V. Ramasubramanian, J.

"$ 700 Billion bail out plan", “Wall Street vanished", "Lehman Brothers went belly up", "Bear Stearns consumed", "U.S. National Debt Clock runs out of digits" and "AIG gone up in smoke" are some of the captions which have hit the headlines in recent times. All of those news items have a common denominator, called "derivatives" and this case is all about derivatives.

2. Since this appears to be the first case of its kind in India (subject to correction) where derivatives contracts are challenged as illegal and void and also since the jargon is not too familiar even to P.Ramanatha Iyer (of Law Lexicon) and Black (of Law Dictionary), a brief prelude has become necessary before we plunge into details.

PRELUDE ABOUT DERIVATIVES

3. "Derivatives are time bombs and financial weapons of mass destruction" said Warren Buffett, one of the world’s greatest investors, who overtook Microsoft Maestro in 2008 to become the richest man in the world and who is known as the "Sage of Omaha or Oracle of Omaha". Derivatives, according to him, can push companies on to a spiral that can lead to a corporate melt down. He compared derivatives business to hell, easy to enter