LexNARESH K. AGGARWALA AND CO. versus CANBANK FINANCIAL SERVICES LTD. AND ANR.
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[2010] 6 S.C.R. 1 NARESH K. AGGARWALA AND CO. v. CAN BANK FINANCIAL SERVICES LTD. AND ANR. (Civil Appeal No. 5173 of 2004) MAY 5, 2010 [B. SUDERSHAN REDDY AND SURINDER SINGH NIJJAR, JJ.] Shares and Securities: A ·s c Appellant entered into a transaction for purchase of 1 lakh RIL shares with the respondent 1 - After few days entered into another transaction for purchase of 1 /akh RIL shares with the respondent 1 - Respondent no. 1 delivered only 1 lakh RIL shares - Claim by appellant for balance 1 lakh RIL shares - D Held: Not sustainable as the first transaction was cancelled by appellant - The entries made in the statement of.aocount of appellant showed that the delivery of shares pertained to the second transaction - Appellant did not produce documentary evidence to show that in his books of accounts, E the contract was shown as incomplete. Securities Contract Regulation Act, 1956 - s. 16 - Circular dated 27.6.1969 - In terms of the Circular, transactions into securities which were permissible were spot delivery contract; contract for cash; hand delivery and special F delivery - Contract note issued by the appellant in relation to the transaction in question showed that it was not a spot delivery contract - Thus, transaction was contrary to the circular and was not capable of being enforced. Plea - Plea of bias against the Presiding Officer - Held: It has become . a common practice for the losing party after receiving an unfavourable verdict, to make allegations of bias - On facts, wild and bald a/legation of bias was without any 1 G H 2 SUPREME COURT REPORTS '[2010] 6 S.C.R. A basis hence rejected. B Words and phrases: 'Spot delivery contract - Meaning of, in the context of s. 2(i) of Securities Contract Regulation Act, 1956. On 14.2.1992, a contract was entered into between the appellant and the respondent no.1 for purchase of one lakh shares of RIL at a price of Rs.154 per share. On 23.3.1992, the appellant entered into another contract with the respondent no.1 for purchase of one lakh shares C of RIL at a price of Rs.375 per share. On 27.2.1992, another contract was entered into by the appellant for purchase of 5 lakh shares of SAIL at a price of Rs.51 per share. 0 It was the case of appellant that the balance one lakh RIL shares pursuant to contract dated 23.3.1992 were not delivered by respondent no.1, inspite of assurances given by respondent no.1 from time to time. On 27.7.1992, appellant requested respondent no.1 that the transaction E with regard to the SAIL shares be squared up at the time when the shares were purchased. They were priced at Rs.51 per share and market rate according to appellant on 27.7.1992 was Rs.130 per share. Appellant asked respondent no.1 to credit Rs.79 per share for five lakh shares of SAIL to the account of appellant. By letter d~ted F 17 .9.1992, respondent no.1 resiled from the contract regarding sale of shares of SAIL. On 27.5.1993 respondent no.1 issued a notice demanding an amount of Rs.2.56 crores. By letter dated 14.6.1993, the appellant informed the respondent no.1 that after reconciliation of G the account, the respondent no.1 was liable to pay to the appellant an amount of Rs.2.59 crores. The appellant further claimed that according to its statement of account as on 31.7.1993 an amount of Rs.3.18 crores was due to it from respondent no.1. Appellant filed suit for recovery H of Rs.3.18 crores together with interest@ 24% . NARESH K. AGGARWALA AND CO. v. CAN BANK 3 FINANCIAL SERVICES LTD. Respondent no.1 opposed the claim and also filed A counter claim of the amount of Rs.2.53 crores with interest w.e.f. 22.4.1992. It stated that the appellant had agreed to purchase one lakh sh.ares of RIL on 14.2.1992 @ Rs.154/- per share, but this contract was cancelled by the appellant on the very same date. Thereafter, the 8 appellant intimated about another contract for purchase of one lakh shares of RIL on 23.3.1992. Against the said contract, the delivery of one lakh shares was made by the respondent No.1 to the appellant on 22.4.1992. After the receipt of a letter dated 15.9.1992 when the Management c of respondent No.1 changed, the appellant started claiming that the delivery of one lakh shares on 22.4.1992 had been adjusted against the cancelled contract dated 14.2.1992. The counter claim by respondent No.1 was based on the difference of price in shares between two D periods of contr
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