A.M. Ahmadi C.J.I., S.P. Bharucha B.N. Kirpal, JJ.

B.O.I. Finance Ltd. others ..... Appellant.

Versus

Custodian others...... Respondents.

Civil Appeal No. 1753 of 1994 with C.A. Nos. 3656-57 of 1995, 4863-64 of 1994, 4390 of 1994, 3529-30 of 1995, 5546 of 1994, 3165 of 1995, 3172 of 1995, 3760 of 1995, 3658-59 of 1995, 8411 of 1994, 10284 of 1995, 10260 of 1995, and 6545 of 1995, decided on 19-3-1997.

Advocates appeared :

T.R. Andhyarujina, Solicitor General of India, Shanti Bhushan, K. Parasaran, Soli J. Sorabjee, S.K. Cooper, I.M. Chhagla, D.A. Dave, S.K. Dholakia, A.M. Setalwad, Arun Jaitley, Ram Jethmalani, Senior Advocates with (P.K. Mullick, V. Tulzapurkar (Anand Bhatt, Sandeep Mittal, R.N. Karanjawala, Ms. Ruby Ahuja, N. Gore), Advocates, for Mrs. M. Karanjawala, E.C. Agrawala, Mahesh Aggarwala, Atul Sharma, M. Himayatullah, S. Ganesh, S. Sukumaran, T.K. Cooper, U.A. Rana, S. Tripathi, T. Cooper, Neeraj Sharma, Mrs. Kiran Neena Gupta, Advocates, for Vineet Kumar, D. Khambatta, J. D. Das, Ms. Anjali Seth, Ms. Mona Bhide, Dr. A. F. Julian, Arputham Aruna and Co., Advocates, G.R. Joshi, A. Subha Rao, P. Parmeshwaran, Sunil Dogra, Monica Sharma, S.S. Shroff, Mahesh Jethmalani, S.B. Jaisingham, Anand Desai, Ms. Lata Krishnamurthi, Jay Salva, and J.K. Das, H.S. Parihar, Subrat Birla, K.S. Parihar, S.K. Mehta, Dhruv Mehta, Fazlin Anam, Ms. Monika Mehta, K.J. John, P.H. Parekh, Ms. Sunita Sharma), for the appearing parties.

JUDGMENT

B.N. KIRPAL, J. :---These appeals, under section 10 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as "the Special Court Act"), arise from the judgment of the Special Court at Bombay which decided common questions of law relating to certain transactions of purchase of securities by the appellant Banks from some of the brokers to whom the Special Court Act, 1992, had been made applicable.

2.The appellant Banks had, prior to June, 6, 1992, entered into contracts with different brokers for the purchase and sale of certain securities which were not listed on any stock exchange. For the purpose of this case, these contracts have been regarded as ready-forward transactions or buy-back transactions. The parties are agreed, and it is on this basis that the High Court also proceeded, that the nature of such a transaction is that it consists of two interconnected legs, namely, the first or the ready leg, consisting of purchase or sale of certain securities at a specified price, and the second or forward leg, consisting of the sale or purchase of the same or similar securities at a later date at a price determined on the first date. Such ready-forward transactions have, in most cases, been entered into either by execution of a single document or by execution of two documents contemporaneously, one representing the first or ready leg and the other the forward or second leg. On such contracts being entered into, the ready leg of the transactions was completed with the appellants paying the agreed price and receiving the delivery of the securities which were agreed to be purchased.

Before the forward leg of the transactions could be completed, the Special Court (Trial of Offences Relating to Transactions in Securities) Ordinance, 1992, was issued on June 6, 1992, which was subsequently replaced by the Act.

Special Court Act, 1992 :

The necessity for issuance of the said Ordinance is contained in the Statement of Objects and Reasons, which reads as follows :

"In the course of the investigations by the Reserve Bank of India, large scale irregularities and malpractices were noticed in transactions in both the Government and other securities, indulged in by some brokers in collusion with the employees of various Banks and financial institutions. The said irregularities and malpractices led to the diversion of funds from Banks and financial institutions to the individual accounts of certain brokers.

2. To deal with the situation

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