IMPORTANT POINT
Cash delivery contract is prohibited.

JUDGMENT

Surinder Singh Nijjar, J. —

1. This Statutory First Appeal under Section 10 of the Special Court (Trial of offences relating to Transactions in Securities) Act, 1992 (in short the ‘Special Court Act’ ) is directed against the judgment and decree dated 15.4.2004 passed by the Special Court at Bombay in Suit No.4 of 1998.

2. The aforesaid suit was initially filed by the appellant in the High Court of Delhi at New Delhi on its original side being Suit No.1827/1993. It was transferred to the Special Court in view of the appellant being notified on or about 17.6.1997 under the provisions of the Special Court and thereafter the suit was numbered as Suit No.4/98 before the Special Court. The appellant had prayed for money decree in the amount of Rs.3,18,06,868/- together with interest at the rate of 24%. Respondent No.1, Can Bank Financial Services Limited, had opposed the claim and also lodged a counter claim, claim and decree in the amount of Rs.2,53,75,000/- from the appellant with interest w.e.f. 22.4.1992. The appellant claims to be a stock broker, being a sole proprietory concern of Mr. Naresh K. Aggarwala. The respondent No.1, Can Bank Financial Services Limited, is a wholly owned subsidiary of Canara Bank.

3. The appellant had prayed for a decree against respondent No.1 in respect of net amount payable arising out of two sets of transactions in shares i.e.; (i) two transactions in the shares of Reliance Industries Limited (RIL) (ii) one transaction in respect of Steel Authority of India Limited(SAIL). It is claimed that on 14.2.1992 a contract was entered into between the appellant and Can Bank for purchase of one lakh shares of RIL at a price of Rs.154 per share inclusive of all charges. On 23.3.1992 another contract was entered into by the appellant with Can Bank for purchase of one lakh shares of RIL at a price of Rs.375 per share net. On 27.2.1992 another contract was entered into by the appellant for purchase of five lakh shares of SAIL at a price of Rs.51 per share net and a contract note was issued. In the plaint it was averred that of the two lakh RIL shares purchased by the appellant only one lakh shares were delivered by respondent No.1. These shares according to the appellant were appropriated towards the contract dated 14.2.1992. It was the case of the appellant that the balance one lakh RIL shares pursuant to contract dated 23.3.1992 have not been delivered by respondent No.1. According to the appellant, respondent No.1 had been wrongly claiming that the entire two lakh shares had been duly delivered to the appellant. The appellant claims that this fact is amply borne out from the various letters written by respondent No.1 to the appellant wherein respondent No.1 claims to have delivered one lakh shares to its Bombay office and the remaining one lakh shares allegedly to a broker/one Mr. Hiten P. Dalal. The appellant states that on inquiry Mr. Dalal has sated that no such shares had been delivered on behalf of respondent No.1. In communication dated 07.08.1992 respondent No.1 acknowledges only one delivery and seeks intimation whether his broker, Mr. Hiten P. Dalal, on their account has delivered one lakh shares or not. Therefore respondent No.1 is, in fact, aware that no such delivery had been made. Respondent No.1, in fact, in its communication dated 15.09.1992 acknowledges the factum of both the contract notes. In letter dated 28.09.1992, the appellant reiterated that at no stage it had received any share from Mr. Hiten P. Dalal on account of respondent No.1. It was also stated that Mr. Hiten P. Dalal had confirmed that he had not given any Reliance shares on account of respondent No.1 to the appellant. It was also averred that in spite of assurances having been given by respondent No.1 from time to time, the balance one lakh shares were not delivered.

4. It was further claimed by the appellant that on 27.07.92 respondent No.1 was requested that the transaction with regard to the SAIL shares should hav