Case: Standard Chartard Bank Vs. Andhra Bank Financial Services Ltd. &amp; Others

2. Sometime in December 1991, NPCL issued bonds of two series - 9% tax free bonds and 17% taxable bonds. These bonds were permitted by the Controller of Capital Issues to be sold to banks and financial institutions for private placement. On 24.2.1992 Andhra Bank Financial Services Ltd. (hereinafter referred to as "ABFSL") made an offer to NPCL for placing Rs. 100 crores - Rs. 50 crores in 9% tax free bonds and Rs. 50 crores in 17% taxable bonds. On 26.2.1992 NPCL wrote to ABFSL confirming the allotment of the 9% tax free bonds and the 17% taxable bonds, as requested. On 26.2.1992, NPCL issued a letter of allotment (hereinafter referred to as the "LOA") confirming the allotment of 9% tax free bonds of the nominal value of Rs. 50 crores (hereinafter referred to as the "suit bonds"). NPCL also said that intimation would be given in due course as to when the allotment letter duly discharged may be exchanged for bond certificates, and that the interest payable on the suit bonds would accrue from the date of allotment, payable on half yearly basis. On the same day ABFSL sold the suit bonds to SCB and in connection with the said sale issued its Cost Memo No. 057 dated 26.2.1992 indicating the particulars of the suit bonds and the cost at which they were being sold i.e. @ 85.05 at the total cost of Rs. 42,52,50,000/-. Against the receipt of the said Cost Memo No. 057 from ABFSL, SCB issued a Pay Order No. 246408 dated 26.2.1992 for the sum of Rs. 42,52,50,000/-. ABFSL, in turn, issued a Bankers Receipt (hereinafter referred to as "BR") No. 23728 acknowledging receipt of the sum of Rs. 42,52,50,000/- from SCB towards the cost of the suit bonds and undertook to deliver the suit bonds of the value of Rs. 50 crores, when ready, in exchange for the said BR duly discharged, and assured that, in the meantime, the suit bonds would be held on account of SCB. On 26/27.2.1992, ABFSL addressed a letter to SCB requiring SCB to hand over its BR No. 23728 in lieu of the original LOA in respect of the suit bonds as well as the 17% NPCL taxable bonds, which were said to have been enclosed with the said letter3. According to SCB, in April/May 1992, when the securities scam broke out, the officers of SCB made an investigation of its records and found that SCB did not have in its possession the original LOA, but only a photocopy4. On 20.5.1992, SCB wrote to NPCL alleging that though in ABFSLs letter dated 26.2.1992, it was stated that the original LOA was forwarded, SCB had found that only a photocopy of the LOA had been enclosed. A copy of ABFSLs concerned letter was also enclosed. SCB further stated that the original LOA purportedly sent by ABFSL was not available, that a note may be made in NPCLs records that the original LOA was missing and, therefore, due caution should be exercised by NPCL. SCB also requested for issue of a duplicate allotment letter on the undertaking to return the original, if received by it, and keeping NPCL indemnified against claims, if any, arising out of issue of the duplicate. On 29.5.1992, SCB requested ABFSL to confirm to NPCL the fact of having sold the suit bonds to SCB. On the same date, ABFSL addressed a letter to NPCL (with a copy endorsed to SCB), confirming having sold the suit bonds to SCB on 26.2.1992. They also confirmed that they had no objection to NPCL issuing a duplicate LOA to SCB5. On 8.6.1992 one Hiten P. Dalal (hereinafter referred to as "HPD"), who was acting as a broker in a large number of securities transactions of banks and financial institutions, was declared a notified person under the provisions of Section 3 of the Act. On 20.6.1992 SCB filed a First Information Report ("FIR") against HPD and its own employees alleging that, as a result of a conspiracy between HPD and its own employees, several securities and monies had been misappropriated by HPD6. On 14.7.1992 CMF filled up a Transfer Deed dated 13.7.1992 and lodged it along with the original LOA with NPCL seeking transfer and registration of the suit bonds in its name. On 3.8.1992, NPCL wrote to SCB that the matter with regard to issuance of duplicate LOA of the suit bonds was being considered in consultation with its solicitors. On 17.8.1992, CMF wrote to NPCL claiming that the suit bonds had been bought on 27.2.1992 from ABFSL through a broker, HPD, and that the consideration therefor had been paid by certain adjustments between itself and ABFSL. CMF claimed that it was the legitimate holder of the suit bonds as it had received them against valid consideration. On 8.9.1992, NPCL informed CMF that they had received a request for issue of a duplicate LOA pertaining to the suit bonds from SCB, which was also claiming purchase of the suit bonds from ABFSL. On 8.9.1992 by another letter, NPCL informed SCB that CMF had lodged the original LOA for registration claiming to have purchased the suit bonds from ABFSL on 27.2.1992. On 30.9.1992 NPCL asked ABFSL to confirm if it had sold the suit bonds to SCB as NPCL had received the LOA and the transfer deed in relation to the suit bonds duly endorsed by ABFSL in favour of CMF. On 30.9.1992 NPCL informed CMF that as early as on 20.5.1992 it had received a letter from SCB conveying that the suit bonds had been transferred in SCBs favour by ABFSL and enclosing a letter of ABFSL to evidence the transaction. They also referred to another letter of 29.5.1992 by ABFSL confirming that ABFSL had sold the suit bonds to SCB on 26.2.1992 and that it had no objection to issuing/transferring the LOA/bonds to SCB. On 9.10.1992 SCB wrote to NPCL stating that as the suit bonds had been issued to ABFSL, who had confirmed selling the same to SCB, the LOA from CMF may be disregarded. By another letter of 15.10.1992 from ABFSL to NPCL, ABFSL once again confirmed the selling of the suit bonds to SCB and stated that as per market practice the suit bonds had been sold with blank transfer deeds to SCB. On 6.11.1992 NPCL informed SCB that, since there was a dispute over the ownership of the suit bonds between SCB and CMF, the matter should be resolved between SCB and CMF, only after which necessary action would be taken by it7. On 27.11.1992 SCB filed Suit No. 3808/92 on the Original Side of the Bombay High Court against ABFSL, CMF and NPCL for a declaration that it was entitled to the suit bonds and for an order directing NPCL to register the suit bonds in the name of SCB and to hand over the same to SCB. A further declaration was sought that CMF had no right, title and interest in the suit bonds; in the alternative, SCB sought refund from ABFSL. The said suit came to be transferred to the Special Court on 25.9.1996 and was re- numbered as Special Court Suit No. 11 of 19968. On 27.11.1992 CMF filed a petition before the Company Law Board (hereinafter referred to as "CLB") under Section 111 of the Companies Act, 1956 seeking registration of the suit bonds in its name. The original respondents to the petition were NPCL, ABFSL and HPD. SCB was subsequently joined as a party respondent. In this petition, CMF alleged that it had purchased the suit bonds from ABFSL on 27.2.1992 through HPD, who, according to CMF, had acted as a broker/authorised agent of ABFSL in the transaction and that the payment of the price of the suit bonds to ABFSL was made by netting of the amounts of three other transactions between CMF and ABFSL made on the same day (i.e. 27.2.1992)9. On 27.2.1993 NPCL contested the petition by denying the so called transaction alleged by CMF and stating that the matter was sub judice since a suit was already filed in the Bombay High Court with regard to the alleged suit bonds. ABFSL also filed a reply to the petition denying that it had sold the suit bonds to CMF and affirming their sale to SCB on 26.2.1992. SCB in its reply to the petition pointed out that it had purchased the suit bonds from ABFSL after paying consideration and that ABFSL had also confirmed that there had been no sale or delivery of the suit bonds to CMF. SCB alleged that HPD had wrongly and fraudulently diverted the suit bonds to CMF. On 16.3.1993 the CLB made an order directing all the parties to disclose the role of HPD in the transaction10. On 6.3.1995 the petition by CMF before the CLB was transferred to the Special Court and re-numbered as Misc. Petition No. 81/95. HPD had filed no affidavit in reply to the petition when the matter was before the CLB11. On 14.6.1996, after the transfer of the petition to the Special Court, HPD filed an affidavit in reply in Misc. Petition No. 81/95 stipulating that the contents thereof and the documents referred to could not and ought not to be referred to and relied upon or used against HPD in any proceedings as he could not be compelled to be a witness against himself in any court of law, whether civil or criminal. According to HPDs version, SCB had lent the suit bonds and the 17% NPCL bonds to him on 27.2.1992; that he had agreed to return the same with interest; that on 9.5.1992 he had purchased the suit bonds from SCB and adjusted the price payable by him to SCB against a sale by him of Cantriple Units and further that, he had sold and delivered the suit bonds to CMF on 27.2.199212. On 25.6.1996, SCB replied to HPDs affidavit and denied that it had any transaction with HPD in respect of the suit bonds on 27.2.1992 and denied that the suit bonds were sold by SCB to HPD on 9.5.1992, or that it had purchased Cantriple Units from HPD. SCB also pointed out several inconsistencies and contradictions in the stand taken by HPD in his affidavit13. On 27.11.1996, the Special Court dismissed Misc. Petition No. 81/95 by holding that CMF had admitted through its counsel that it was not in a position to show that it had paid any consideration for the suit bonds to ABFSL, and, as no consideration was paid by CMF either to ABFSL or to SCB, CMF could claim no title to the suit bonds, even assuming that HPD had acted as a mercantile agent and appeared to have obtained possession of the LOA through/from SCB. In view of this, the Special Court concluded that CMF could claim no right, title and interest in the suit bonds. However, in view of the fact that SCB had already filed Suit No. 11/96, it was held that SCBs title to the suit bonds could be decided in that suit14. On 23.12.1996, CMF preferred an appeal to this Court but failed to obtain any interim relief except a direction from this Court that the Officer on Special Duty, who was in possession of the suit bonds, would not part with the suit bonds without notice to CMF and that the decision in Suit No. 11/96 would be subject to the decision in the appeal15. On 10.1.1997, HPD took out Chamber Summons 1/97 in Suit No. 11/96 for being joined as a party. The said Chamber Summons was opposed by SCB and by an order dated 20.3.1997, the Chamber Summons was dismissed by the Special Court taking the view that HPD was at liberty to adopt appropriate substantive proceedings regarding his alleged claim of having purchased the suit bonds from SCB on 9.5.199216. On 30.9.1997, SCB applied for withdrawal of the Suit against CMF. This application was allowed. However, the Special Court took the view that CMF was a necessary party to the Suit in spite of its earlier order holding that CMF could claim no right, title or interest in the suit bonds and by an order made on 30.9.1997/ 1.10.1997 the Suit was dismissed on the ground of non-joinder of CMF which was a necessary party. SCB appealed there from to this Court17. Thus, both SCB and CMF came in appeal to this Court against the orders made by the Special Court in Misc. Petition No. 81/95 as also of dismissal of Suit No. 11/96. By the judgment and order dated 21.4.1998 made in Civil Appeal No. 7 of 1997 etc., this Court allowed both the appeals filed by SCB and CMF and remitted the matter to the Special Court for being tried de novo. Accordingly, both, the Suit and the Misc. Petition came to be tried again by the Special Court. By the judgment dated 17.1.2002, Special Court Suit No. 11/96 was dismissed and Misc. Petition No. 81/95 was allowed. Being aggrieved, SCB is in appeal against both the judgments. Since the impugned judgments arise out of interconnected facts, it would be convenient to dispose of both the appeals by a common judgment18. Since the judgment in Misc. Petition No. 81/95 merely follows the judgment in Special Court Suit No. 11/96, it would be sufficient to deal with the judgment in Special Court Suit No. 11/96, calling it the impugned judgment hereinafter.

Reasoning:
26. Thus, it is clear that the appeal has been brought on the footing that SCB had fully proved its title to the suit bonds and that the Special Court had erroneously held against SCB. Looked at from any point of view, we are not satisfied that the Suit was a mere declaratory suit, it must be regarded as a title suit27. We shall now turn to the nature of the proceedings in Misc. Petition No. 81/95. This petition was presented under Section 111 of the Companies Act, 1956. Section 111(1) provides for the power of refusal by a company to register the transfer of debentures to a transferee. The transferor or the transferee has a right of appeal to the Tribunal (then, the CLB) under subsection (2) of Section 111. The nature of proceedings under Section 111 are slightly different from a title suit, although,n (7) of Section 111 gives to the Tribunal the jurisdiction to decide any question relating to the title of any person who is a party to the application, to have his name entered in or omitted from the register and also the general jurisdiction to decide any question which it is necessary or expedient to decide in connection with such an application. It has been held in M/s Ammonia Supplies Corporation (P) Ltd. v. M/s Modern Plastic Containers Pvt. Ltd. and Ors. that the jurisdiction exercised by the Company Court under Section 155 of the Companies Act, 1956 (corresponding to Section 111 of the present Act, before its amendment by Act 31 of 1988) was somewhat summary in nature and that if a seriously disputed question of title arose, the Company Court should relegate the parties to a suit, which was the more appropriate remedy for investigation and adjudication of such seriously disputed question of title.Mr. Kapadia, learned counsel for CMF, contended that as far as the petition of CMF was concerned, it merely invoked the summary remedy under Section 111 of the Companies Act. The only prayer made by CMF before the CLB was that it had purchased the suit bonds from ABFSL and, therefore, it was entitled to be registered as the owner of the suit bonds in the register of NPCL. Relying on Mannalal Khetan v. Kedar Nath Khetan and Ors. he contended that the provisions of Section 108 of the Companies Act, 1956 were mandatory and unless they were fulfilled, a registration of the transfer of the bonds could not be done. Further, he relied on the exemption granted from certain provisions of Section 108(1) in respect of bonds issued by a Government company29. Even if the petition filed under Section 111 of the Companies Act, 1956 was only for this limited relief of registering theF as the holder of the suit bonds, we cannot accept the contention of Mr. Kapadia for two reasons. In the first place, whatever might have been the limited jurisdiction of the CLB under Section 111 of the Companies Act, 1956, while entertaining the petition, the fact that the said petition was transferred to the Special Court by an order of this Court needs to be reckoned with. The order of this Court is specific and requires the trial of Special Court Suit No. 11/96 along with Misc. Petition No. 81/95. The limitation of the jurisdiction of the CLB, if any, does not apply to the Special Court, which is clothed with all the jurisdiction of a civil court. Secondly, merely by filing a petition under Section 111 of the Companies Act, 1956 and by placing reliance on Section 108 of the Companies Act, 1956 theF cannot succeed. It would have to go further and prove that it is validly a transferee of the suit bonds, if that question is put in issue. Thus, in our view, each of the two contesting parties, i.e. SCB and CMF, would have to prove their rights and show how they are entitled to the suit bonds before any relief could be granted either in the Suit or in the Misc. Petition32. These were expressly approved by this Court in the judgment. It appears to us that much of the controversy about the nature of the 15% arrangement could have been avoided if the judgment in the Canara Bank case (supra) had been kept in mind. We notice from the impugned judgment that the decision of this Court in Canara Bank (supra) was specifically brought to the notice of the Special Court, but it appears to have been brushed aside on the grounds, first, that the doctrine of res judicata would not apply as Section 13 of the Act had an overriding effect; second, the exact scope of the 15% arrangement was not determined by evidence in the previous suit; and third, that an arrangement by which banks and public financial institutions are enabled to earn a return higher than what is stipulated by the government/RBI, would cause inflation and the government would not be able to control its deficit, hence it was opposed to public policy. The Special Court said: "In the economic sense, they are not legitimate. On this point also, therefore, there is no merit in the arguments advanced on behalf of SCB."33. We are afraid that the Special Court was wrong on all the counts. On the question of res judicata, the Special Court failed to notice that the doctrine of res judicata is not merely a matter of procedure but a doctrine evolved by the courts in larger public interest. What is enacted in Section 11 of the Civil Procedure Code ("CPC") is not thed of the doctrine, but merely the statutory recognition of the doctrine, which rests on public policy. (See in this connection Daryao and Ors. v. The State of U.P. and Ors. , Guda Vijayalakshmi v. Guda Ramachandra Sekhara Sastry and Hope Plantations Ltd. v. Taluk Land Board, Peermade and Anr. ) In the previous suit to which both SCB and Canara Bank were parties, the same issue with regard to 15% arrangement with HPD was urged by CMF as ag factor, but was negatived both by the Special Court and by this Court34. This was an issue raised by CMF which was defendant no. 1 in that suit (Special Court Suit No. 13/94). The burden of proving this issue was on the defendant and the Special Court answered the issue in the negative and observed that the counsel for defendant no. 1 had admitted that there was no evidence to support this issue. Consequently, the Special Court held that the issue was answered in the negative i.e. against defendant no. 1. Since the Special Court findings were finally upheld by this Court in the judgment reported in Canara Bank (supra) and a review petition thereagainst was also dismissed, we are of the view that it is not open for this Court to again raise the issue and take a view contrary to what had already been decided in the previous suit, particularly in view of the fact that there has been no new revelatory evidence on this issue35. We are not in agreement with the view taken by the Special Court that Section 13 of the Act overrides the doctrine of res judicata. Section 13 of the Act provides: "The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law, other than this Act, or in any decree or order of any Court, tribunal or other authority". This was certainly not intended to abrogate all the established principles of law, unless they were directly in conflict with the express provisions of the Act itself. There is nothing in the Act which is inconsistent with the doctrine of res judicata, per se, as seems to have been assumed by the Special Court36. We are also unable to appreciate the thinking of the Special Court that there was something morally or economically reprehensible in the arrangement which was brought about between HPD and SCB as a result of which SCB was able to earn higher returnB. Evidence on Record:The evidence as to the nature of the 15% arrangement was SCBs replies to interrogatories in previous suits, tendered by CMF as Exhibits 5, 6, 8 and 9 as evidence in the present suit, the Janakiraman Committee Report and the JPC Report, which recognise and explain the 15% arrangement. There is nothing in all the said evidence to suggest that by entering into such a contractual transaction with HPD, HPD became the owner of the bonds. The evidence, on the other hand, clearly brings out that at all times the securities transactions would be between SCB and the, the legal relationship always being between the said two parties. In our view, therefore, the Special Court grossly erred in drawing a conclusion based on no evidence and attributing to the said arrangement a legal character, which was not proved on record. It also erred in ignoring the finding on the issue given in the previous Special Court Suit No. 13/94 as upheld by the judgment of this Court in Canara Bank (supra). The Special Court has also observed that under the 15% arrangement SCB was "maintaining brokers position". While this may be appropriate jargon in a stock exchange, what exactly is the legal implication, if any, of such an expression is unclear. We find no evidence on record to suggest that merely because of the 15% arrangement the legal ownership of the securities was transferred to HPD in any manner, since all the transactions appear to be between SCB and. This would be evident from the fact that if the counters failed to deliver the securities or failed to pay for the securities delivered, the legal action could only be between SCB and the counters with which the transaction took place and not by or against HPD37. We are unable to accept the conclusions drawn by the Special Court with regard to some of the documents produced by CMF as defendant, about which no evidence by way of explanation was led by either party38. In the absence of proper explanation, it was not open to the Special Court to make inferences or assumptions with regard to terms used in the documents, for example, SCBs securities ledger in relation to the suit bonds, which pertains to the sale and purchase of the suit bonds with different. This document as such does not contain the description portfolio, but the said appellation has been given to it by the Special Court on its own. The Special Court has observed thereupon: "Therefore, all such transactions were entered into by the bank on behalf of HPD. Therefore, they were transactions of HPD. This is amply illustrated by. A portfolio represents stock held by SCB on behalf of HPD. HPD was entitled to enter into buy transactions and sale transactions in respect of securities coming under that portfolio. The portfolio was built up by SCB by purchasing securities at the instance of HPD. This is also called as building up of position. The suit contract comes under. By the suit contract, the LoA came within the portfolio of HPD. He was allowed to deal with the LoA under the portfolio." We are afraid that this inference is not readily available ex facie from the document; nor was there any other evidence given by any witness explaining the document, suggesting it42. While it may be true that the Special Court has been given a certain amount of latitude in the matter of procedure, it surely cannot fly away from established legal principles while deciding the cases before it. As to what inference arises from a document, is always a matter of evidence unless the document is. We do not think that any of the documents placed on record during the trial were; nor were they explained by any competent witness on either side. In the absence of any such explanation, it was not open to the Special Court to come up with its own explanations and decide the fate of the Suit on the basis of its inference based on such assumed explanations. In fact, these inferences run contrary to the oral evidence given by Kalyana Raman) in relation to the transaction of 26.2.199243. The Special Court has also adversely commented on the conduct of SCB in not leading evidence to prove what the 15% arrangement was. We fail to see how a party could be called upon to lead evidence with regard to an issue which was no part of its case. The 15% arrangement was brought on record at the instance of CMF and the burden, if any, of proving its details lay on CMF. Although, a number of documents were produced on record as called for by CMF, there was no obligation on SCB to explain any of them50. The force of the words "belonging to any person notified" used inn (3) of Section 3 of the Act are wide enough to result in attachment of the property which belongs to the notified person irrespective of in whose name the property stands. The provisions of Section 13 of the Act give an overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Even assuming that the argument of Mr. Jethmalani based on Section 4(2) of The Benami Transactions (Prohibition) Act, 1988 is a plausible one, we are of the view that the combined effect of Sections 3(3) and 13 of the Act would give an overriding effect to the provisions of the Act. It is rightly urged by Mr. Kapadia, learned counsel for CMF, that, if that were not so, then the whole purpose of the Act would be defeated since the objective of the Act was to reach out and attach the property in whichever hands it was, irrespective of in whose names the property stood, as long it was property belonging to a notified person. Thus, the contention based on Section 4(2) of the Benami Transactions (Prohibition) Act, 1988 has been rightly rejected by the Special Court51. Much was said by the learned counsel for CMF about the manner in which SCB has hedged its replies. The learned counsel criticised the attempt of SCB to hide the true facts and contended that SCB kept on changing its stand from time to time. He highlighted that the stand taken by SCB in the Suit, the stand taken by it in the reply to the Petition and the stand taken by it before this Court was wholly inconsistent and, therefore, urged that the claims of SCB should fail. We think that this is a classic case of the pot calling the kettle black. When we look at the defence taken by CMF, the same criticism can be validly levied against it. CMF started by saying that it had bought the suit bonds from ABFSL. When it found that the evidence was against it, it shifted its stand and said it had bought them from HPD with HPD acting on behalf of ABFSL or SCB as the broker, or on his own behalf. We do not think that on the question of bona fides and consistency, there is anything to choose between SCB and CMF. Since both parties are tarred by the same brush, the issue will have to be resolved purely on the basis of what the legal evidence demonstratesIII. Did SCB get any title to the suit bonds:It is the case of SCB that it had the title to the suit bonds as it obtained the suit bonds under a contractual agreement by paying consideration for the suit bonds. This transaction is based on documentary evidence on record. The Cost Memo) dated 26.2.1992 issued by ABFSL evidences that the suit bonds were offered to SCB at the consideration indicated in the document. The Cost Memo indicates the details of the transactions such as the description of the bonds, the number of bonds sold, the rate at which they were sold and the total consideration payable. This is accompanied by a BR. Against this, there is a pay order dated 26.2.1992 issued by SCB in favour of ABFSL in the sum of Rs.42,52,50,000/evidencing that such consideration had been paid. The BR No. 23728 dated 26.2.1992 evidences that upon receipt of the agreed consideration, being the cost of the suit bonds sold to SCB, the BR was issued to undertake that bonds of the face value of Rs. 50 crores would be delivered when ready, in exchange for the BR duly discharged and that in the meantime the suit bonds would be held on account of SCB. The letter dated 26.2.1992 from ABFSL to SCB shows that the LOA of the suit bonds was forwarded to SCB inter alia with a request for discharging the corresponding BR No. 23728 on receipt of the LOA. The register of SCB shows that with reference to BR No. 23728, the bonds had been received, although, the word photocopies appears to have been inserted therein. It is the case of SCB that one of its employees, Mulgaonkar, had acted fraudulently by inserting this word and causing misappropriation of the suit bonds. We find that this part of the case was not part of the pleadings of SCB either in its plaint or in the written statement filed in reply to CMFs petition. There was also no reference to it at any time when evidence was led by the parties. The first time this part of the case appears is in the copy of the charge sheet filed by CBI against certain employees of SCB and HPD for several criminal offences. Mr. Jethmalani contended that since this charge sheet was produced on record at the instance of CMF, the averments in the charge sheet must be taken to have been proved before the court. Even assuming Mr. Jethmalani is right in characterising the charge sheet as a public document within the meaning of Section 35 of the Indian Evidence Act, 1872, we cannot accept all that is stated in the charge sheet as having been proved. All that we can say is that it is proved that the police had laid a charge sheet in which such allegations have been made against the accused. We need not delve further into it since the criminal proceedings against HPD and others are still pending and it will be up to the appropriate court to decide the correctness or otherwise of the charges in the chargesheet. All that can be said at this stage is that there were serious allegations that the original LOA went out of the possession of SCB by some nefarious means52. Learned counsel for CMF contended that even as on 26.2.1992 SCB had no title to the suit bonds since the suit bonds were under the 15% arrangement and that under the 15% arrangement the transaction was one merely of funding; in other words, that there was no real buyer or seller and it was mere paper work intended as a cover for lending money to HPD. We are unable to accept this argument for more than one. The documents which we have referred to above clearly evidence a transaction of sale and purchase of the suit bonds by SCB upon payment of consideration. Secondly, ABFSL, who was the other party to the transaction, has come forward and accepted the transaction unhesitatingly. There is no reason why all this evidence should be discarded by choosing the chimera of the 15% arrangement theory. We, therefore, hold that SCB validly acquired title to the suit bonds as a result of the transaction entered into between itself and ABFSL on 26.2.1992. And that the suit bonds were in fact handed over to SCB although, it is not evident as to how the suit bonds went out of the possession of SCB. Therefore, the contention of CMF that SCB never acquired title to the suit bonds cannot be accepted. Even the Special Court finds that the contract of 26.2.1992 with regard to the suit bonds had been proved by the evidence on record. However, the Special Court goes on to say that merely proving the suit contract was not sufficient because it had to be further proved that the suit bonds had been acquired by SCB, as, in its view, the mystique of the 15% arrangement made HPD the real owner of the bondsWe are, therefore, satisfied that there was transfer of the property in the suit bonds to SCB and the evidence on record is sufficient to arrive at such a conclusion. It was wholly unnecessary for SCB to go further and prove how the BR was discharged and how the LOA went out of its possession, which were the facts emphasised on behalf of CMF. Nor was it necessary for SCB to lead evidence as to how HPD had intercepted the original LOA, when and in what manner. Turning to the argument that SCB could not be permitted to make an argument inconsistent with the pleadings on record, we need to see an order dated 2.7.1997 made by the Special Court. On that day the learned counsel for SCB made a statement that he was not pressing for relief of monetary claim in terms of prayer (b) of its plaint. While settling the issues between SCB and CMF and SCB and NPCL, the learned counsel for SCB made a statement that he would not be pressing the contention that the original LOA had not been received by SCB. In view thereof, the Special Court did not permit the issue proposed to be raised by CMF on the said point. CMF proposed another issue as to whether SCB was not aware of the circumstances in which the original LOA was taken away from it. This issue was held by the Special Court to be irrelevant for the purposes of the Suit on the ground that, as the plaintiff was not pressing the contention that they have not received the original LOA; it was not necessary59. We respectfully concur with the said observations and reject the contention of Mr. Kapadia that SCB could not be permitted to rely on its changed stand. There is one minor issue with regard to the date of the letter written by ABFSL, namely, whether it was 26.2.1992 or 27.2.1992. The evidence of Kalyana Raman makes it clear that mentioning the date of the letter as 26.2.1992 was a mistake and that the actual date of the letter was 27.2.1992We think that this criticism is justified. While the Special Courts inferences are based upon its understanding of what the 15% arrangement was and its analysis of, it totally fails to give any reason as to why the evidence of a witness from AB about there being no such transaction on 9.5.1992, backed by the purchase register of AB, should be rejected. In our view, in the face of the positive evidence of AB that no such transactions were there, there was no justification for not accepting the stand of SCB that entry dated 9.5.1992 pertaining to the suit bonds was a sham entry intended to introduce the money into the books of SCB to cover a wide gap. The Janakiraman Committee Report is also clinching on this issue of the so called sale of the suit bonds on 9.5.1992 to ABFSL. Both sides have relied on the Janakiraman Committee Report, which is admitted in evidence as. In the Fourth Interim Report dated March 1993, in Paragraph 3.1(h) there is a discussion of this entry in the Report. The Janakiraman Report says:"(h) On 9.5.1992, Stanchart as per deal slip purchased units of Cantriple of face value of Rs. 45.5 crores @ Rs. 58.50 per unit from Andhra Bank for an aggregate cost of Rs. 266.18 crores. There is no record of this transaction in the books of Andhra Bank nor are there any cost memos available and no securities were received from Andhra Bank. On the same day, Stanchart as per deal slips sold PSU bonds aggregating Rs. 266.12 crores to Andhra Bank. (Refer paragraph 3.4 below). There is no record of these transactions in the books of Andhra Bank and no securities were delivered. A pay order No. 257131 for the difference of Rs. 0.06 crore was prepared but not delivered to Andhra Bank. These transactions appear to have been put through merely to cover up a gap in respect of various earlier purchase deals for which neither securities nor BRs. were available. The details of these earlier transactions are explained in paragraphs 3.3 and 3.4 below."We need not delve further into the issue as we have already stated that the issue is immaterial. It is the stand of CMF that SCB lost its title to the suit bonds as a result of sale of the suit bonds on 9.5.1992 as consideration for its purchase of Cantriple Units worth Rs. 205 crores. While answering issue no. 6, the Special Court has clearly held that purchase of the Cantriple Units on 9.5.1992 had been proved but CMF had not been able to prove that the said purchase was against sale of the suit bonds on 9.5.1992. In the face of this finding, the argument of CMF that SCB lost title because it had sold the suit bonds in lieu of which it purchased Cantriple Units, has been rejected by the Special Court itself. For these reasons, we are clearly of the view that whatever might have been the conjectures on the part of the Special Court, whatever might have been the suspicion generated on account of sham entries made by one or the other party, when it came to the crux of the issue, the Special Court has correctly answered it and negatived the case of CMF that SCB lost title of the suit bonds because the suit bonds were sold in consideration of purchase of Cantriple Units67. Thus, according to the evidence led by CMF, CMF had to pay to ABFSL on 20.11.1991 a large sum as a result of their deals which took place on 20.11.1991. Surprisingly, instead of CMF paying ABFSL the aforesaid amount, on the same day, two sums of Rs. 2,75,18,571.04 and Rs. 4,56,70,000.00 as evidenced by letter dated 20.11.1991 written by HPD to AB, came to be paid to CMF by HPD. It is evident that some of the existing documents with regard to various deals have been put together by CMF to patch up the story of consideration put forward by it. Another strange document which shakes the credibility of the story of consideration set up by CMF is the letter dated 26.2.1992 from HPD to AB instructing AB to issue a bankers cheque in favour of CMF for a sum of Rs. 3,87,46,575.35 and debit his account. The actual number of the cheque is also shown on the document as 143941 dated 27.2.1992. There is also a statement of the RBI account of HPD with AB showing the debit of the aforesaid amount to the books of HPD in AB. The Special Court relies on this letter as evidencing the netting of the transactions between CMF and HPD on 27.2.1992. Mr. Jethmalani legitimately criticised the story of consideration put forward by CMF by urging that, if the aforesaid amount of Rs. 3,87,46,575.35 was the amount after netting, which had been arrived at on 27.2.1992, it was impossible to believe that HPD had the prescience on 26.2.1992 to know the exact amount that would be arrived at after netting of transactions including the purchase of the suit bonds on 27.2.199268. Although, SCB raised this point in the arguments and pointed out that this letter belies the stand of CMF, the Special Court brushed it aside by saying that it did not find any merit in the argument and observing: "merely because letter is dated 26.2.1992 one cannot assume that HPD knew about the transactions one day prior to 27.2.1992. The remark indicating pay order number and the date of 27.2.1992 shows that the instructions were specifically given on 27.2.1992." Moreover, if we accept the finding of the Special Court that the transaction of the suit bonds between HPD and CMF on 27.2.1992 did take place, then there is no explanation for the suit bonds being sold to and purchased from other parties during the period 27.2.1992 to 9.5.1992 as shown in Exhibit-11. The pleadings of CMF on the issue of consideration appear to be most confusing and shifty. The exercise carried out by the Special Court of analysing several transactions and discharge of BRs, shows transactions of payments back and forth between CMF and HPD. The ledger folio produced by CMF in support of its stand is also hardly reliable. The ledger entry pertaining to the purchase of 13% NLC bonds discloses a very curious state of affairs. The entry pertaining to 20.11.1991 is hand written after the entry of 30.11.1991. When the witness of CMF, Nandita Rao (DW-1), was cross- examined as to how the entry of 20.11.1991 could have been written in the ledger folio after the entry of 30.11.1991, she had hardly any explanation for that except professing ignorance69. The said witness was also asked as to whether she came across any document from ABFSL in support of the transactions of 20.11.1991 on the basis of which she had prepared the vouchers and ledger entries. She admitted that she had not seen any document from ABFSL on the basis of which such entries were made. Under cross-examination, the said witness also stated that she did not remember whether any documents were received from ABFSL in support of the four general vouchers dated 27.2.1992 and she further admitted that, irrespective of whether a cheque was received or not, it was a routine practice to write "RBI cheque received from ABFSL" in the transactions with ABFSL. Considering the evidence as a whole, it appears that the initial stand taken by the learned counsel of CMF in the first round of the litigation, that there was no credible evidence on which payment of consideration by CMF could be proved, was fully justified. The attempt of CMF on picking up and putting forward some of the documents, out of the several transactions entered into by them to patch up the story of consideration, in our opinion, has miserably failed. There was no cause for being charitable to CMF by saying that they could prove only a part of the consideration, ergo, rest of the transactions must be deemed to have been proved. We are of the view that every one of the arguments put forward by SCB to impugn the story of CMF that it had paid consideration is justified and the Special Court was wrong in rejecting the arguments of SCB on this count70. We, therefore, hold that CMF has utterly failed to prove its story that it had paid consideration for purchase of the suit bonds on 27.2.1992. Conclusion: Finally, it appears that there is not much to choose between the two contending banks, namely, SCB and CMF. Both the banks have been tarred by the same brush by the Janakiraman Committee Report about fudging their accounts. However, it appears to us that the issue of the ownership of the suit bonds could not have been decided on any basis other than what the legal evidence showed. The situation is somewhat like a game of musical chairs; the one who is sitting on the chair when the music stops, wins. Similarly, the situation before us. Once we eliminate the conjectural findings, we find that all the material evidence on record shows that SCB had purchased the suit bonds from NPCL by paying good money. The original LOA for purchase of the suit bonds along with the transfer deed was handed over to SCB. As to how it went out of its possession, it appears to be the subject matter of the FIR filed by SCB. SCB alleges that, it was pilfered or misappropriated by some officer in conspiracy with HPD, but that is a matter which will be tried by an appropriate criminal court. Turning to the other side of the story, CMF claims acquisition of the suit bonds on 27.2.1992 by paying consideration for them. It is not shown as to who was the counter-party from whom the purchase was made, as CMFs stand on its counter-party keeps changing from beginning to end. The documents produced on record do not bear out the stand of CMF. In spite of exercise of our imagination, we are not able to support the conclusion that CMF had paid consideration for acquisition of the suit bonds from HPD; or that HPD became the owner of the suit bonds merely because of the existence of the 15% arrangement, the details of which were thoroughly analysed by the Janakiraman Committee Report and the Joint Parliamentary Committee Report. That such an agreement was not against public policy was clearly held by the previous judgment of this Court in Civil Appeal No. 4456/9571. In these circumstances, we are not satisfied that the evidence on record proves that HPD became the owner of the suit bonds or that CMF legitimately acquired the suit bonds from HPD or any other person by paying bona fide purchase value for them. Consequently, we must hold that CMF acquired no right, whatsoever, to the suit bonds. The suit bonds always remained the property of SCB irrespective of how they found their way into the hands of CMF