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TMI Blog2001 (6) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... dy-forward transaction, the forward leg aspect is illegal and impermissible in law. 3. The chamber summons taken out by the defendants mainly proceed on basis of the aforesaid decision of the Supreme Court. Mr. Tulzapurkar, the learned Counsel for the defendants has contended that in case of ready-forward transaction, forward leg is illegal as the same is not permissible under the Securities Contracts (Regulation) Act, 1956 ('the Act'). Mr. Tulzapurkar has further contended that, in the instant case, the transactions involved were in the nature of ready-forward transactions, and, therefore, in the light of aforesaid decision of the Apex Court in the B.O.I. Finance Ltd.'s case (supra) the forward leg aspect which is the issue involved in the present suit is totally illegal, and as such plaint ought to be rejected. 4. Mr. Tulzapurkar brought to my notice the provisions of order VII, rule 11(a) and (d ). Rule 11(a) contemplates that the plaint shall be rejected where it does not disclose a cause of action. Rule 11(d) contemplates that plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law. It is the contention of Mr. Tulzapurkar that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat from a bare reading of plaint and the admitted documents and facts coming out in the statement of the plaintiff under order of the Code, the Court could come to the conclusion that the plaint does not disclose the cause of action or the suit is barred by limitation or is not maintainable, the Court can decide the said point even without recording any evidence. Therefore, Mr. Tulzapurkar submitted that, in the instant case, a bare reading of the plaint along with the admitted correspondence, viz., the exhibits annexed to the plaint and in view of the Supreme Court's judgment, this Court ought to come to the conclusion that the present suit claim is clearly barred, inasmuch as it involves enforcement of forward leg which is prohibited by law as has been held by the Apex Court in the case of B.O.I. Finance Ltd. (supra). 8. Mr. Tulzapurkar, the learned counsel for the defendants also referred to another judgment of the Apex Court in the case of T. Arivandandam v. T.V. Satyapal AIR 1977 SC 2421, and contended that the Court ought to reject the plaint at the initial stage. Nobody disputes the aforesaid proposition. In the aforesaid judgment of the Supreme Court, it was a case of vex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that by a letter dated 14-5-1992 addressed by the defendants to the Chairman and managing director of Canara Bank, the defendants themselves have admitted that with regard to the aforesaid transactions of the securities pertaining to the Canshare, Canstar and Cantriple the financing was done by the Canfina at the rate of 18 per cent per annum. Therefore, Mr. Shah has contended that by the aforesaid letter dated 14-5-1992, financing done by the Canfina has been admitted by the defendants. Over and above, the defendants had acted on the said basis as pointed out hereinabove, and parts of the Canshare Units were also taken back by paying certain amount as referred to in para 8 of the plaint. It is the contention of Mr. Shah that in this case it is not a case of clearly admitted position that it was a ready-forward transaction, though it might have been described so. According to him, the pleadings in the plaint clearly make out a case that it was a case of financing done by the plaintiffs and the defendants were to pay back the amount to the plaintiffs, and on their failure, the plaintiffs have approached this Court. 10. Mr. Shah has also contended that the defendants had taken bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition mentioned therein, inasmuch as they were not scrips issued by any incorporated company or a body corporate, whereas the same were issued by the mutual fund which was a trust. 14. Mr. Shah has submitted that sub-clause (iii) of section 2(h) will have no application, inasmuch as sub-clause (iii) deals with rights or interests of such securities as contemplated under sub-clauses (i) and (ii). Sub- clauses (i) and (ii ) deal with securities of either incorporate company or body corporate and the Government securities, and sub-clause (iii) deals with rights or interests of such securities as mentioned in sub-clauses (i) and (ii) above. Mr. Shah, the learned counsel for the plaintiff has sub-mitted that, in the instant case, there was no admitted position of a ready-forward transaction. Over and above, the said scrips would not come within the perview of the Act. According to him, in any event, this is not a matter to grant the reliefs by way of chamber summons, without affording an opportunity to the plaintiff as well as to the defendants to lead evidence on these aspects as to whether there was a ready-forward transaction and whether these securities were covered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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