standard chartered bank vs unknown on 13 july, 2010

Bombay High CourtStandard Chartered Bank vs Unknown on 13 July, 2010Bench: 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 )

Standard Chartered Bank vs Unknown on 13 July, 2010

Indian Kanoon - http://indiankanoon.org/doc/2943423/ 1

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 16:08:22 ::: This Order is modified/corrected by Speaking to Minutes Order

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 ig ) (8) P.R. Nayak ) (9) D.M. Nanjundeppa ) (10) M.M. Khanna )

) 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 i.b M/s Pandya Gandhy & Co for Defendant No.1.

Mr. M.P.S.Rao, Senior Advocate with Mr. Sunil Kale for Defendant No.2.

::: Downloaded on - 09/06/2013 16:08:22 ::: This Order is modified/corrected by Speaking to Minutes Order

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:-



1. Plaintiffs - Bank are a Company incorporated by Royal Charter under the laws of England andWales. 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 ownedsubsidiary of the Andhra Bank, a nationalized Banking Company incorporated under the provisionsof the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980. Plaintiffs - Bankalso This Order is modified/corrected by Speaking to Minutes Order had Investment BankingDivision which had a Unit known as Money and Investment Unit which dealt with the sale andpurchase of Securities, Bonds and Units. Defendant No.1 are also authorized to engage in sale andpurchase of Securities, Bonds and Units. The dispute raised in the suit is in respect of purchase byPlaintiffs 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 madeon the same day.

The total price payable to Defendant No.1 was Rs 48,02,50,000/- which was paid by Pay Orderdated 26/02/1992. A Banker's Receipt was issued to the Plaintiffs by Defendant No.1 vide Banker'sReceipt No.23727 acknowledging the said payment and stating that the bonds would be deliveredlater 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 beingperpetrated upon several banks including plaintiffs, investigation was made of the records and itwas alleged that the Banker's Receipt (hereinafter referred to as "BR") given by Defendant No.1 ThisOrder is modified/corrected by Speaking to Minutes Order was discharged and letter dated26/02/1992 was given to the Plaintiffs asking them to handover the said BR in lieu of the originalallotment letter. Plaintiffs' initial case was that no such original was ever received by Plaintiffs andthat 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 theDefendant 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 thePlaintiffs. It was alleged that Hiten Dalal had utilized the original LOA to undertake series oftransactions involving various Banks. Plaintiffs were under the impression that the transactionswere based on the very same LOA which was handed over to the Plaintiffs but, in fact, it was nothanded over either by Defendant No.1 or by Hiten Dalal. It was further alleged that Defendant No.1were under an obligation to fulfill their contractual obligation of delivering the purchased bonds tothe Plaintiffs after having received the valuable consideration from the Plaintiffs being the amountof Rs 48,02,50,000/- for the purchase of suit bonds and, This Order is modified/corrected bySpeaking to Minutes Order therefore, they were liable to pay the said amount with interest to thePlaintiffs.



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 ChamberSummons was allowed on 15/12/1995 by this Court and paragraphs 11A to 11C were added that theoriginal LOA was taken by Defendant Nos. 3 to 10 from Defendant No.2 and the said LOA waswrongfully converted to their own use and that this fact became known to Plaintiffs in the course ofproceedings before the Company Law Board being Company Petition No. 5/111/92-CLB (NR) whichwas 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 withinterest. 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 10/09/2006being Chamber Summons No.10 of 2006 and the amendment was carried out by Plaintiffs - Bank on17/10/2006. The additional Written Statement was filed by Defendant No.3 - Canara Bank on08/01/2007 to the amended plaint. The Custodian was also added as Defendant No.11 on19/01/2007. The additional Written Statement was also filed by Defendant No. 2 to the amendedplaint. The substantial amendments were made by Plaintiffs pointing out the circumstances underwhich Plaintiffs discovered a hole i.e shortfall in Securities Account on 09/04/1992 and in order tocover-up the said hole, the dealers of the Plaintiffs entered into dummy transaction dated10/04/1992 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 notreceive any payment from Defendant No.1 nor Plaintiffs delivered any Securities. It was then allegedthat the defence taken by Defendants in This Order is modified/corrected by Speaking to MinutesOrder their Written Statement was barred by principles of res-

judicata 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 causeof action against him and, therefore, the suit was liable to be dismissed on that count. It was alsoalleged that the suit claim was barred by law of limitation. It was then contended that DefendantNo.2 was not concerned with the transaction between Plaintiffs and Defendant No.1 on 26/02/1992and in para 4(b) of the Written Statement he had made an averment in which he stated that thePlaintiffs 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 toreturn the Securities on 18/4/1992 with interest at the rate of 24% per annum. Then in para 4(c), hecame out with the case that on 13/04/1992, Plaintiffs were interested in purchasing Can Triple Unitsand the Defendant agreed to sell those Units at the rate of Rs 58.50 per Unit to the Plaintiffs. He hasalleged that he was holding BR of City Bank of Rs 3.5 crores units of Can Triple and this BR washanded over to Plaintiffs by the Defendant.



This Order is modified/corrected by Speaking to Minutes Order He also agreed that the saidtransaction would be completed on 18/04/1992 and that the Defendant would retain the 9% NPCbonds and 17% NPC bonds and the value of the bonds would be adjusted against value of the CanTriple Units and the balance would be paid over to the Defendant. However, according to DefendantNo.2, Plaintiffs were postponing the completion of the transaction and in para 4(d) he has allegedthat sometime on/or about 09/05/1992, Plaintiffs purchased Can Triple Units and agreed to paybalance amount after adjusting the cost of two bonds. However, this was not done thereafter byPlaintiffs. Thereafter, it is alleged by Defendant No.2 that the Defendant sold 17% NPC bonds toCMF on 27/02/1992 and delivered to CMF LOA alongwith transfer deed which was received byDefendant No.2 from Plaintiffs. It was then contended that though Plaintiffs had admitted thistransaction before the various authorities, in Misc. Petition No.36 of 1993, Plaintiffs in theiraffidavit had alleged that the said transaction was bogus. It is then contended that IDG report in thesaid Misc. Petition No.430 of 1994 stated that Plaintiffs were not liable to pay to the Defendant No.2a sum of Rs 205 crores and the transaction This Order is modified/corrected by Speaking to MinutesOrder of the Defendant with Plaintiffs on 09/05/1992 was also confirmed. It is also contended thatthe case of Plaintiffs is proved to be false from the Flow Chart as submitted by Plaintiffs to CBI inrespect of various transactions between Plaintiffs and the second Defendant. It is then contendedthat Defendant No.2 had never acted as broker in transaction between Plaintiffs and DefendantNo.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 theoriginal LOA to undertake series of transaction with various banks is also denied. In the additionalWritten Statement, Defendant No.2 has alleged that Plaintiffs are seeking decree on totallycontradictory and mutually exclusive cases.

6. Defendant No.3 in their Written Statement firstly alleged that the plaint did not disclose anycause of action since the plaint did not disclose that the Plaintiffs did not acquire any title or right tothe suit bonds. It was contended by Defendant No.3 on the basis of list of transactions which werefiled by the Plaintiffs with Joint Parliamentary This Order is modified/corrected by Speaking toMinutes Order Committee in October, 1994 that there were continuous dealings in these Securitiesby the Plaintiffs which made it clear that either Plaintiffs had received these Securities and partedwith the same for consideration or its worth and even otherwise were estopped from claiming fromany other party.

It was then contended that Defendant No.3 had, on 27/02/1992 purchased through Hiten Dalal whowas share and stock broker ig of the said 17% NPCL bonds for consideration in good faith andwithout knowledge of any prior transaction. The allegations of fraud and collusion were denied. Itwas contended that the said transaction was the result of 15% arrangement between the Plaintiffsand Hiten Dalal - Defendant No.2. Additional Written Statement is also filed by Defendant No.3 inwhich it was alleged that the alleged entries were fictitious and the purchase transaction dated26/02/1992 was also fictitious and, therefore, there was no need to plug the hole on 10/04/1992. Itwas alleged that, in any case, such transactions and or entries were not only illegal but were alsoopposed to public policy. Further particulars about 15% arrangement alleged in the suit arementioned 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 additionalaffidavit. The allegations that the plea of 15% arrangement and other averments made in the firstWritten Statement were barred by res judicata were denied.

7. In the meantime, Plaintiffs filed affidavit of documents on 12/06/1997. Affidavit of documents isfiled by Defendant No.3 on 16/06/1997. Defendant No.1 filed their affidavit of documents on19/06/1997. 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 deliverinterrogatories 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 toDefendant 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 to10 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 Defendant No.2 in collusion with one of the employees of

the Plaintiff (viz. Santosh Mulgaonkar) fraudulently misappropriated the Suit LOA as alleged in para6A(iii) of the Plaint?

3. Whether the Plaintiffs were unaware that the series of transactions involving Canbank MutualFund (CMF), ANZ Grindlays Bank, Defendant No.1 and the Plaintiffs themselves were "based on thevery 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 asalleged 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 concealthe 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 of26-2-1992 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 dummytransaction 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 thePlaint?

9. Whether the Suit transaction and the transactions referred to in para 7(a), 7(f) and 7(g) of thePlaint reflect that the same were fictitious transactions for funding and/or they were transactions atstructured price and/or they were transactions involving difference between the actual rate (astransacted) 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/oropposed to the public policy?

11. Whether the contention that the transactions are opposed to public policy is barred by theprinciples 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 4456/95dated 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 transactionand Defendant No.1 handed over the original LOA to Defendant No.2 as alleged in para 6(c) and11(a) of the Plaint?

13. Whether the Plaintiffs are estopped from making any claim as alleged in para 2 read with para 14of the Written Statement of the Defendant No.3?

This Order is modified/corrected by Speaking to Minutes Order

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 thePlaintiff and/or Defendant No.1 for consideration in good faith and without notice as alleged inparagraph 11 of the Written Statement of the said Defendant?

15. Whether the transactions under the 15% arrangement were transactions of HPD & not of SCBand HPD was entitled to deal with bonds at his discretion as alleged in para 7(g) of Defendant No.3'sWS?

16. Whether the Defendant No.3's allegations that transactions under 15% arrangement weretransactions of HPD, are barred by res judicata by the judgment of the Special Court in 13/94 dated13-3-1995 and the decision of the Supreme Court in CA No.4456 of 1995 dated 30-10-2001 asalleged in para 7(L)(i) to 7(L)(v) of the Plaint and denied in 32, 33, & 34 of additional WrittenStatement and by the judgment of the Supreme Court dated 5-5-2006 in Appeal from Suit No.11 of1996 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 inpara 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 on27-2-1992 is barred by virtue of the principles of res-judicata as This Order is modified/corrected bySpeaking 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 theParticulars 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 inpara 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 theWritten Statement of Defendant No.2?

3. Whether allegations of Defendant No. 2 that the LOA was lent to him on 27th February, 1992and/or that he purchased the same on 9th May, 1992 in the circumstances and manner set out inpara 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 10to pay to the Plaintiffs the sum of Rs 55,26,16,438.36 as per the particulars of claim together withfurther interest on principal sum of This Order is modified/corrected by Speaking to Minutes OrderRs 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 CorporationLimited (NPCL)



10. PW1 - R. Kalyanraman, alongwith his evidence has produced his affidavit dated 25/01/1993 atExhibit P-1, annexures and documents of Written Statement at Exhibit P-2 collectively and thesignature 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 onrecord:-

This Order is modified/corrected by Speaking to Minutes Order Documents Exhibits1 Letter dated 24/2/1992 at page 19 of the Annexures to Written Statement dated25/1/1993 annexed to the Exh-D-3(1) Affidavit of Evidence of PW1. 2 Letter dated26/2/1992 by ABFSL to NPCL at page 20 of the Annexures to Written Statementdated 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 theAnnexures to Written Statement dated 25/1/1993 Exh-D-3(3) annexedto the Affidavit of Evidence of PW1 4 Letter dated 26/2/1992 by NPCLto ABFSL at page 24 of the Annexures to Written Statement dated25/1/1993 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 toWritten Exh-D-3(5) Statement dated 25/1/1993 annexed to theAffidavit of Evidence of PW1.

12. Following documents were separately shown and tendered by Defendant Nos. 3 to10:-

Documents Exhibits

1 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 dated24/11/1992 by ABFSL to ANZ Grindlays Bank Exh-D-3(7) 3 Page 165, para 11 ofJanakiraman 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 Report dated

29/4/1992 Exh-D-3(10) 6 Page 2 of Daily Transaction Report



dated 29/4/1992 written and signed Exh-D-3(11) by R. Kalyanraman (PW1) 7 DailyTransaction 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) 8 Daily Transaction Report dated

26/2/1992 at page 235 written and Exh-D-3(13) signed by R. Kalyanraman (PW1) 9The Four Entries in Column of FUNDS RECEIVED FROM and in Column ofTHROUGH/REMITTED TO a Daily Exh-D-3(14) Transaction Report dated26/2/1992 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 Reportdated 28/2/1992 at page 234 Exh-D-3(17) This Order is modified/corrected bySpeaking to Minutes Order 13 Letter dated 29/5/1992 by ABFSL to NPCL (enclosingletter of same date Exh-D-3(18) addressed by SCB to ABFSL page 46 of Notes ofEvidence of PW1.

13. PW2 - Mr. R. Kannan produced the original letter dated 11/5/1992 by HPD to SCBat Exh-P-5 and the letter dated 20/5/1992 addressed by Mr. R. Kannan to theCompany 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 documentswere brought on record:-

Documents Exhibits

1 Letter dated 29/5/1992 addressed

by SCB to ABFSL which was duly Exh-D-3(19) signed by R. Kannan(PW2) 2 Page 379para 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)



4 Copy of File Note dated 28/5/1992

duly signed by Mr. R. Kannan Exh-D-3(22) (PW2) This Order is modified/correctedby 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 byMr. R. Kannan Exh-D3(24) (PW2) 7 Deal Slip dated 10/4/1992 of StandardChartered 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 ofwitness R. Kannan in Suit No.17 of Exh-D-3(27) 1994.

15. In the evidence of PW3 - Mr. N. Srinivasan, following documents have beenbrought on record:-

Documents Exhibits

1 Original File Note of Meeting

dated 7/11/1991 unsigned by Mr. Exh-P-8 N. Srinivasan 2 Letter dated 11/3/1996addressed 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 dated26/2/1992 in Bank Receipt Held Registered, which is at Exhibit-P-10.


17. In the cross-examination of PW4 by Counsel for Defendant No.2, followingdocuments are brought on record viz a copy of the letter dated 3/5/1994 alongwithReport 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 atExh-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 ofthe 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.



20. In the cross-examination by Counsel for Defendant Nos.

3 to 10 following documents were brought on record viz copy of letter dated10/1/2008 addressed by NPCL to M/s Mulla & Mulla & CBC at Exh-D-3(30) andapplication under section 6 This Order is modified/corrected by Speaking to MinutesOrder 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 thewitnesses:-

Documents Exhibits

1. 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 ORDERALONGWITH COVERING LETTER

3. AFFIDAVIT OF S. RAMARAJ DATED 13/7/1993 FILED IN COMPNAY PETITIONExh-P-15.

NO.5011/99 CLB(NR) OF 1993

4. BANK RECEIPT NO. 2767 DATED 17/3/1992 ISSUED BY CMF TO SCB WITHExh-P-16 RESPECT TO 17% NPCL BONDS OF FACE VALUE RS.50 CRORES(NOTAVAILABLE WITH US NOT EVEN A COPY. CBI TO PRODUCE ORIGINAL ANDCMF TO PRODUCE COPY)

5. ORDER DATED 21/4/1998 REMANDING SUIT 11/96 AND M.P. NO. 81/95 TOTHE 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.



Exh-P-19

8. ORDER DATED 1/5/2002 IN REVIEW PETITION NO.391 OF 2002 Exh-P-20

9. MISC. PETITION NO. 81 OF 1995 FILED BY Exh-P-21 CMF 10. AFFIDAVIT DATED 2ND JUNE 1993 BY

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 DEFENDANTNO.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-29SUPPPORT( 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



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(CANARABANK)

27. ORDER DATED 13/3/1995 PASSED BY HIS Exh-P-40 LORDSHIP MR. JUSTICES.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.JUSTICEExh-P-43 This Order is modified/corrected by Speaking to Minutes OrderY.K.SABHARAL,MR. JUSTICE C.K.THAKKER AND MR. JUSTICE ALTAMASKABIR

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 SUIT13/94)

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 BISHESHWARPRASAD 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 LORDSHIPSMR. JUSTICE B.N.



KRIPAL & MR. JUSTICE R.P. SETHI.

22. Defendant No.2 has produced the following documents which are taken on recordviz. Chamber Summons No.1 of 1997 in Suit No.11 of 1996 along with Affidavit insupport dated 10/01/1997 at Exh-D2-3 and the order dated 20/03/1997 in ChamberSummons 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) ThisOrder 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) Suit6/94( 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 para29,233,237,238 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) ThisOrder 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.



24. To summarise, therefore, the case of Plaintiffs in brief is that they had purchasedbonds for consideration from ABFSL on 26/02/1992. The original LOA was taken byHPD and it was given to CMF on the same day. Plaintiffs sold bonds to ANZ and gaveBR and in order to discharge their liability had to purchase the bonds from CMF andpaid 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 handingover the same to ANZ to whom they had sold the bonds on 27/02/1992. They couldnot do so since the bonds were converted by HPD and, ultimately, by CMF to theirown use.

25. On the other hand, the case of Defendant No.2 is that This Order ismodified/corrected by Speaking to Minutes Order the LOA was initially borrowedfrom Plaintiffs and they purchased after adjustment of sale consideration of CanTriple Units and that the Plaintiffs were, on the contrary, liable to pay Rs 205 croresto Defendant No.2

26. The case of Defendant No.3 is that the entries in the Plaintiffs' books werefictitious 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 thatthese transactions were bogus and this was done as a result of 15% arrangementbetween Plaintiffs and HPD whereby the LOA would be used by HPD and, after afixed period, entries would be reversed after adjusting the interest. Alternatively it isurged that the HPD had squared off his liability. It is also urged that Plaintiffs wereestopped, therefore, from claiming money and, lastly, it is submitted that thetransactions were against the public policy. The reliance is placed on the JointParliamentary 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 wasbarred by limitation.


27. Plaintiffs, after Written Statement was filed, amended their plaint and contendedthat issue of 15% arrangement between Plaintiffs and HPD and that the transactionswere against the public policy and other related issues were barred by principles ofres judicata and it was not open for Defendant No2 and Defendant Nos. 3 to 10 toraise these issues in this suit.

CONVERSION

28. In the present case, since the suit is filed alleging conversion of the suit bonds byDefendant No.2 and Defendant Nos. 3 to 10, it would be necessary to consider



definition of conversion. In the Commentary on the Law of Torts by Salmond &Hueuston, 20th Edition published by Sweet & Maxwell, the conversion has beendefined in Chapter 6.4 page 101 as under-

"A conversion is an act, or complex series of acts, of wilfulinterference, without lawful justification, with any chattel in a mannerinconsistent with the right of This Order is modified/corrected bySpeaking to Minutes Order another, whereby that other is deprived ofthe 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 whichso seriously interferes with the right of another to control it that the intermeddlermay justly be required to pay its full value."

Winfield and Jolowicz on Tort, 13th Edition at page 470 have observed in respect ofconversion as under:-

"Conversion at common law may be committed in so many differentways that any comprehensive definition is probably impossible but theconnecting thread running through the cases seems to be that thewrong is committed by a dealing with the goods of a person whichconstitutes an unjustifiable denial of his rights in them or the assertionof rights inconsistent therewith."

This Order is modified/corrected by Speaking to Minutes Order In ButterworthsCommon Law Seriries on the Law of Tort, conversion is defined at page 536 at 11.5 asunder:-

"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 anunfortunate expression because in many cases where conversion isbrought 'no conversion in one sense has taken place; the goods are inthe same state as they always were; there is no actual conversion in thesense in which a person, not a lawyer, might possibly understand theterm'."

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 cases on conversion, most of which turn upon



their particular facts. It is, therefore, difficult to generalise to any great degree, butfor explanatory purposes a This Order is modified/corrected by Speaking to MinutesOrder number of classifications have been adopted. It should be noted, however, thatthe categories are not mutually exclusive, the question always being whether theconduct of the defendant is inconsistent with the right to immediate possession of theclaimant."

29. From the above definitions, therefore, it is clear that the conversion is a commonlaw tort and the conversion is voluntary act by one person inconsistent withownership rights of another. It is a tort of strict liability.

30. In the present case, according to Plaintiffs, the suit bonds belonged to thePlaintiffs and they were to be delivered to ANZ. However, BR was given to ANZ andthe original bonds were converted by Hiten Dalal and were given by him toDefendant No.3 - CMF and, therefore, though the Plaintiffs were entitled topossession 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 CMFwas not the owner and the Plaintiffs had already purchased the same bonds fromABFSL.


31. Before I record my findings on issues between the parties, it will be necessary tobriefly take into consideration the evidence of Plaintiffs.

32. PW1 - R. Kalyanraman has been inter alia examined by Plaintiffs to bring onrecord the sale of the suit bonds by ABFSL to Plaintiffs on 26/02/1992 forconsideration and the acknowledgment by the ex-employee of ABFSL forconsideration received by ABFSL for the said transaction and the various documentswhich were executed viz cost memo etc for the purpose of proving the saidtransaction. Secondly for proving that on 10/04/1992 ABFSL had not purchased thesuit bonds from Plaintiffs and that, in fact, neither they had paid any amount nordelivered any securities and thirdly for the purpose of bringing on record the WrittenStatement of ABFSL in earlier suit.

33. Plaintiffs have also examined PW2 - Mr. R. Kannan, PW3 - Mr. N. Srinivasan andPW4 - Mr. David Loveless.


34. PW2 - Mr. R. Kannan has been examined to prove that there was a shortfall in theSecurities in the Bank's portfolio and that various meetings were held in connectionwith the Securities Scam and HPD had admitted that the losses were caused by himto the Bank to the tune of Rs 1,258 crores as also to bring on record various letters



written by HPD to SCB and that large number of Securities had been purchasedthrough HPD but they were not backed by Bank Receipts or physical securities andalso that they had noticed that original LOAs were not traceable in SCB's records andrequest 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 hasstated that latter on he learnt that, in fact, 17% NPCL bonds had been sold to ANZGrindlays who, in turn, had sold it to ABFSL which had, thereafter, sold the bonds toFair 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 ismodified/corrected by Speaking to Minutes Order between 11/5/1992 and 5/6/1992between the various Officers of SCB, HPD and other brokers in order to sort out theshortfall in SCB's portfolio and one such meeting was held on 23/5/1992 which wasalso attended by HPD. In his evidence, he has also stated that Hiten P. Dalal in thesaid 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 haddiverted the said bonds to Canara Bank. It was further stated in para 11 of hisaffidavit of evidence that the information which was given by HPD was purelyinformal and that he would deny his conversation with SCB if they were to seekformal use of his statement. He has also stated that he made file note of the saidstatement which was brought on record. He further stated that he had a discussionwith Senior Managers of SCB but since no particulars were given by HPD, it was feltthat 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 MinutesOrder 7/11/1991 which was unsigned by him and (ii) letter dated 11/3/1996addressed by Industrial Credit Company Ltd to SCB signed by Mr. N. Srinivasan. Hewas examined to prove that the said documents were prepared as record of meetingwhich took place on 7/11/1992 and confirmation in respect of transactions wasmentioned in the documents. He has stated that the said memo of meeting was notsigned by him. One Mr. Sanjeev Chugh from SCB sometime in 1996 inquired fromhim as to whether copy of the minutes forwarded by Chugh to Srinivasan was in factprepared by Mr. Srinivasan and whether they reflected what had transpired at thatmeeting. He has stated that he confirmed to the said Mr. Sanjeev Chugh that thememo of the meeting reflected the correct position and Mr. Chugh asked him toconfirm the same to the Bank in writing. He had addressed a letter dated 11/3/1996to SCB, stating that due to inadvertence, he has not signed the note and confirmedthat the original of the said note reflected a true and correct statement of whattranspired on 7/11/1992.



36. PW4 - Mr. David Loveless was also an ex-employee of This Order ismodified/corrected by Speaking to Minutes Order the Plaintiffs - Bank and he hasstated the initial scope of his role after he joined Plaintiffs - Bank as Director ofSecurity and Investigations. He has deposed on a matter concerning some of thedecisions taken in one of the Bank's civil litigation viz the present suit and he hadbeen shown various documents in para 4 to refresh his memory. He has also statedthat 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 spaceof time in the High Court since it was widely assumed that Original Side, Civil SideJurisdiction was going to transfer to the City Civil Court and the Bank was advisedthat all these civil suits should be filed before 30/11/1992 so that they could be heardin the High Court at Bombay. He has also stated the circumstances under whichcertain other facts became known to the Plaintiffs on 7/11/1992 and that the Plaintiffson that day became aware of the fact that CMF claimed to have received original LOAfrom HPD and accordingly the Plaintiffs realized that the suit bonds were diverted toCMF on 27/2/1992 and that the CMF had fraudulently converted the said bonds. HeThis Order is modified/corrected by Speaking to Minutes Order has also stated as tohow, though the meeting was held on 23/5/1992, HPD had not fully cooperated withthe Plaintiffs and had refused to furnish any details regarding diversion and themanner and circumstances thereof and he has, therefore, stated that under thesecircumstances, Plaintiffs took steps to amend its Plaint and make alternative prayeragainst CMF for conversion. He has further stated that Plaintiffs learnt in the courseof hearing of Misc. Petition No. 81 of 1995 that at all material time, there was onlyone set of NPCL bonds issued by NPCL at the relevant time and, therefore, an inquirywas made with NPCL under the Right to Information Act, 2005 which confirmed thesaid fact.

37. Finally, Plaintiffs examined PW5 - Mr. R.R. Kakde who was working as CentralPublic Information Officer. He stated that pursuant to the letter written by M/sHariani & Co., he has inquired from the concerned Department and has provided theinformation by letter dated 1/6/2007. He has further stated that they had a FinanceGroup which maintains all records and from the information given by this FinanceGroup, he has conveyed the information to M/s This Order is modified/corrected bySpeaking to Minutes Order Hariani & Co., stating therein that there was only one setof 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 extensivelycross-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 witnessabout his selective memory and attempt is made to demonstrate as to how the best



evidence has not been produced by the Plaintiffs and for the purpose of putting thecase of the Defendants that the entries were sham and bogus and that actually therewas a 15% arrangement between HPD and SCB and the transactions were of HPDand not SCB and that these transactions were fictitious and, therefore, opposed topublic policy and that, in fact, there was no hole in the transaction pertaining to26/2/1992 and that the Plaintiffs had not purchased the bonds from ABFSL and weretherefore not the owners since the relevant This Order is modified/corrected bySpeaking 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 byABFSL and how non-production of the reverse side of the BR was fatal to thePlaintiffs' case and, lastly, on the point of limitation also, PW2, PW3 and PW4 havebeen cross-examined at length. Since the issue of 15% arrangement and thetransactions being fictitious and therefore opposed to public policy and other relatedissues have been held by me as barred by principles of res judicata including the issueNo.3 between the SCB and HPD, the cross-examination on that point including thequestion in respect of the report given by Janakiraman Committee is not relevant forthe purpose of deciding the said issue. The cross-examination on the point oflimitation has been considered wherever it is necessary. Since most of these issueshave been held to be barred by res judicata by the Apex Court in the appeal fromjudgment 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 cross-

examination on these points does not arise. Therefore, I have not referred to thecross-examination by the Counsel This Order is modified/corrected by Speaking toMinutes Order for Defendant Nos. 3 to 10 at great length since it is not relevant forthe purpose of deciding the issue of res judicata.

I have considered the evidence on each issue and the arguments and counterarguments 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 bylimitation?

ISSUE NO.2 BETWEEN SCB and HPD:

2. Whether the suit is barred by limitation as against Defendant No.2as alleged in para 2 of the Written Statement of Defendant No. 2?

40. Shri Ram Jethmalani, the learned Senior Counsel appearing on behalf ofPlaintiffs has urged that the period of limitation started running against them from



07/11/1992. He submitted that, on this date, a meeting took place in the Office ofCMF and it was attended by CBI Officers. CMF was This Order is modified/correctedby 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 Ramrajinformed the SCB that CMF had acquired suit bonds from HPD on 27/02/1992. It issubmitted that this was a date on which the Plaintiffs had acquired sufficient degreeof credibility regarding the person in whose possession the letter of credit had passedand who was the person who could be sued. He submitted that Article 91 of theLimitation Act, 1963 would govern the question of limitation in the present suit. Hesubmitted that the word "learns" in Article 91(a) had been construed by variousjudgments of the Apex Court, High Courts and the Supreme Court to mean certainknowledge and not merely suspicion, surmise or conjecture. He relied upon thejudgments 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 viz18/3/1992, 10/04/1992, 20/05/1992, 23/05/1992 and 20/06/1992 could notpossibly 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 Speakingto Minutes Order reasonably be argued that Plaintiffs' knowledge was adequate andas 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 WrittenStatement that the claim against Defendant Nos. 3 to 10 was barred by limitation, theearlier date prior to 07/11/1992 was not disclosed or alleged as the starting point oflimitation. It is, therefore, submitted that burden of proving this fact was on thedefendants. It is further urged that no suggestion was made to the three witnessesexamined by SCB in cross-examination that SCB had acquired credible informationand knowledge on an earlier date on the basis of which they could have reasonablysued CMF. Further, no witnesses were examined by Defendants. The learned SeniorCounsel for Plaintiffs relied upon the judgment of the Calcutta High Court in AEGCarapiet 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 AIR2002 SC 3652 This Order is modified/corrected by Speaking to Minutes Order SeniorCounsel appearing on behalf of Defendant Nos. 3 to 10 submitted firstly that Article91 of the Limitation Act was not applicable to the facts of the present case. Hesubmitted that (a) Article 91 was applicable to the specific movable property (b) thatbonds are not movable property but are "chose in action" and (c) "Chose in action" isnot a thing capable of being produced. It is then submitted that the argument of thePlaintiffs in this case is contrary to the argument of the Plaintiffs before the SupremeCourt in appeal from Judgment in Suit No.11 of 1996 and, therefore, the finding givenby the Apex Court also is binding on the Plaintiffs. It is also submitted that thereliance placed by Plaintiffs on the judgment of the Apex Court in Shivanarayan



Laxminarayan Joshi & Ors vs. State of Maharashtra & Ors 1 and on the judgment inManchersha Ardeshir Devierwala vs. Ismail Ibrahim Patel & Ors2 cannot be placed incivil suits to decide the nature of suit bonds since the observation made by the ApexCourt was in respect of provisions of section 403 of the Indian Penal Code. Reliancewas 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 bySpeaking to Minutes Order Gokal Chand and another1. It is then urged that assumingthat provisions of Article 91 apply to the facts of the said case, the word "learn" had tobe construed literally. It is submitted that the expression such as subjective, primary,derivative knowledge etc. was not used in Article 91 and, therefore, mere firstinformation was enough for starting point of limitation. It is further urged that on thefollowing 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 theword "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 Article123 and, therefore, if the Legislature intended to use the word "knowledge" in Article91, 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 onthe judgment of the Apex Court in The Member, Board of Revenue vs. Arthur PaulBenthall. 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 ThisOrder is modified/corrected by Speaking to Minutes Order was placed on thejudgment of the Privy Council reported in Lewis Pugh Evans Pugh vs. Ashutosh Senand others1. It is then urged that the fraud was not a relevant ingredient for an actionin conversion. In support of this submission, reliance was placed on the judgment inChampalal vs. Ramchander and another2, and on the judgment in Dhian SinghSobha Singh and another vs. Union of India3. It is submitted that ratio of thejudgment of Privy Council ig in Rahimbhoy Hubibbhoy vs. Turner4 and that of theJudgment in K.M Talyarkhan vs. Gangadas Dwarkadas & others5 on which thereliance is placed by the Plaintiffs, is not applicable to the facts of the present casesince those cases were based on fraud under section 18 of the then Limitation Actwhich is now section 17. It is further urged that the Plaintiffs' case was not based onfraud or on section 17 of the Limitation Act. It is then urged that on the basis of theevidence led by Plaintiffs itself the Plaintiffs had first learnt on the following datesviz. 18/03/1992, 10/04/1992, 23/05/1992 and on 29/05/1992. On the question ofonus of 1 AIR 1929 Privy Council 69 2 AIR 1976 Rajasthan 75 para 9 3 AIR 1958 SC274 para 15.

4 1892 (20) IA PC 1 5 ILR 1935 (60) Bom 848 This Order is modified/corrected bySpeaking to Minutes Order proof it is urged that burden was on the Plaintiffs to pleadexemption from limitation under Order VII Rule 6 and Plaintiffs had to prove itspleading in para 7E. Lastly, it is urged that various circumstances indicated that, infact, the alleged meeting did not take place on 07/11/1992 and the said meeting was



imaginary meeting created to bring the claim against CMF in limitation. It is urgedthat the evidence of Plaintiffs' witness Sriniwasan (P.W.3) is not reliable and noveracity could be placed on the unsigned minutes of the alleged meeting dated07/11/1992 and lastly it is submitted that if Plaintiffs had said knowledge aboutconversion on 07/11/1992, yet, when the suit was filed on 27/11/1992, no claim wasmade against the HPD and CMF. It is, therefore, submitted that setting up of07/11/1992 as a date for running of time for limitation is an after thought to bringtime barred claim within limitation.

43. For the purpose of deciding issue of limitation, it will be necessary first toascertain whether Article 91 of the Limitation Act applies to the facts of the presentcase.

Secondly , i t wi l l have to be ascertained what is the true This Order ismodified/corrected by Speaking to Minutes Order meaning and import of the word"first learns". Thirdly, it will have to be ascertained whether limitation had startedrunning from 07/011/1992 or on the earlier dates as alleged by Defendant Nos. 3 to10. Before I consider the aforesaid aspects, one important question regarding burdenof proof has to be resolved. It is now well settled by catena of judgments that theinitial burden of establishing that the suit is within limitation is on the Plaintiff and ifhe has alleged that the period of limitation, particularly in a case which falls withinthe parameters of Article 91, starts running from a particular date and establishesthis fact then the burden shifts on the Defendant to prove that the period oflimitation had started running from an earlier date. The first judgment on this pointis in the case of K.M. Talyarkhan vs. Gangadas Dwarkadas & Ors1 It has been fullyapproved by the Supreme Court by its judgment in K.S. Nanji & Co. vs. JatashankarDossa & Ors2. In para 12 of the said judgment the Apex Court has observed asunder:-

"12. Let us now consider some of the decisions cited at the Bar. ADivision Bench of the Patna High Court in Sundari 1 ILR 60 Bombay848 at page 860.

2 AIR 1961 SC 1474 This Order is modified/corrected by Speaking to Minutes OrderShivaji v. Secretary of State of Inida1 held that "when a defendant in an action basedon tort seeks to show that the suit is not maintainable by reason of the expiry of thestatutory period of limitation, it is upon him to prove the necessary facts". There thesuit was for conversion of property, and the learned Judges applied Article 48 of theLimitation Act to the said suit. After noticing the words in the last column of thearticle, 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 personwho has the right to possession first learns of the act of conversion."



Adverting to the burden of proof, the learned Judges observed:

"There is nothing in the pleadings which would show precisely at what period theplaintiff or the plaintiff's agent, which is the same thing, became aware of the sale andits wrongfulness, that is to say, became aware of the fact of conversion. Thedefendant was unable to provide us with any materials to fix that date and thereforehis plea of limitation fails altogether, because he is unable to show a date outside theperiod of three years which would entitle him to succeed."

With great respect to the learned Judges, we hold that this case had not beencorrectly 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 Orderplaintiff who asserts a right, and it may be, having regard to the circumstances ofeach case, that the onus of proof may shift to the defendant. But to say that no duty iscast upon the plaintiff even to allege the date when they had knowledge of thedefendant's possession of the converted property and that the entire burden is on thedefendant is contrary to the tenor of the article in the Limitation Act and also to therules of evidence. A Division Bench of the Calcutta High Court in Kalyani PrasadSingh v. Borrea Coal Co. Ltd.1 did not accept the view of the Patna High Court, butfollowed 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 LimitationAct, 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 ofthe issue..... We are of opinion that the onus is upon the plaintiff in these suits toprove 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 suitthat the property which he is seeking to recover was in the possession of thedefendant. 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 MinutesOrder to prove that he obtained the knowledge of the defendant's possession of theproperty within three years of the suit, and that is all. If he proves this, then tosucceed in the plea of limitation the defendant has to prove that the fact that theproperty was in his possession became known to the Plaintiff more than three yearsprior to the suit."

We accept the said observations as representing the correct legal position on thesubject."



From the ratio of the aforesaid judgments it is thus obvious that initial burden is onthe Plaintiffs to prove that the period of limitation started running from 07/11/1992and 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 returnof Plaintiff BR bearing No.1939 favouring ANZGB by delivering toANZGB the original Letter of Allotment in respect of the said bondsfrom 3rd Defendant. .... Had 3rd Defendant, delivered to Plaintiffagainst the transaction of 17th March, 1992, the original letter ofallotment, which was in possession of 3rd Defendant, Plaintiff wouldhave immediately realized the fraud that had been played on thePlaintiff."

This Order is modified/corrected by Speaking to Minutes Order Once this fact isproved by the Plaintiffs then the Defendants would have to prove from the evidenceon record that, in fact, the limitation did not start running from 07/11/1992 but onthe 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 tobriefly deal with the judgment on which reliance is placed by the Plaintiffs viz thejudgment of the Privy Council in Rahimbhoy Hubibbhoy vs. Turner1 (hereinafterreferred to as "Rahimbhoy Hubibbhoy") in support of the contention that the word"first learns" means knowledge which is not mere suspicion but knowledge andcertain information. It is urged that the principle laid down by the Privy Council inthis case also applies to the dishonest conversion by bailee and to any other personbenefiting by such dishonest conduct. In my view, ratio of the judgment on the saidaspect 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 down1 1892(20) IA PC 1 This Order is modified/corrected by Speaking to Minutes Orderunder section 18 of the old Limitation Act which, after an amendment, now relates tosection 17 of the Limitation Act and in this context it was held that by virtue ofsection 18 of the Limitation Act right of person who was defrauded was extended bythe said section for the period when the Plaintiff had been kept in dark by means offraud from the knowledge of such right or title or where any document which isnecessary to establish such right had been fraudulently concealed from him. In thiscase, a suit was brought by the Official Assignee against Rahimbhoy Hubibbhoy forrecovery of the property of his insolvent brother, which was alleged to have beenprivately transferred to him in fraud of the creditors under the insolvency. In thiscontext, it was observed by the Privy Council as under:

"It is not disputed that the transfer was voluntary one, that it cannotbe maintained, and that if this action had been brought in 1867 theassets must have been recovered. But it is said that as the action wasnot brought till 1887, it is barred by time. The answer is that the



transfer was not only a voluntary one and bad against the creditors,but that it was committed in pursuance of a fraud, and was concealedfrom the creditors, that i t was a fraud which This Order ismodified/corrected by Speaking to Minutes Order prevented theassignee from having knowledge of his right to recover the assets, andtherefore 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 shallbe computed from the time when the fraud first became known to theperson injuriously affected thereby.

The assignee is positive that he did not know anything about this frauduntil the year 1885, when he learnt it in the course of a suit broughtagainst Ahmedbhoy to recover a number of other i tems, inconjunction with this one, belonging to the insolvent's estate.

Their Lordships consider that when a man has committed a fraud andhas got property thereby, it is for him to show that the person injuredby his fraud and suing to recover the property has had clear anddefinite knowledge of those facts which constitute the fraud, at a timewhich is too remote to allow him to bring the suit. That is attempted inthe present case. But their Lordships consider, and in this they agreewith both the Courts below, that all that the Appellant Rahimbhoy hasdone is to show that some clues and hints reached the assignee in theyear 1881, which perhaps vigorously and acutely followed up, mighthave led to complete knowledge of the fraud, but that there was nodisclosure made which informed the mind of the assignee that theinsolvent's estate had been defrauded by Rahimbhoy of these assets inthe year 1867."

45. It is evident, therefore, that the observation made by This Order ismodified/corrected by Speaking to Minutes Order the Privy Council about completeknowledge is in respect of the fraud which prevented the official assignee from havingknowledge of his right to recover the assets and, therefore, the said observation hasbeen made in the light of the provisions of section 18 of the Limitation Act (XV of1877). In my humble view, the said observation cannot be of any assistance to thePlaintiffs for the purpose of interpreting the word "learn" which is used in Article 91of the Limitation Act, 1963. Admittedly, fraud had not been pleaded by the Plaintiffsin this suit nor any evidence has been led on this aspect and consequently it has notbeen argued. It will, therefore, not be possible to derive the said analogy which hasbeen used by the Privy Council in the context of section 18 of the Limitation Act (XVof 1877) to a case of conversion as pleaded by the Plaintiffs in this case. For the samereasons the other judgments in respect of fraud will not apply to the facts of thepresent case.



46. It will have to be seen now as to whether Article 91 of the Limitation Act appliesin this case. Article 91 reads as under:-

This Order is modified/corrected by Speaking to Minutes Order Description of suitPeriod 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 anyspecific movable Three years property first learns property lost, or in whosepossession acquired by theft, or it is.

dishonest misappropriation or conversion.

(b) for wrongfully taking or injuring or When the property is wrongfully detainingany other specific movable property ig Three years wrongfully taken or injured, orwhen the detainer's possession becomes unlawful.

47. It is the case of Plaintiffs that their case falls under Article 91(a) and that thebonds in question are a specific movable property. It is secondly argued that the word"dishonest" which is used to describe misappropriation would also apply toconversion and it is, therefore, argued that the ratio of the judgment in RahimbhoyHubibbhoy would also apply to the facts of this case. In my view, taking intoconsideration the averments in the plaint, the provisions of Article 91 are applicablein this case. Taking into consideration the provisions of section 3(36) of the GeneralClauses Act, even incorporeal property would fall within the This Order ismodified/corrected by Speaking to Minutes Order definition of the movable property.Movable property has been defined under General Clauses Act, 1897 under section3(36) as under:-

"movable property, shall mean property of every description, exceptimmovable property;"

Immovable property has been defined under General Clauses Act, 1897 under section3(26) as under:-

"Immovable property shall include land, benefits to arise out of land,and things attached to the earth, or permanently fastened to anythingattached to the earth."

Since every thing that is not immovable is movable, incorporeal property is also amovable property under the said Act. Therefore, submission of the learned SeniorCounsel 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



therefore not capable of being possessed, cannot be accepted.


48. Secondly, it is further urged by Shri Rohit Kapadia, the learned Senior Counselappearing on behalf of Defendant Nos. 3 to 10 that in view of arguments of SCB inSuit No.11 of 1996 and consequent decision of the Apex Court that bonds are "chosein action", the said judgment is binding on the Plaintiffs. This submission also, in myview, cannot be accepted. It must be remembered that SCB's argument in that suitwas in respect of the word "thing" in section 110 of the Evidence Act and, in thatcontext, 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 thatthe 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 thePlaintiffs in respect of the facts of the present case. Therefore, in my view the suitbonds are movable property which is capable of being possessed.

49. Once it is held that the bonds are specific movable property which is capable ofbeing possessed, the second question which falls for consideration is whetherconversion This Order is modified/corrected by Speaking to Minutes Order could betreated as dishonest conversion. In my view, on plain reading of the said Article, theword "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 describemisappropriation, in my view, cannot be used to describe conversion either as anhonest conversion or dishonest conversion. The Privy Council in Lewis Pugh EvansPugh vs. Ashutosh Sen and others1 while considering this question in the context ofArticle 48 of the Limitation Act 1908 which is pari materia with Article 91 of 1963 Acthas observed on page 71 as under:-

"......Art.48 alone refers to conversion, and their lordships can see no ground forsplitting 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 Courtof law is bound to do, the meaning is reasonably clear...."

From the above observations, therefore, it is clear that the word "wrongful" isattached to misappropriation and not to conversion.

1 AIR 1929 Privy Council 69 This Order is modified/corrected by Speaking toMinutes Order

50. Similarly, tort of conversion cannot be split into honest conversion and dishonestconversion since tort of conversion is a strict liability. Rajasthan High Court has



followed the judgment of Privy Council in its judgment in Champalal vs. Ramchanderand another1 Therefore, so having held, the next question which needs to be decidedis regarding meaning of the word "first learns". Mr. Jethmalani, the learned SeniorCounsel appearing on behalf of Plaintiffs has urged that taking into considerationdefinition of the word "learn" in the Oxford Dictionary to mean to acquire knowledgeof or skill in (something) through study or experience or by being taught. He hasurged that the word "learn"must be understood in the context of acquiring knowledgeand, therefore, in the ordinary dictionary sense the word "learn" is equivalent to theknowledge. In support of the said contention, Shri Jethmalani, the learned SeniorCounsel 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 inAllareddi 1 AIR 1976 Rajasthan 75 para 9 2 ILR 60 Bombay 848 This Order ismodified/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 onbehalf of Defendant Nos. 3 to 10 has urged that the word "learn" appearing in Article91 of the Act cannot be equated with the complete knowledge or knowledge as arguedby the Plaintiffs. He has further submitted that the Limitation Act, 1963 has used theword "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" inArticle 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 hissubmission he relied upon the judgment of the Apex Court in The Member, Board ofRevenue vs. Arthur Paul Benthall2

52. It is true that in Arthur Paul Benthall (supra) it has been observed by the ApexCourt that when two words of different import are used in a statute in twoconsecutive provisions, it would be difficult to maintain that they are used in thesame 1 (1966) 1 Andhra Weekly Reporter 218 2 AIR 1956 SC 35 This Order ismodified/corrected by Speaking to Minutes Order sense, yet it has to be seen that theword "learn" has an element of knowledge in the sense that when you say that "onelearns" it meas that one gains knowledge about something and though in theLimitation Act, the word "knowledge" is found in Article 123 and the word "known" isused 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 absurdconsequences.

A negotiable instrument can pass through various hands and unless there is concreteknowledge about the person who is in possession of the specific movable property, itwill 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 learnedSenior Counsel appearing on behalf of the Plaintiffs will have to be accepted that theword "first learns" would indicate clear and definite knowledge.



The Bombay High Court in K.M. Talyarkhan (supra) has also interpreted Article 48which is pari materia with Article 91 in a similar manner and it has observed asunder:-

"The plain meaning of Article 48 is that time begins to run against theowner of This Order is modified/corrected by Speaking to MinutesOrder the property lost, from the time when he first discovered that itis in the possession of the Defendant. The words "whose possession"in that Article, mean, the possession of some definite person who canbe identified and against whom effective relief for restoration of theproperty in question can be obtained. In such a case the onus is in thefirst place on the Plaintiff to prove that he first learnt it within threeyears of the suit that the property which he is seeking to recover was inpossession of the Defendant. If he proves this, then to succeed on theplea of limitation the Defendant has to prove that the fact that theproperty was in his possession became known to the Plaintiff morethan three years prior to the suit."

Same view has been taken by the Madras High Court in Seshappier vs. SubramaniaChettiar & Ors.1 wherein it is held that the time began to run "when the Plaintiff cameto know in whose possession" the concerned article was. Same view has been takenby 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 theDefendant's possession within three years prior to suit which is thesame thing as saying that they had 1 ILR 40 Madras 678 2 (1966) 1Andhra Weekly Reporter 218 This Order is modified/corrected bySpeaking to Minutes Order knowledge that the defendants tookpossession within three years prior to the suit. The question ofknowledge is one of fact and that can be found on the pleadings. If itcan be so found the question of taking evidence may not arise."

From the aforesaid three judgments, it is abundantly clear that all the High Courtshave held that the word "learn"

implies knowledge regarding possession by some definite person. The contention ofShri Rohit Kapadia, the learned Senior Counsel appearing on behalf of DefendantNos. 3 to 10 that the word "first learns" cannot be equated with knowledge of adefinite person, therefore, is unacceptable.

53. Having so held, the next crucial question which is required to be decided iswhether the Plaintiffs prove that they first learnt or had knowledge about possessionof the bonds with CMF for the first time on 07/11/1992 and if it is held that the



Plaintiffs have proved this fact then whether on the basis of evidence which is onrecord, Defendants prove that, in fact, the Plaintiffs had knowledge about possessionof the bonds in question prior to 07/11/1992.


54. It has, therefore, to be seen as to whether the Plaintiffs have established that theyfirst 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 istherefore necessary first to see the chronology of events. Plaintiffs initially filed a suitonly 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 amendmentof the plaint in which they gave up their claim against Defendant No.1 and set up aclaim against Defendant Nos. 2 to 10 i.e HPD and CMF. This amendment wasallowed in 2005. By virtue of the amendment, it is now claimed that the Plaintiffssubsequently came to know more particularly in a meeting held on 07/11/1992 thatthe bonds were unauthorizedly delivered and diverted by HPD to CMF. According tothe Plaintiffs on 07/11/1992, a meeting was held in the Office of CMF and which wasattended by Shri S.R. Ramraj representative of CMF, Kannan , Kalyanraman and theOfficers of the CBI and in the said meeting S.R. Ramraj informed the Plaintiffs thatthe bonds were diverted by HPD This Order is modified/corrected by Speaking toMinutes 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 himin March 1996 vide letter Exh.

D2-2. In para 7E of the plaint, it is averred by the Plaintiffs that on 18/3/1992 sincethe bonds were directly given to ANZ, the Plaintiffs did not realize that these were thesame bonds which belonged to the Plaintiffs and they were fraudulently not given tothe Plaintiffs by CMF because they had they done so, Plaintiffs would have realizedon 18/03/1992 itself that the bonds belonged to the Plaintiffs were sold by CMF. Inview of these pleadings, therefore, the Plaintiffs will have to establish firstly that suchmeeting did take place on 07/11/1992 and and that it was attended by S.R. Ramraj ofCMF, Kannan, Officers of CBI and Kalyanraman amongst others. Secondly, unsignednote was prepared by Kannan and, thirdly, it was confirmed subsequently by him inMarch, 1996.

55. In my view analysis of the evidence on records creates serious doubt regarding thestory of the Plaintiffs about the said meeting dated 07/11/1992. Firstly, if 07/11/1992was This Order is modified/corrected by Speaking to Minutes Order the date onwhich 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 ofthe suit itself on 27/11/1992. No explanation has been given by the Plaintiffs as tohow and why this discrepancy has arisen.



Secondly, no reference has been made about this meeting which was allegedly heldon 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 betweenPlaintiffs and NPCL or ABFSL. P.W.4 - Devid Loveless does not make any referenceabout this meeting. P.W. 2 - Kannan was in Zambia at the relevant time when he hadconfirmed about this meeting by letter Exh.D2-2. Shri Kannan in his evidence doesnot mention as to how this note was delivered to him on the basis of which he couldsend the confirmation. The evidence of P.W.2 - Kannan itself does not inspireconfidence since though he was a member of the investigation team, he does notremember anything else about the transaction of the Plaintiffs except thec i r c u m s t a n c e s u n d e r w h i c h h e h a s s i g n e d t h e l e t t e r o f T h i s O r d e r i smodified/corrected by Speaking to Minutes Order confirmation - Exh D2-2Therefore, in my view, Plaintiffs, in the first place, have not established that such ameeting, in fact, had taken place and the on

standard chartered bank vs unknown on 13 july, 2010

Documents

canara bank

nationalised bank

bombay indian inhabitant

registered office

bombay suit

minutes order

andhra bank buildings

indian kanoon http