2013 (7) TMI 605 - SC - Indian Laws

Recovery - Liability for pay order - Whether Defendant proved that the pay order was issued by Plaintiffs on behalf of CMF Held that - the plaintiff had proved that it had bought the securities through the broker - It is the specific case of defendant that the broker informed it that the plaintiff has made payment - defendant had not been able to prove that payment was made by the plaintiff - the natural corollary thereof was that the payment was made by the plaintiff to defendant to purchase the bonds - it had delivered the bonds to the plaintiff - the payment had been made with a clear understanding and arrangement that the bonds would be delivered by Canbank Mutual Fund to the plaintiff on account of the money having been paid by the plaintiff to said defendant.

Summary

Issues:
1. Interpretation of payment made by plaintiff to defendant for purchase of securities.
2. Dispute regarding payment made on behalf of Canbank Mutual Fund.
3. Examination of evidence and findings by the trial court.
4. Analysis of defendant's assertion and plaintiff's obligation for securities delivery.

Interpretation of Payment:
The Supreme Court analyzed a case where the plaintiff, a financial services company, filed a suit against defendant no. 1, a banking corporation, seeking payment for Coal India bonds purchased in 1991. The plaintiff alleged non-receipt of bonds and demanded either delivery or a refund. The defendant contended that the payment was made on behalf of Canbank Mutual Fund and not for the plaintiff directly. The trial court found in favor of the plaintiff, emphasizing the payment details and the absence of proof of delivery to the plaintiff.

Dispute Over Payment for Canbank Mutual Fund:
The defendant argued that the payment received from the plaintiff was intended for Canbank Mutual Fund, based on the broker's communication. However, the court noted a letter indicating the sale of bonds to the plaintiff and not the mutual fund. This lack of evidence supporting the defendant's claim led the court to reject the assertion that the payment was made on behalf of Canbank Mutual Fund.

Examination of Trial Court Findings:
The trial court's findings were upheld by the Supreme Court, emphasizing the plaintiff's purchase of securities through a broker and the payment made to the defendant, as evidenced by the pay order issued by Canara Bank. The court dismissed the defendant's argument of an understanding between the plaintiff and the mutual fund, as it lacked substantial evidence.

Analysis of Defendant's Assertion and Plaintiff's Obligation:
The court rejected the defendant's claim that the payment was for the mutual fund, as it failed to provide convincing evidence supporting this assertion. The court upheld the trial court's decision, concluding that the payment was indeed made by the plaintiff for the purchase of bonds from the defendant. Consequently, the appeal was dismissed with no costs awarded.