The main legal point established in the judgment is the burden of proof in establishing ownership of securities and the application of legal principles under the Evidence Act.

JUDGMENT :

A.K. Menon, J.

This miscellaneous application is filed by the Official Liquidator of Bank of Karad (In Liquidation). It seeks an order against the 1st respondent to pay a sum of Rs.14,31,00,092/- towards balance said to be outstanding towards interest in an overdraft facility availed of by the 1st respondent at the material time from the Bank of Karad (In Liquidation), (hereinafter referred to as "the Bank"). In the alternative, it seeks a direction against the 1st respondent to prove his claim to ownership over certain securities within a time to be fixed by this court and a direction against the 2nd respondent-Custodian to pay to the applicant the amount to the extent of the value of the securities over which the 1st respondent claims title from and out of the amounts deposited with the Custodian by the applicant.

2. A brief description of the parties will be appropriate.

The applicant is the Official Liquidator of the Bank of Karad, which came to be wound-up by an order of the High Court in Company Petition No.229 of 1992. The 1st respondent is a party notified under the Special Court [Trial of Offences Relating to Transactions in Securities] Act, 1992, (hereinafter referred to as "the Special Court Act"). The 2nd respondent is the Custodian appointed under the Special Courts Act. This application has been filed by the Official Liquidator, pursuant to liberty said to have been granted to the Liquidator vide an order dated 14th November 2014 passed in Miscellaneous Application No.85 of 2012. At all material times, the 1st respondent was a broker dealing in securities transactions with many banks, including the bank in liquidation. The applicant states that the bank in liquidation was victim of several irregularities and malpractices arising out of diversion of funds. That an Overdraft Account bearing No.348 was opened in the name of the 1st respondent in the Bank of Karad. The 1st respondent was notified under the Special Courts Act on 2nd July 1992. The overdraft account had a debit balance of Rs.18,22,682/- as on 27th May 1992 i.e. the date on which an order directing liquidation to the Bank of Karad was passed.

3. The 1St respondent, it transpires, had filed Miscellaneous Application No.85 of 2012 in this court, claiming a sum of Rs.1,71,96,700/- being the amount of face-value of certain securities lying with the bank in liquidation. The applicant contended that the Books of Accounts and records of the Bank of Karad were found to be containing several inaccuracies. The bank did not maintain records, which could provide particulars of the securities received and delivered to the bank through various parties. That despite appointing professionals, including the Chartered Accountants, to conduct an investigation, it has not been possible to establish, beyond doubt, the ownership of the securities as vesting in the 1st respondent. In Miscellaneous Application No.85 of 2012, an order came to be passed by this court on 14th November 2014, directing the applicant to deposit redemption amount in respect of various securities with the 2nd respondent-the Custodian, to be placed in a separate account.

4. According to the applicant, the ownership of the securities had not been established. The applicant handed over to the Custodian a net amount of Rs.2,84,64,587/-, said to be due as on 27th May 1992, being the principal amount of the securities and interest thereon received from the Reserve Bank of India (RBI), after deducting the debit balance of Rs.18,22,682/-. This amount excluded interest from 1st April 1992 till date. The contractual rate of interest agreed between the 1st respondent and the bank in liquidation was 18% p.a. It is therefore contended that the 1st respondent had filed Miscellaneous Application No.41 of 2015, praying for a direction that the applicant herein, namely, the Bank of Karad (In Liquidation), s