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TMI Blog1995 (11) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ng due endorsements and issue bond certificates in respect of the said bonds to the appellant along with interest warrants. The appellant has also prayed that respondents Nos. 1 to 4 be directed to pay compensation for non-payment of interest on the said IRFC bonds on and after June 26, 1992, comprising the taxable amount of interest/ compensation on the IRFC bonds payable up to October 1, 1994, and interest/compensation for non-payment of these amounts from the due date till October 1, 1994. It is also prayed by the appellant that respondents Nos. 1 to 4 be directed to pay to the appellant, as specified in para. 21 of the petition, on the instalment of interest becoming due on the said IRFC bonds pendente lite and future. During the pendency of this matter before this court, respondent No. 4, Standard Chartered Bank, filed Company Application No. 388 of 1995. The principal prayer in this company petition is that the impugned judgment of the Company Law Board is contrary to the settled law which has been declared by the Supreme Court in Civil Appeal No. 3206 of 1995 Canara Bank v. Nuclear Power Corporation of India Ltd. [1995] 84 Comp. Cas. 70 (SC). It is prayed that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , power or authority in relation to any matter or claim referred to in sub-section (1). (4)While dealing with cases relating to any matter or claim under this section, the Special Court shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice, and subject to the other provisions of this Act and of any rules, the Special Court shall have the power to regulate its own procedure. (5)Without prejudice to the other powers conferred under this Act, the Special Court shall have, for the purposes of discharging its functions under this section, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely: ( a )summoning and enforcing the attendance of any person and examining him on oath; ( b )requiring the discovery and production of documents; ( c )receiving evidence on affidavits; - ( d )subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any public record or document or copy of such record or document from any office; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services. The said NPC bonds could not be delivered by Naresh K. Agarwala, respondent No. 3, and in turn, he gave bonds of respondent No. 1, Indian Railway Finance Company Ltd. (IRFC), as security. The petitioner wanted these bonds to be registered in its name. Respondent No. 1 did not register them in the name of the petitioner and they filed the petition before the company judge. In accordance with the instructions of N.K. Agarwala, respondent No. 3, ABN Amro Bank, issued an account payee cheque in favour of Andhra Bank, Bombay, for the aforesaid amount and attached a memorandum which represents the cost of the NPC bonds purchased on behalf of the petitioner. It was delivered to N.K. Agarwala on March 9, 1992, and was encashed by the payee on the same day. Respondent No. 3 failed to deliver the said NPC bonds purchased through him or a bank receipt in spite of repeated reminders. Instead, on March 18, 1992, respondent No. 3 delivered to the appellant the original letter of allotment covering 1 lakh 9 per cent. IRFC secured redeemable of Rs. 1,000 fully paid-up (VI-A series) bonds 1991-92 issued by the IRFC Ltd. Respondent No. 3 delivered to the petitioner, Amro Bank, a transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The exclusive jurisdiction of the Court of Small Causes arises only if the person invoking the jurisdiction of the court alleges that the other party is a tenant or a landlord and the question is one which is referred to in section 28. Where the person so invoking does not set up the claim that the other party .is a tenant or a landlord the defendant is not entitled to displace the jurisdiction 6f the ordinary court by an allegation that he stands in that relation qua the other and on that ground the court has no jurisdiction to try the suit or proceeding or an application." This passage was relied on primarily to strengthen the submission regarding jurisdiction and to canvass that only the averments and allegations incorporated in the plaint alone should be taken into consideration for determining the question of jurisdiction. The averments mentioned in the written statement or reply cannot be looked into for determining the question of jurisdiction. Mr. Koura also placed reliance on Natraj Studios (P.) Ltd. v. Navrang Studios, AlR 1981 SC 537. In this case, the Supreme Court has observed that a suit will have to be brought in the Court of Small Causes which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant in determining the question of jurisdiction. She submitted that in this case, there is no dispute that the transaction had taken place during the interregnum period, then the only question which remains to be determined is that in view of section 9A of the said Act, this matter should be decided by this court or this matter be sent to the Special Court for disposal. According to Naresh Agarwala, he was a broker of the Standard Chartered Bank and his role as intermediary or at least in the category of any other person cannot be denied. She also referred to the affidavit filed by Naresh Agarwala. The relevant portions are reproduced hereunder to appreciate the controversy in its correct perspective. ( a )That the answering respondent has been acting as a mercantile broker on behalf of Karur Vysya Bank Ltd. ( b )Pursuant to an order placed upon the answering respondent, the answering respondent arranged for a transaction for sale of 9 per cent. IRFC bonds (Sixth "A" series) bearing distinct Nos. 1500001-1600000 from Karur Vysya Bank Ltd. to Standard Chartered Bank through their representative/broker. ( c )The necessary consideration was paid to Karur Vysya Bank Ltd. by S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curities and rights or interest in securities. Section 3(1) provided for the appointment by the Central Government of a custodian. By reason of section 3, the custodian was empowered on being satisfied on information received that any person had been involved in any offence relating to transactions in securities after April 1, 1991, and before June 6, 1992, to notify the name of such person in the Official Gazette. The Supreme Court has also analysed section 9A and mentioned that by reason of sub-section (1) of section 9A, on and from the date of commencement of the Amendment' Ordinance, the Special Court exercises all such jurisdiction, power and authority as were exercisable by any civil court in relation to any matter. The Special Court is empowered to exercise such jurisdiction, power or authority in relation to the matters or claims therein specified. These matters or claims include those arising out of transactions in securities entered into between the aforesaid dates in which a notified person is involved. Sub-section (2) of section 9A deals with transfer of suits, claims or legal proceedings (other than an appeal) to the Special Court. Every suit, claim or other legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he country and even the Ministry of Finance, other economic ministries in varying degrees. The most unfortunate aspect has been the emergence of a culture of non-accountability which permeated all sections of the Government and banking system over the years. The state of the country's system of governance, the persistence of non-adherence to rules, regulations and guidelines, the alarming decay over the time in the banking systems has been fully exposed. These grave and numerous irregularities persisted for so long that eventually it was not the observance of regulations but their breach that came to be regarded and defended as "market practice". Through all these years the ability of the concerned authorities to effectively address themselves to the problems has been tested and found wanting. The consequences of these irregularities in securities and banking transactions are both financial and moral. During the period from July, 1991, to . May, 1992, the most glaring proof of the nexus between the irregularities in banks and the overheating of stock market which came to light is explained by the graphic representations of the BSE Index and the fact that there was a sharp in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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