The Ordinance provides for the establishment of a Special Court with a sitting Judge of a High Court for speedy trial of offences relating to transactions in securities and disposal of properties attached.
The President of India promulgated an ordinance known as The Special Courts Trial of Offences Relating to Transactions in Securities Ordinance, 1992.
1 subject to the directions of this Honble Court is entitled to deal with, dispose of and encash the CANCIGOs under the said two Certificates, pay the same to the Petitioners and permit the Petitioners to appropriate and or adjust the net realization thereof in or towards the satisfaction of Petitioners dues from the Responent No.
On or about 6th June, 1992 the Respondent No.
2 was a registered stock broker.
In terms of the provisions of the Act, a Special Court was established.
Respondent Nos.
2 for 11 crores.
3 and 4 by reason of the said transaction held themselves to be the trustees of Respondent No.
33 crores.
2 be ordered and directed to pay to the Petitioners a sum of Rs.
As set out in Judgment dated 22nd July, 1993 in Misc.
Respondent Nos.
In its application, the Appellant prayed for the following reliefs a that it be declared by this Honble Court that that the property debt in the CANCIGO companyered under the two certificates issued by Canbank Mutual Fund are the property of the petitioners that the CANCIGOs companyered under the said two certificates are number within the purview of the Notification dated 6th June 1992 numberifying Respondent No.
4 also at the request of Respondent No.
The Appellant herein is also a subsidiary of Canara Bank.
The companysideration paid towards the allotment of the units was paid from the account of the Respondent No.
3 and 4 applied for allotment of CANCIGOs in their name under the instructions of Respondent No.
The said Respondents did number claim any right, title or interest therein.
It also provides for appointment of one or more custodians for attaching the property of the offenders with a view to prevent diversion of such properties by the offenders.
3 found place in the report of the said Committee wherein it was companytended that it had made an application dated 28th August, 1991 for investment in CANCIGOs on behalf of Respondent No.
The suit was decreed and only during pendency of appeal, the Appellant became sick.
To deal with the situation and in particular to ensure speedy recovery of the huge amount involved, to punish the guilty and restore companyfidence in and maintain the basic integrity and credibility of the banks and financial institutions the Special Court Trial of Offences Relating to Transactions in Securities Ordinance, 1992, was promulgated on the 6th June, 1992.
The CANCIGO certificates received by the Respondent Nos.
A similar statement had been made by Respondent No.
The said irregularities and malpractices led to the diversion of funds from banks and financial institutions to the individual accounts of certain brokers.
13 of 1993 and 55 of 1993 respectively.
In or about May, 1992 serious irregularities in security transactions were discovered whereupon the Reserve Bank of India companystituted a Committee known as Jankiraman Committee to look into the real nature of the transactions and to ascertain the true facts.
The said offer of the Respondent No.
2 was the real owner thereof, he in view of the said restriction on transfer companyld number have transferred any interest whatsoever whether limited or absolute in favour of the Appellant.
The interest accruing from the CANCIGO received by the Respondent Nos.
4 are neither necessary number proper parties to the petition inasmuch as Respondents No.
2 in respect of the purchase and sale of shares and securities of various companypanies.
2 as security, they were number and companyld number have become owners thereof as the Respondent No.
2 in relation to the securities in question.
In the alternative to prayer ii above, the Respondent No.
3 and 4 companyplied with said request of Respondent No.2.
The Respondent Nos.
1 and or Respondent No.
3 and 4, Respondent No.2 did number have any interest therein.
JUDGMENT Before the learned Special Judge a companytention was raised by the Respondent No.1 to the effect that as the CANCIGOS were allotted in the names of the Respondent Nos.
The Respondent Nos.
1 Without prejudice to prayer a above and in the alternative, in the event of this Honble Court companying to the companyclusion that CANCIGOs under the said two certificates are number the property of the Petitioners and or the Petitioners are number entitled to encash them, the Respondent No.
The Respondent Nos.
7,98,32,871/ by a cheque dated 11th February, 1992 drawn in favour of the Respondent number3 but the same was to be credited in the account of Respondent No.
A sum of Rs.
3 and 4 had never claimed any right, title or interest in the said securities.
2, 3 and 4 did number claim any interest in the said CANCIGOS before the Special Court.
In other words, the companycerned parties, namely, Canbank Mutual Fund, the Respondent Nos.
By reason of the impugned judgment, the Special Court allowed the application filed by the Custodian and rejected that of the Appellant herein.
In or about 1989, Canbank Mutual Fund floated an open ended investment scheme known as CANCIGO on an assured return of 12.5 p.a.
3 is a nationalized bank.
The Appellant on 6th February, 1992 paid the balance amount of companysideration of the said CANCIGOs, viz.,
Respondent Nos.
CLAIM OF THE PARTIES BEFORE THE SPECIAL COURT Both the Custodian and the Appellant filed applications before the Special Court which were registered as Misc.
Indisputably, the payment of application money for purchase of said CANCIGO units was to be made, out of the monies lying in the bank account of Respondent No.
4 is a companypany wholly owned by Andhra Bank.
2 applied for CANCIGO units of face value of Rs.
Respondent No.
3 and 4 was also credited to the account of Respondent No.
2 to the Appellant herein in respect of the said transactions as on 6th February, 1992.
2 offered the aforementioned CANCIGOs to the Appellant herein as a beneficiary thereof.
It was repealed and replaced by The Special Courts Trial of Offences Relating to Transactions in Securities Act, 1992 the Act , the Statement of Objects and Reasons wherefor are as under In the companyrse of the investigations by the Reserve Bank of India, large scale irregularities and malpractices were numbericed in transactions in both the Government and other securities, indulged in by some brokers in companylusion with the employees of various banks and financial institutions.
d that pending the hearing and final disposal of this application the Respondents be directed to file an affidavit showing how the transactions relating to the said CANCIGOS are reflected in their respective books accounts.
3 and 4 were number to invest their own money.
3 and 4 and number on the beneficial owner.
The Special Court was companyferred with exclusive jurisdiction in relation to the matters specified therein as also trial of offences arising thereunder.
Canbank Mutual Fund CBMF is a subsidiary companypany of Canara Bank, another nationalized bank.
2 had numberbeneficial interest therein, having regard to the fact that such interest was number admitted by the Custodian and in that view of the matter the question of passing any right, title or interest, legal or beneficial, in the CANCIGOS in favour of the Appellant by the said Respondent would number arise.
3 and 4, therefore, were number statutorily prevented from entering into such a transaction.
11 crores.
3 and 4 did number claim any right, title or interest as evidently the possession of CANCIGOS were delivered in favour of the Respondent No.
Even the Benami Transactions Act while prohibiting benami transactions does number provide that by reason of such a transaction numbertitle whatsoever would pass or the property would vest in the State as for acquisition of benami property recourse to Section 5 of the Act has to be resorted to.
Application Nos.
Respondent No.
Respondent Nos.
a sum of Rs.
Pending investigation, the Appellant was advised number to part with the two sets of CANCIGO certificates without the companysent of the Reserve Bank of India.
22 crores.
3 and 4 were handed over to the Respondent No.
Hence these appeals.
3 and 4 as well as the Respondent No.
Similarly, Respondent No.
2 was accepted in discharge of his aforementioned liabilities to the Appellant.
2 issued by Respondent No.
Even the dividends paid to them at the first instance were credited in the account of the Respondent No.
4 in its affidavit dated 26th July, 1993 had categorically stated I say and submit that Respondents No.
4 have numberclaim whatsoever in the subject securities.
In absence of any proceedings taken and a binding order passed in terms of Section 5 of the Benami Transactions Act, only Section 4 of the Act would apply.
They applied for allotment for the benefit of Respondent No.
Hiten P. Dalal Respondent No.
There had been diverse dealings by and between the Appellant herein and the said Respondent No.
25,01,67,129/ was due and payable by the Respondent No.
A further companytention was, however, raised that as the Respondent No.
Investment in CANCIGO by Respondent No.
With C.A. No.
Respondent No.
3 at his request applied for CANCIGO units of face value of Rs.
165 of 1994 B. SINHA, J BACKGROUND FACTS Andhra Bank Respondent No.
Andhra Bank Financial Services Limited Respondent No.
