R. Banumathi JUDGMENT
V. Gopala Gowda, J.
1. The Securities Scam that shook the Bombay Stock Exchange in 1992 took place 23 years ago, yet the Banks and Financial Institutions that were impacted as a result of the scam continue to litigate to recover their rightful damages. The present appeals filed Under Section 10 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 arise out of a transaction which occurred as a part of the same scam, which have been filed against the impugned judgment and order dated 13.07.2010, as modified by the order dated 07.10.2010 in Suit No. 6 of 1994, passed by the Special Court, Bombay, constituted under the above Act.
The relevant facts which are required for us to appreciate the rival legal contentions are stated in brief hereunder:
2. The National Power Corporation Limited (hereinafter "NPCL") issued bonds of two series in December, 1991. These were the 9% tax-free bonds and 17% taxable bonds. On 26.02.1992, the said bonds were allotted by NPCL to the Andhra Bank Financial Services Limited (hereinafter "ABFSL"), Respondent No. 1 herein. On the same day, ABFSL sold the 17% taxable bonds of the face value of Rs. 50 crores to the Appellant-Standard Chartered Bank (hereinafter "SCB"). The total amount payable to ABFSL was Rs. 48,02,50,000/- which was paid by way of Pay Order on the same day. A Banker's Receipt No. 23727 was issued to the Appellant by the ABFSL acknowledging the said payment. The receipt also stated that the delivery of the bonds would be done later.
3. On 26.02.1992, SCB sold 17% bonds of the face value of Rs. 50 crores to ANZ Grindlays Bank (hereinafter "ANZ"). SCB issued a Bank Receipt No. 1939 to ANZ in lieu of the actual possession of the bonds. On 27.02.1992, ABFSL forwarded the original letter of allotment to SCB and sought the return of the Banker's Receipt No. 23727. On the same date, SCB returned the Banker's Receipt No. 23727 to ABFSL. SCB states that as against the return of the said Bank Receipt, it only received a photocopy of the original letter of allotment. On 27.02.1992, Hiten P. Dalal, a broker who was acting in a large number of securities transactions of banks and financial institutions obtained the possession of the said original letter of allotment and delivered it to Canara Bank Mutual Fund (hereinafter "CMF"). On 17.03.1992, CMF sold the 17% NPCL bonds of the face value of Rs. 50 crores to SCB. CMF issued a Receipt No. 2767 to SCB Bank in lieu of the original letter of allotment. According to SCB, when the Securities Scam came to limelight in May, 1992, the officers of SCB conducted an investigation of its records and found that SCB did not possess the original letter of allotment but had only its photocopy with it. On 09.10.1992, SCB wrote a letter to NPCL stating that as the suit bonds had been issued to ABFSL, which had further confirmed that the same has been sold to SCB and therefore, the letter of allotment from CMF may be disregarded. NPCL informed SCB on 06.11.1992 that since there was a dispute of ownershi........