taken over and the letter had<\/p>\n
been    written      on    going   through      the     records.            Hence         it    was<\/p>\n
observed that against two sale contracts of RIL, for one lakh<\/p>\n
shares   each,       physical      delivery       had   been        given       of   one       lakh<\/p>\n
                                                                                                      17<\/span>
\nshares by Hiten P. Dalal.               To take advantage of the aforesaid<\/p>\n
letter, the appellant writes the letter dated 19.9.1992 stating<\/p>\n
that there were two contracts for two lakh RIL shares.                         Against<\/p>\n
these two lakh shares, appellant had received only one lakh<\/p>\n
shares     which    had    been      credited   against       the   contract     dated<\/p>\n
14.2.1992.        The appellant further claimed delivery of one lakh<\/p>\n
shares under contract dated 23.3.1992.                  Having taken this stand<\/p>\n
in its letter dated 14.6.1993 the appellant does not claim any<\/p>\n
damages on account of non-delivery of one lakh shares                          against<\/p>\n
the contract note dated 23.3.1992 at the rate of Rs.375\/- per<\/p>\n
share.     The only plea is that delivery of one lakh shares has<\/p>\n
been credited against the contract dated 23.3.1992.                      Therefore,<\/p>\n
credit due to respondent No.1 would be only Rs.1,54,00,000\/-<\/p>\n
and not Rs.3,75,00,000\/- as shown by the respondent No.1 in its<\/p>\n
account.     Mr. Bhushan further submits that even if the plea of<\/p>\n
the appellant is accepted that the transaction has been shown<\/p>\n
in   the    account       as   being    incomplete,      it    still     had    to   be<\/p>\n
reflected in the sauda books.             However during the course of the<\/p>\n
trial sauda books were not produced and therefore an adverse<\/p>\n
inference has been drawn against the appellant.                     With regard to<\/p>\n
the SAIL shares, Mr. Bhushan submits that the contract was<\/p>\n
contrary     to    law.        The    appellant   was    aware      of   this    legal<\/p>\n
position and admitted the same in the letter dated 27.7.1992.<\/p>\n
                                                                                          18<\/span>\n<\/p>\n
15.   Upon consideration of the submissions made by the learned<\/p>\n
counsel for the parties we have examined the material on the<\/p>\n
record.     It is not disputed before us that there were, in fact,<\/p>\n
two transactions with regard to RIL shares dated 14.2.1992 and<\/p>\n
23.3.1992.    The Special Court notices that the appellant claims<\/p>\n
to have adjusted the delivery of one lakh shares of RIL against<\/p>\n
the   contract   dated   14.2.1992    which    is   said    to    have    been<\/p>\n
cancelled by respondent No.1.         The Special Court also notices<\/p>\n
that if the case of the appellant that the contract dated<\/p>\n
14.2.1992 was alive is accepted, then the transaction will<\/p>\n
remain incomplete and unfulfilled.           The Special Court further<\/p>\n
observed as follows:\n<\/p>\n<\/p>\n
            “In my opinion, even without recording any finding
\n            as to whether the contract dated 14-2-1992 was
\n            cancelled on the same day or not, the Plaintiff
\n            cannot be granted any relief in relation to the
\n            contract dated 14-2-1992, assuming it to be
\n            outstanding because the only relief that might
\n            have been claimed by the Plaintiff if the contract
\n            dated 14-2-1992 was unfulfilled contract was
\n            relief for damages for breach of contract.”\n<\/p><\/blockquote>\n
16.   The    Special   Court   also   upon    reading      of    the    plaint<\/p>\n
concludes that it is not a suit filed by the appellant for a<\/p>\n
decree in the amount of damages for breach of contract.                       In<\/p>\n
our   opinion,   the   aforesaid   findings    cannot      be    said    to   be<\/p>\n
erroneous or based on no evidence.            In fact in paragraphs 6<\/p>\n
and 7 of the plaint the appellant had stated as follows:<\/p>\n
                                                                                   19<\/span>
\n             “6. The plaintiff and defendant No.1 have been
\n             doing regular business over a fairly long period
\n             of time and are maintaining running accounts
\n             respectively.\n<\/p>\n
              7. The present suit is in respect of recovery of
\n             money which is due from the defendant No.1 on
\n             account of transactions undertaken on behalf of
\n             with the defendant No.1 after accounting for all
\n             the transactions in the running accounts and the
\n             amount whereof has not been paid to the plaintiff
\n             in spite of requests for the same.”\n<\/p>\n
17.    In   the    face    of     these    averments,       we    find   it    a    little<\/p>\n
difficult to appreciate the submission of Mr. Suri that the<\/p>\n
findings on these issues are erroneous or not supported by any<\/p>\n
evidence.      The Special Court also notices that the appellant<\/p>\n
had, in fact,           adjusted the       delivery of           shares towards          the<\/p>\n
contract dated 23.3.1992.                It is true that in the examination-<\/p>\n
in-chief     appellant      had     stated    that    he     had    made      the    claim<\/p>\n
against respondent No.1              on the basis of difference in price<\/p>\n
of Reliance shares as on 14.2.1992 and as on 23.3.1992, i.e.,<\/p>\n
Rs.375-Rs.154        for    one    lakh     shares.         In    our    opinion,        the<\/p>\n
Special Court has correctly observed that in the absence of<\/p>\n
pleadings      the      statement    made     by    the     appellant      had      to   be<\/p>\n
ignored.       We are also unable to accept the criticism of Mr.<\/p>\n
Suri    that      the    burden     of    proving     the    continuance           of    the<\/p>\n
contract dated 14.2.1992 was not on the appellant.                                  We may<\/p>\n
notice here that respondent No.1 had taken a categorical plea<\/p>\n
that contract dated 14.2.1992 was cancelled by appellant on<\/p>\n
                                                                                               20<\/span>
\nthe same day.        The conduct of the appellant showing delivery<\/p>\n
made    on   22.4.1992      as   delivery     against   the    contract     dated<\/p>\n
23.31992     indicated      that   he   was    also   treating     the   contract<\/p>\n
dated 14.2.1992 to be cancelled.                 Had that not been so, he<\/p>\n
would have made entries in the books of account to show that<\/p>\n
the     delivery     of   shares    were      against   the    contract     dated<\/p>\n
14.2.1992. In our opinion Mr. Bhusan, has rightly pointed out<\/p>\n
that till 27.7.1992, the reliance shares were not in issue.<\/p>\n
The letter written by the appellant to the Respondent No 1<\/p>\n
talks    only   of    the   SAIL   shares.      Therefore     it   was   for   the<\/p>\n
appellant to produce documentary evidence to show that in his<\/p>\n
books of accounts the contract had been shown as incomplete.<\/p>\n
But the appellant failed to produce the necessary evidence,<\/p>\n
which led the Court to observe that:\n<\/p>\n
             “The burden was on the plaintiff to prove that the
\n             contract dated 14.2.1992 remained incomplete. In
\n             my opinion, therefore, it was for the plaintiff to
\n             produce documentary evidence to show that in his
\n             Books of Accounts the contract is shown as
\n             incomplete. It becomes necessary for the plaintiff
\n             to produce the document to show that the
\n             transaction in his Books of accounts is shown as
\n             incomplete. The conduct of the plaintiff of
\n             showing delivery made on 22.4.1992 as delivery
\n             made on 23.3.1992 indicates that he was also
\n             treating   the   contract   dated   14.2.1992   as
\n             cancelled. Had that not been so he would have made
\n             entries in the Book of account to show that the
\n             delivery of shares were against contract dated
\n             14.2.1992. ”\n<\/p><\/blockquote>\n
                                                                                     21<\/span><\/p>\n
In our opinion the view expressed by the special Court is an<\/p>\n
acceptable view, and does not call for any interference.<\/p>\n
18.   With regard to issues no 6 & 7, we again do not find any<\/p>\n
merit in the submissions of Mr. Suri. Admitted position is that<\/p>\n
on the date when the contract with regard to the SAIL shares<\/p>\n
was entered into, the shares were unlisted. It is also the<\/p>\n
admitted   position   that   on   that   day,   the   circular   dated<\/p>\n
27.6.1969 issued under Section 16 of the Securities Contract<\/p>\n
Regulation Act 1956 was in existence and in force. Relevant<\/p>\n
portion of the afore said circular reads as follows:<\/p>\n
            ” S.O. 2561 In exercise of the powers conferred
\n           by   sub-section   (1)  of   Securities   Contract
\n           (Regulation) Act 1956 (42 of 1956) the Central
\n           Government being of opinion that it is necessary
\n           to prevent undesirable speculation in securities
\n           in the whole of India, hereby declares that no
\n           person in the territory to which the said Act
\n           extends shall save with the permission of the
\n           Central Government enter into any Contract for the
\n           sale or purchase of securities other that such
\n           Spot delivery contract or
\n           Contract for cash or
\n           Hand delivery or
\n           Special Delivery
\n           in any securities as is permissible under the said
\n           act and the rules, bye laws and regulations of a
\n           recognized Stock Exchange.”\n<\/p><\/blockquote>\n
It is thus clear from the circular that after issuance of these<\/p>\n
Circular, transactions into securities by (i) Spot delivery<\/p>\n
contract; (ii) Contract for cash; (iii) Hand delivery and (iv)<\/p>\n
                                                                         22<\/span>
\nSpecial Delivery are only permitted. The term `spot delivery’<\/p>\n
is defined in Section 2 (i) of the Act, which reads as under:-<\/p>\n
                 “Spot delivery contract means a contract
\n                 which provides for :-\n<\/p><\/blockquote>\n
                 (a) actual delivery of securities and the
\n                 payment of a price therefore either on the
\n                 same day as the date of the contract or on
\n                 the next day, the actual period taken for the
\n                 dispatch of the securities or the remittance
\n                 of money therefore through the post being
\n                 excluded from the computation of the period
\n                 aforesaid if the parties to the contract do
\n                 not reside in the same town or locality;\n<\/p><\/blockquote>\n
                 (b)transfer   of   the   securities   by  the
\n                 depository from the account of a beneficial
\n                 owner when such securities are dealt with by
\n                 a depository; ”\n<\/p><\/blockquote>\n
A perusal of the aforesaid definition would show that spot<\/p>\n
delivery contract is the contract where actual delivery of the<\/p>\n
securities and the payment of price is either on the same day<\/p>\n
or on the next day. Admitted position is that the contract<\/p>\n
note issued by the appellant in relation to this transaction<\/p>\n
shows that it was not a spot delivery contract.<\/p>\n
19.   As   regards   the   other   types   of   contracts,   the   terms,<\/p>\n
contract for cash, hand delivery or special delivery are not<\/p>\n
defined by the Act. Therefore in terms of the circular dated<\/p>\n
27.6.1969 quoted above, if the rules made under the act, bye<\/p>\n
laws and regulations of a recognized Stock Exchange permit<\/p>\n
contract for cash, hand delivery or special delivery, those<\/p>\n
types of transactions would also be permitted by the circulars.<\/p>\n
                                                                            23<\/span>
\nThe provisions of the bye-laws of Delhi Stock exchange clearly<\/p>\n
permits spot delivery transaction, hand delivery transaction<\/p>\n
and special delivery transaction. It was noticed by the Special<\/p>\n
court that<\/p>\n
             “It was not even the case of the Plaintiff that
\n             the transaction into SAIL shares in relation to
\n             which contract note has been issued by the
\n             plaintiff was either hand delivery, spot delivery
\n             or special delivery contract.”\n<\/p>\n
\nIt was argued before the Special Court that the transaction was<\/p>\n
a   cash    delivery   contract.   The   Special    Court   negated    such<\/p>\n
contention, observing as follows:\n<\/p>\n
             “Firstly there are no pleadings to that effect.
\n             There is no evidence to that effect and there is
\n             no provision to         that effect either in the
\n             Act, rules framed by the Delhi Stock Exchange.
\n             Therefore cash delivery contract unless it is
\n             permitted by the Act, bye laws and regulations of
\n             the   Stock   Exchange  is   prohibited  by   the
\n             circulars.”<\/p><\/blockquote>\n
      The    appellant   was   aware     of   the   illegality    of   the<\/p>\n
transaction. It is evident from the letter dated 27th of July,<\/p>\n
1992 written by the appellant to the respondent No.1 wherein it<\/p>\n
is clearly stated that “technically this was incorrect since<\/p>\n
contracts relating to unquoted shares would be outside the<\/p>\n
purview     of   Delhi    Stock    Exchange     rules,      bye-laws    and<\/p>\n
regulations.” In the face of such an dmission, the Special<\/p>\n
Court, in our opinion, has correctly concluded, as noticed<\/p>\n
                                                                              24<\/span>
\nabove. In our opinion the view expressed by the Special Court<\/p>\n
does not call for any interference.\n<\/p>\n<\/p>\n
20.   The contention that the circular did not apply to unlisted<\/p>\n
securities was duly considered and rejected by the Special<\/p>\n
Court.    The   Special     Court    thoroughly   considered     the     term<\/p>\n
`securities’ as defined in Section 2(h) of the Act. It reads as<\/p>\n
under:-\n<\/p>\n
                         “2(h) Securities include-\n<\/p><\/blockquote>\n
                         (i)        shares,   scrips,    stocks,       bonds,\n\n                 debentures,         debenture      stock      or        other\n\n<\/pre>\n
                 marketable securities of a like nature in or of<\/p>\n
                 any      incorporated    company       or   other       body<\/p>\n
                 corporate;\n<\/p><\/blockquote>\n
                 (ia)     derivative;\n\n                 (ib)      units or any other instrument issued by\n\n                 any      collective     investment     scheme      to    the\n\n                 investors in such schemes.\n\n                 (ii)      Government securities;\n\n                 (iia)     such other instruments as may be declared\n\n<\/pre>\n
                 by the central Government to be securities; and<\/p>\n<\/blockquote>\n
                 (iii) rights or interests in securities; ”\n<\/p><\/blockquote>\n
Perusal of the above quoted definition shows that it does not<\/p>\n
make any distinction between listed securities and unlisted<\/p>\n
                                                                                 25<\/span>
\nsecurities and therefore it is clear that the Circular will<\/p>\n
apply to the securities which are not listed on the Stock<\/p>\n
Exchange. Admittedly the contract note issued in relation to<\/p>\n
this transaction by the appellant does not show that it was a<\/p>\n
spot delivery contract, therefore the transaction was clearly<\/p>\n
contrary     to   the   circular.      Consequently          in    terms    of     the<\/p>\n
provisions of Sub-section(2) of Section 16 the transaction was<\/p>\n
illegal and is not capable of being enforced.\n<\/p>\n<\/p>\n
21.   With    regard    to   issues    no   1,8    &    9,   it    was     correctly<\/p>\n
observed     by   the    Special      Court     that    the       Plaintiff       i.e.<\/p>\n
Appellant herein is not entitled to make any claim either in<\/p>\n
relation to the Reliance Industries Shares nor in relation to<\/p>\n
contract     for SAIL    shares. Further          as the      appellant is not<\/p>\n
entitled to claim any amount from the respondent on account of<\/p>\n
the   aforesaid    transactions,        there     is    no    question       of    the<\/p>\n
appellant being entitled to any interest.\n<\/p>\n<\/p>\n
22.   On Issue No.10, Mr.Suri has submitted that the Special<\/p>\n
Court has illegally allowed the counter claim of respondent<\/p>\n
No.1. It was submitted that the Special Court has come to a<\/p>\n
contrary     conclusion      even     though      the   fact      situation        was<\/p>\n
identical in the claim put forward by both the parties. We are<\/p>\n
unable to accept the submissions made by the learned senior<\/p>\n
                                                                                         26<\/span>
\ncounsel.     Once     it    is    concluded       that   the   appellant        is    not<\/p>\n
entitled to claim any amount from respondent No.1 in relation<\/p>\n
to   the     aforesaid       three    transactions        i.e.      contract        dated<\/p>\n
14.2.1992, contract dated 23.3.1992 for one lakh RIL shares<\/p>\n
each and contract dated 27.2.1992 relating to one lakh SAIL<\/p>\n
share. It needed to be determined as to whether the appellant<\/p>\n
in fact needed to compensate respondent No.1. In the counter<\/p>\n
claim, the respondent No.1 clearly stated that the appellant<\/p>\n
had agreed to purchase one lakh shares of RIL on 14.2.1992 @<\/p>\n
Rs.154\/- per share, but this contract was cancelled by the<\/p>\n
appellant on the very same date. Thereafter, the appellant had<\/p>\n
intimated     about    another       contract      for   purchase        of   one    lakh<\/p>\n
shares of RIL on 23.3.1992 @ Rs.375\/- per share. Against the<\/p>\n
aforesaid contract, the delivery of one lakh shares was made<\/p>\n
by the respondent No.1 to the appellant on 22.4.1992. After<\/p>\n
the receipt of a letter dated 15.9.1992 when the Management of<\/p>\n
respondent No.1 had changed, the appellant started claiming<\/p>\n
that the delivery of one lakh shares on 22.4.1992 had been<\/p>\n
adjusted against the cancelled contract dated 14.2.1992. The<\/p>\n
respondent No.1 had based the counter claim on the difference<\/p>\n
of   price    in     shares      between    two    periods     of    contract        i.e.<\/p>\n
14.2.1992      and     23.3.1992.          The    difference        of     amount      of<\/p>\n
Rs.2,21,00,000\/-           was   claimed     as    the   amount      due      from    the<\/p>\n
appellant     to the       respondent No.1.         A perusal       of the      letter<\/p>\n
                                                                                            27<\/span>
\ndated 27.5.1993, which contains a statement of account with<\/p>\n
the subject “settlement of outstanding” clearly shows that the<\/p>\n
respondent      No.1     is    claiming   a    sum    of        Rs.2,56,25,000\/-       as<\/p>\n
outstanding against the appellant from various transactions as<\/p>\n
per   the     details        given   therein.    Against          the   entry     dated<\/p>\n
4.3.1992, there is a clear entry with regard to the sale of<\/p>\n
one   lakh    RIL   shares       @   Rs.375\/-    per       share     given    a   total<\/p>\n
consideration       of    Rs.3,75,00,000\/-.          The    respondent        No.1    had<\/p>\n
clearly requested the appellant to settle account by paying<\/p>\n
Rs.2,56,25,000\/- immediately. In the letter dated 14.6.1993,<\/p>\n
the appellant offered its comment on the statement of account<\/p>\n
for   payment    by      respondent     No.1    on    27.5.1993.         Herein,      the<\/p>\n
appellant states that the credit claimed by the respondent<\/p>\n
No.1 should be Rs.2,21,00,000\/- instead of Rs.2,56,25,000\/-.<\/p>\n
This balance was claimed by the appellant on the ground that<\/p>\n
the credit claimed by respondent No.1 of Rs.3,75,00,000\/- has<\/p>\n
to be reduced by Rs.1,56,00,000\/- i.e. the difference in price<\/p>\n
of shares of the two contracts dated 14.2.1992 and 23.3.1992.<\/p>\n
The appellant also claimed that a sum of Rs.2,95,00,000\/- was<\/p>\n
also required to be adjusted in respect of SAIL shares. The<\/p>\n
appellant     had   claimed      the    difference         in    contract     price    of<\/p>\n
shares   of    SAIL      @    Rs.51\/-   per    share       against      the   official<\/p>\n
quotation of the Delhi Stock Exchange @ Rs.110\/- per share.<\/p>\n
Thus he had claimed that respondent No.1 was liable to pay for<\/p>\n
                                                                                            28<\/span>
\nthe difference of Rs.59\/- per share (Rs.110\/-Rs.51\/- per share<\/p>\n
amounting        to   Rs.2,95,00,000).      It    was    held     by    the    Special<\/p>\n
Court,     which      finding    has     been    affirmed    by       us,    that   the<\/p>\n
contract with regard to SAIL shares being contrary to law was<\/p>\n
void ab initio. Therefore, the appellant could not possibly<\/p>\n
claim anything against the aforesaid SAIL shares on account of<\/p>\n
any difference in the contracted rate and the rate when the<\/p>\n
same were listed on the Delhi Stock Exchange. Therefore, the<\/p>\n
irresistible conclusion was that the appellant was liable to<\/p>\n
pay   to   respondent      No.1    for    the    RIL    Shares    @    Rs.375\/-     per<\/p>\n
share,     the    contract      dated    14.2.1992      having    been      cancelled.<\/p>\n
Thus the Special Court, in our opinion, correctly concluded<\/p>\n
that the appellant was liable to pay to the respondent No.1<\/p>\n
the amount of Rs.2,53,75,000\/-. In view of the above, we find<\/p>\n
no reason to interfere with the findings of the Special Court<\/p>\n
on Issue No.10 also.\n<\/p>\n<\/p>\n
23.   We also do not find any cogent reason to interfere or to<\/p>\n
reduce the amount of interest awarded by the Special Court in<\/p>\n
the peculiar facts and circumstances of this case.<\/p>\n
24.   Mr.Suri had submitted that the entire approach of the<\/p>\n
Special Court was biased against the appellant simply because<\/p>\n
the sole proprietor of the appellant was duly notified under<\/p>\n
                                                                                          29<\/span>
\n   the Special Courts Act. We are of the considered opinion that<\/p>\n
   the   aforesaid   submission   has   to   be   merely   stated   to   be<\/p>\n
   rejected. The allegations of bias and mala fide had to be<\/p>\n
   proved   by cogent   and clear   evidence. In     the present    case,<\/p>\n
   apart from the bald submissions made by Mr.Suri, no material<\/p>\n
   was placed on the record to indicate that the judgment of the<\/p>\n
   Special Court was coloured, let alone being affected by any<\/p>\n
   bias. It seems to have become a common practice these days for<\/p>\n
   the losing party after receiving an unfavourable verdict, to<\/p>\n
   make allegations of bias against the Presiding Officer. We<\/p>\n
   decline to give any credence to such wild and bald submissions<\/p>\n
   without any factual basis.\n<\/p>\n<\/p>\n
   25.   In view of the above, we find no merit in this appeal and<\/p>\n
   the appeal is dismissed. No order as to costs.\n<\/p>\n
…………………..J.\n<\/p>\n
                                                  [B.Sudershan Reddy]<\/p>\n
   New Delhi;\n<\/p>\n
…………………..J.\n<\/p>\n
   May 05, 2010.                                  [Surinder Singh Nijjar]<\/p>\n
                                                                              30<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Naresh K. Aggarwala & Co vs Canbank Financial Services Ltd. & … on 5 May, 2010 Author: S S Nijjar Bench: B. Sudershan Reddy, Surinder Singh Nijjar REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.5173 OF 2004 NARESH K. AGGARWALA & CO. …APPELLANT(S) VERSUS CANBANK FINANCIAL […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-226407","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nNaresh K. 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