Holding

The Supreme Court set aside the Special Court’s decree, dismissed the suit, and held that the Special Court erred in its procedural and evidentiary approach and the plaintiff failed to produce any evidence, constituting abuse of process.

Summary

The National Housing Bank (NHB) sued State Bank of Saurashtra (later merged with SBI) for recovery of a large cheque amount, alleging that the cheque was drawn for the purchase of IRFC bonds and that the defendant had misappropriated the funds. The case was tried before a Special Court established under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, which partially decreed in favour of both parties. On appeal, the Supreme Court examined whether the Special Court was bound by the Code of Civil Procedure’s Order VIII on set‑off/counter‑claim, whether it had complied with the Evidence Act, and whether the plaintiff had suppressed material facts. The Court held that the Special Court, though not bound by CPC procedure, must still follow the Evidence Act and could not rely on unproved documents or the Janakiraman Committee report as evidence. The plaintiff had led no oral evidence and had suppressed material facts, constituting abuse of process. Consequently, the decree was set aside in toto and the suit dismissed.

Issues considered

The Special Court’s jurisdiction and whether it must follow CPC Order VIII procedures for set‑off or counter‑claim.
Whether the Special Court complied with the Evidence Act, 1872, in admitting documents and the Janakiraman Committee report as evidence.
Whether the plaintiff suppressed material facts and approached the Court with unclean hands.
Whether the decree should be set aside on the ground of no evidence being led by the plaintiff.

Legislation cited

Code of Civil Procedure, 1908s. Order VIII
Indian Evidence Act, 1872
Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992s. 3(2), s. 9-A(1), s. 9-A(4)

Subjects

Special Court ActEvidence ActCPC Order VIIIset‑offcounter‑claimunclean handsabuse of processsecurities transactionbank fraudJanakiraman Committeeprocedural jurisdiction

Judgment

[2013) 13 S.C.R. 1074

A STATE BANK OF INDIA THR. GENERAL MANAGER
v.
NATIONAL HOUSING BANK & ORS.
(Civil Appeal No. 2155 .of 1999)
JULY 31, 2013
B
[R.M. LO[;>HA, J. CHELAMESWAR AND
MADAN 8. LOKUR, JJ.]

Special Court (Trial of Offences Relating to Transactions
c in Securities) Act, 1992 -Recovery suit - Special Court
established under the Act passed decree - Propriety of the
.decree - Held: Not proper - Plaintiff did not adduce any
evidence in support of its pleadings and merely tendered
certain documents but did not bother to prove them inspite
0 of caution by the Special Court - Course adopted by the
Special Court of looking into the correspondence between the
parties, which had not been proved not permissible in law -
Though the Special Court was not bound by the CPC, it did
not relieve it from the obligation to follow the Evidence Act -
E Further, the Special Court erred in extensively relying upon
the second interim report of the Jankiraman Committee -
Janakiraman Committee is not even a statutory body
authorised to collect evidence in the legal sense - Report o~
Janakiraman Committee is not evidence within the meaning -+
of Evidence Act which the Special Court was bound to follow
F - Suit required to be dismissed on ground that no evidence
was led by the plaintiff to establish its case - The plaintiff
approached the Special Gourt with unclean hands by
suppressing relevant material - There was sheer abuse of the
legal process - Decree set aside in toto - Evidence Act,
G 1872.

Special Court (Trial of Offences Relating to Transactions
in Securities) Act, 1992 - s.9A :... Jurisdiction of the Speci9I
Court - Recovery suit - Procedure required to be followed in
H 1074
STATE BANK OF lNDIA THR. GEN. MANAGER v. 1075
NATIONAL HOUSING BANK

; the cases of set off or counter claim as contemplated u/Order A
VIII CPC not followed by Special Court in the instant case -
Propriety - Held: Special Court was authorised by law to
adjudicate the claim of defendant without being shackled by
the procedural fetters imposed under CPC - U/s.9-A(4) of the
Act, the Special Court is not bound by the procedure laid B
down by.CPC but shall be guided by the principles of natural
justice and has the power to regulate its own procedure -
Code of Civil Procedure, 1908 - 0. VIII.
f
The National Housing Bank (plaintiff bank) drew a
cheque on the Reserve Bank of India in favour of the
c
State Bank of Saurashtra (defendant no.1-bank).
Subseq·uently, the plaintiff bank sought delivery of Bank
Reciepts· (BRs)ISecurities or ·return of amo!,mt. The first
defe~dant bank denied the existence of any "outstanding
transaction" .between the two and its liability to issue D
-<'.
~ither a B.R. or deliver any securities or refund of the
amount as claimed by the plaintiff bank. The plaintiff Bank
filed suit b.efore .the Special Court established under the
Special Court (Trial of. Offences relating to transactions
in Securities) Act, 1992. E

The Special'.Court partially accepted the 'counter
claim' made by the second defendant-- a notified person
under Section 3(2) of the Special Court Act and decreed
partly· in fa'Vour of plaintiff bank. The first part of the F
decree was in favour.of the plaintiff bank and the second·
part virtually in favour of the second defendant, though,
!h~ ulthnate ·direction in this regard was that the plaintiff-
should pay certain amounts to the fifth defendant who is
the statutory custodian of the 2nd defendant's property
'*: G
under the Special Court Act. The plaintiff preferred appeal
being aggrieved by the judgment of th~ Special Court.
The 1st defendant also preferred an appeal aggrieved by
the decree directing the payr:nent to the plaintiff.

Disposing of the appeals, the Court H
1076 SUPREME COURT REPORTS (2013] 13 S.C.R.

A HELD:1. The procedure that is required to be'·
followed in the cases of set off or counter claim is detailed
under Order VIII of the Code of Civil Procedure. It does
not appear that the procedure contemplated under Order
VIII of the Code is followed in the ir:istant case. However,
a under Section 9-A(4) of the Act, the Special Court is not
bound by the procedure laid down by the Code but sh~tl
be guided by the principles of natural justice and has the
power to regulate its own procedure; Under Section 9-
A(1) of the Act, the Special· Court has all jurisdiction to
c adjudicate any matter or claim 'arising out of a transaction
in securities entered into during the period specified in
the said s·ection in which a notified person is involved in
whatever capacity. Therefore, the Special Court is
authorised by law to adjudicate the claim of the second
defendant without being shackled by the procedural
0
fetters imposed under the Code. [Paras 30, 31] [1093-D-
F; 1094-A-B]
: 2. On ~he basis of pleadings ofthe parties, the Special
Court passed the decree which· is the subje~t matter.of
E these two·appeals, though the plaintiff did not choose to
adduce any evidence in support of its· pleatlings. Apart
from the problem of the plaintiff not add.ucing any
evidence, it is rather difficult to understand the process
followed by the Special Court to reach the concJOsion that
F . the plaintiff is entitled to the decree as prayed for and at
the same time not entitled to retain the entire amoul)t but
should share a part of it with· the 2nd defendant.
·Scandalous thing about the litigation is that the plaintiffs
led no ~vidence. They merely· tendered" certain
G documents but did not bother to prove them in spi~ of a
. caution by the Special Court. [Paras 40, 41 af'!d 47) [1097-
F-G; 1100-C-D] . .
.• i . .• ... : , ' ;J '

·.·· 3. The Special Court.based its .conclusions ori
. H . Janakiram.an Committee Report.and the corr~spondence
STATE: BANK OF INDIATHR. GEN. MANAGER v. 1077
NATIONAL HOUSING BANK

between the various parties (whose details are not even A
specified in the judgment). The course adopted by the
Special Court of looking into the correspondence
between .the parties, which even according to the Judge
had not been proved is not permissible in law, The·
Special Court Act though declares that the C_ourt is not . B
bound by the Code of Civil Procedure, it d~es not relieve .
the Special Court from the obligation to follow the
Evidence Act. Further,. the Judge extensively .relied upon
f the second interim report of the Jankiraman Com,mittee
on the grou.nd that the same was tendered by the 1st c
defen~ant. It is well settled by a long line of judicial .
..' authority that-. the_ findings of. even a statutory
·commission appointed under the Commissions: of
tnquiry Act, 1952 are not enforceable proprio. vigore .and
the statements made before such Commission are
0
expressly made inadmissible in any subsequent
proceedings civil or criminal. The Courts are not bound
·by :the conclusions and findings rendered by such
Commissions. The statements made before such
Commission cannot be used as evidence before any civil
., or criminal court. It should logically follow thateven the E
·~onclusions based on:such statements can also not be
used as evidence in any Court. Janakiraman committee .·
:y- is not even a statutory·:body authorised to 'collect .
evidence in the legal sense. It is a body set up by the
Governor of Reserve Bank of lndja in exercise of its F
administrative 'functions.- [Paras 49, 50, 52 and 53] (1101-
C-F; 1102-D-E,. G; 1103-A-B] .

Ram Krisflna Dalmia ·v. Justice S.R. Tendotkar and
.... Ottier5-AIR 1958 SC 538.: 1959 SCR 279; State of Kamataka. G .·
v. Union· of India [(1977) 4 SCC 608] and Sham Kant v. State
o~ MtJharastitra ((1992) Supp (2) _SCC 521 - relied on~

· Mahara}a Madhava Singh v. Secretary of State frir India ·
. . . .[(1903-04)
inCouncjl . 31 IA 239 . and M..V. Rajwade v. H
. (PC)
1078 SUPREME COURT REPORTS [2013) 13 S.C.R ·

A Dr. S.M. Hassan [AIR 1954 Nag 71 : 55 Cri LJ 366)- referred
to.
4.The report of such a Committee can at best be the
opinion of the Committee based on its own examination
of the records of the various banks (including the plai11tiff
8
and the 1st defendant) an~ the statements recorded (by
the Committee) of the various persons examined by the
Committee. The report of Janakiraman Committee is not
evidence within the meaning of Evidence,Ac.t -which.the
C Special Court is bound to follow. It is difficult to ~pprove.
the procedure followed by the Special Court to record
such conclusions. [Para 54 and 55] [11.04-A·C]

5. The suit is required to be dismissed on the ground
that there is no evidence led· by the plaintiff· to ·establish
D its case. The plaintiff approached the Special Court with
unclean hands by suppressing the relevant material.
[Paras 62, 63] [1106-B-C; 1101-A]

6. The plaint, as originally filed, stated that the
cl:teque in question was drawn "in favour of the'"'lst
E defendant in respect of the sale by the 1st defendant to
the plaintiff of 9% IRFC Bonds of face value Rs.100.
crores". But $Ubsequently the plaint was amended
omitting the reference of the purchase of the
abovementioned IRFC Bonds. The suppression of the
F original case coupled with the very fac~ that the 1st
defendant paid various amounts in accordance with the
instructions of the 2nd defendant after' encashing the
cheque in question coupled with the 1st defendant's
consistent stand that the cheque was issued for -the
G benefit of the 2nd defendant, leads to a possible inference
that the fst defendant acted on the instructions of
somebody ·high up in the administration of the .plaintiff
Bank. Neither of the banks explained the genesis of such
practice. But from the very history of this litigation and
H the background in which the Special Court Act came to'
STATE BANK OF INDIA THR. GEN. MANAGER v. 1079.
NATIONAL HOUSING BANK

be passed, o~e -can safely' presume that both the banks A
herein, (along with other ban~.did not follow any
·procec;lure when it came to the dealings in which the 2nd
defendant was involved. Eventually when the bubble
burst, everybody tried to disown the responsibility trying
to project an image of innocence. The entire effort of the. B
pJaintiff in the suit is to suppress all the relevant
information. Such a pr.ocess is resorted to in order to
shield the delinquent officers of the bank (whoever they
are) who are responsible for such dealings by taking
shelter under the· 1egal principles such as unjust c
enrichment and moneys had and received etc. to recover
the money paid by the plaintiff to the 1st defendant
through the cheque in question. [Paras 64, 68] (1107-B;
1108-D-H;. 1109-A]

7.1. The whole attempt of both the b.anks is to shield D
the officers on either side taking refuge under.attractive
legal pleas - which if examined in the context of the
limited facts pleaded 'give a picture that the suit ·
transaction is an innocuous transaction Which
unfortunately for the country is not. The suit is a sheer E
abuse of the legal process'. [Paras 69] [1109-E]

· 7.2. On the other hand, the dispute such as the one
on hand, where the contesting parties are either organs
of the State or its instrumentalities, is better resolved · F
through a Committee of Secretaries of the. Government
of India or the States, as the case may be, as directed by
this Court on more than one occasion. Unfortunately,
such orders remain unimplem~nted. In fact, it appears
from the judgment under appeal that even in this case the G
Special Court had directed such a settlement without any
success. Both the plaintiff and respondent Banks simply
reiterated their respective stands before the- Committee
of Secretaries. No attempt appears to have been made by
the Government to find out the truth as to (1) how the H
1080 SUPREME COURT REPORTS [2013). 13 S;C;R.
.

A plaintiff Bank parted with a high denomination cheque
and gave custody of the same to Harshad Mehta and (2)
as to how the first defendant Bari·k paid the various
amounts t"o the dictation of Harshad Mehta in the
absence of any authorisation by the plaintiff Bank. Be that
s as it may, if really the Government beHeved that the
judgment of the Special Court does not require any
interference, nothing stopped the Government from·
directing both the Banks to withdraw their appeals before
this Court. The whole exer.cise appears to be an eye
c wash. A thinly veiled scorn for the orders of this Court.
The professed purpose of the Special Courts Act - the
back drop of the scandal that shook the nation • and the
manner fo which the litigation was conducted· coupled
with the absolute indifference of the Government to get
, . at the truth only demonstrates the duplicity with which
0
Governments can act. [Paras 70, 73, 74 and 75) [1109-F-
G; 1111-F-H; 1112-A~B].
8. The suit is dismissed and the decree set aside in
toto. [Para 76) [1112-C]
E
Case Law Reference:.
1959 SCR 279 relied on Para 52
-f
(1977) .4 sec 608 relied on· Para 52
F (1992) ~upp (2) sec 521 relied on Para 52
(1903-04) 31 IA 239 (PC) referred to Para 52
AIR 19.54 Nag 71 : 55 Cri LJ 366 referred to . Para 52
)'" -
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
G
2155 of 1999•
. Appeal Under Section 10 of Special Court (Trial of
Off~r.ices Felating to Transactions in Securities) Act, 1992,
Jupgment and decree passed by the Special Court on February
H 24/25.02.1999 in Suit No.2 of 1995.
. .. - "•' . . .
STATE BANK OF INDIA THR. GEN. MANAGER v. 1081
NATIONAL HOUSING BANK

WITH A

C.A. Nos. 2294 & 3647 of 1999.

Harin P. Raval, ASG, Bishwajif Bhattacharyya, Sanjay
Kapur, Priyanka Das, Anmol Chandan, Shubhra Kapur,
Mohammed Himayatullah, Pradeep Kumar Tiwari, Ninad Laud, B
Mahesh Agarwal, E.C. Agarwal, Megha Mehta Agrawal,
Abhi.nav Agarwal, Anirudh Sharma, Palash Kanwar,
Respondent-In-Person, Amit .Yadav, Shishir Deshpande,
+ Kat1shal Narayan Mishra, Sujata Kurdukar, Subramonium
Prasad for the appearing parties. c
The Judgment of the Court was delivered by

CHELAMESWAR, J. 1. These statutory appeals are filed
under Section 10 of the Special Court (Trial of Offences
D
Relating to Transactions in Securities) Act 27 of 1992
(hereinafter referred to as 'the Special CourtAct'). An appeal
both on q•Jestions of fact arid law under the above-mentioned
provision is provided directly to this Court from any "judgment,
decree, sentence or order" of a Special Co"urt established
under Section 5 of the above-mentioned Act. E

2. The Special Court Act was made in the aftermath of a
scandal in the stock market in the year 1991-1992 when "large
scale irregularities and malpractices were noticed in both the
Government and
other securities, indulged in.by some brokers F
in collusion with the employees of-various banks and financial
institutions" .1
t. In the course of the investigations by the Reserve Bank of india, large scale
irregularities and malpractices were no.ticed in transactions in both the
Government and other securities, indulged in by. some brokers in collusion
with the employees· of various bonds and financial institutions. The said G
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 and in particular to ensure the speedy recovery
ofthe huge amount involved, to punish the guilty and restore confidence
in and maintain the' basic integrity and credibility ofthe banks and financial .
· institutions the. Sp~cial Court (Trial of Offences Relating to Transaetions H
1082 SUPREME COURT REPORTS

A 3. Under Section 3(2) 2 of the said Act, the Custodian
. appointed by the Government of India, if satisfied that any
person was involved in "any offence relating to transactions in
securities" during the period falling between 01.04.1991 to
06.06.1992 is empowered to notify the name of such person
B in the official gazette. Upon such notification, all the properties
whether movable or immovable belonging to any person so
notified stand attached. The custodian is required to deal with
such attached properties in such manner as the Special C0urt
may direct. The Act further authorises the Government of India
c to establish a Special Court to be presided over by a sitting
Judge of a High Court to be nominated by the Chief Justice of
the High Court within the local limits of whose jurisdiction the
Special Court is to be located. The concurrence of the Chief
Justice of India is required to be obtained for such nomination
of a sitting Judge of the High Court.
0
4. The Special Court is invested with jurisdiction both
criminal and civil to dea1 with the offences committed by the
notified persons and also with the properties and transactions

E in Securities) Ordinance. 1992 was promulgated on the 6th June, 1992.
The Ordinance provides for the establishment of a Special Court with a
sitting Judge of a High Court for speedy trial of offences ,relating to
transactions in securities and disposal of properties attached. It also
provides for appointment of one or more Custodians for attaching the
property ·of the offenders with a view tci prevent diversion of such properties
F by the offenders. 1

2. Section 3. Appointment and functions of Custodian. - (1) The Central
Government may appoint one or more Custodians as it may deem fit for
the purposes of this Act.
(2) The Custodian may, on being satisfied on information received that
any person has been involved in any offence relating to transactions in
G securities after the 1st day of April, 1991 and on and before the 6th June,
1992 notify the name of such person in the Official· Gazette.
(3) Notwithstanding any1hing contained in the Code and any other law
for the time being in force, on and from the date of notification under sub-
section (2), any property, movable or immovable, or both belonging to any
person notified under that sub-section shall stand attached simultaneously
with the issue of the notification.
H
STATE BANK OF INDIA THR. GEN. MANAGER v. 1083
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

f- ip securities in which a notified person is involved and any A
matter or claim arising therefrom. An appeal to this Court, is
provided from the judgment, decree, sentence or order of such
Special Court.

5. The entire scandal and the present litigation revolves B
"around the second defendant (since deceased) - one Harshad
S. Mehta (a notified person under Section 3(2) of the Act). The
"l.
!scandal exposes the shortcomings and loopholes in the
~

i administration of banking sector of this country, more
,particularly, the State-owned/controlled banks.
c
6. The National Housing Bank (hereinafter referred to as
the 'Plaintiff') a statutory Corporation created by an Act of
Parliament (Act No. 53 of 1987) filed two suits, one invoking
the. original jurisdiction of Bombay High Court (Suit No. 211 of
__, 1995) and another before the Special Court established under D
~
the ActNo. 27of1992 being Suit No. 2of1995. The said suits
came to be filed against (i} the State Bank of Saurashtra which
at that point of time was a subsidiary bank of the State Bank
of India but later got amalgamated with the State Bank of India,
(ii) Harshad S. Mehta, (iii) two of the employees of the plaintiff E
bank and (iv) the Custodian appointed under Section 3(1) of
the Act 27 of 1992.

-
~ 7. ltappears that the relief sought in both the above-
' mentioned suits is substantially the same i.e. the recovery of
F
an amount of Rs. 95.39 crores with interest. By an Order dated
17th April, 1995, the Special Court directed the plaintiff bank
to elect one of the two fora for pursuing its litigation.

8. "Aggrieved" by the said direction, the plaintiff bank
... -< approached this Court. This Court directed that both the suits .G
be placed before the learned Judge who had been nominated
to be the Judge presi~ing over the Special Court (Hon. Justice
Variava of Bombay High Court, as His Lordship then was) for
~ disposal in accordance with law. Consequently, a preliminary
H
1084 SUPREME COURT REPORTS [2013) 13 S.C.R.

A question regarding the forum which had jurisdiction to adjudicate
the dispute which is the subject matter of the two suits came
to be considered by Hon. Justice Variava. By an order dated
. 3rd February, 1996, the learned Judge hel~ that in. view of the
language of Section 9-A( 1)(b) of the Special Court Act, it is the
B Special Court alone which had the jurisdiction to adjudicate the
dispute as the dispute centres around a claim arising out of a
transaction in which a person notified under the Special Court
·Act is involved. The above-mentioned Suit no. 211 of 1995
came to be dismissed.
c
9. Subsequently, the plaintiff bank moved an application
to amend the pleadings in Suit No. 2 of 1995. The said
application was allowed by an order of the Special Court dated
16th October; 1996: The frame of Suit No. 2 of 1995 and the
nature of the amendment made will be discussed later in this
0
judgment. .,._ ~

10. In view of the amendment in the plaint, the 1st defendant
bank once again raised a preliminary issue regarding the
maintainability of the suit before the Special Court. The Special
E Court rejected the preliminary objection by its order dated 22nd
November, 1999. Aggrieved by the same, the 1st defendant
Bank carried Civil Appeal No. 2294 of 1999 to this Court.

F 1995
11. During the,pendency of the said appeal, Suit No. 2 of
itself came to be disposed off on 24th February, 1999.
Challenging that part of the decree3 which was against it, the
1st defendant Bank once again carried Civil Appeal No. 2155
.· of 1999 to this Court. Aggrieved by that part of the decree of
-
· the Special Court wherein the Special Court directed the
'r .
G
3. Para 110.. Accordingly there will be a decree in favour of the Plaintiffs and
against the 1st Defendant in a sum of Rs.95,39;78,082.19p with interest.
thereon at the rate of 19% p.a. from 3rd January 1992 till payment of
realisation ·thereof.
H
STATE BANK OF INDIA THR. GEN. MANAGER v. 1085
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

;._ plaintiff to deliver certain amounts to the Custodian 4 , the plaintiff A
bank filed Civil Appeal no. 3647 of 1999.

12. The prayer in Suit No. 2 of 1995 is as follows:-

"(a) that the 1st Defendant be ordered and decreed to pay
to the Plaintiff a sum of Rs. 164, 11,61,079.59 as per B
particulars at Exhibit 'B' hereto with further interest thereon
at the rate of 24% per annum from the date hereof till
i payment and/or realisation.
1
(b) In the alternative to prayer (a) above the Defendant c
Nos. 1 to 4 or any one or more of them be ordered and
decreed to pay to the Plaintiff jointly and/or severally a sum
of Rs. 164, 11,61,079.59 p. as per particulars at Exhibit 'B'
hereto together with interest thereon at the rate of 24% per
annum from the date hereof till payment and/or realisation. D
--'\-' (c) For costs; and

(d) For such further and other reliefs as the nature and
circumstances of the case may require;"
E
' 13. According to the facts pleaded in the amended plaint,

4. Para 120. Today a Decree has been passed in favour of the Plaintiffs and
j.
.... ,.. against the 1st Defendant in the sum of Rs.95,39,78,082.19p along with
interest at 19% per annum. If plaintiffs are allowed to keep interest on the
sum of Rs.40.22 crs. they will have unjustly enriched themselves. This F
... because with effect from 30th March, 1992 the Plaintiffs liability to Canfina
stood discharged without their having paid any consideration for the 9%
IRFC Bonds f.v. Rs.38.75 crs. The Plaintiffs will be receiving interest at
19% per annum even on the sum of Rs.40.22 crores. As stated above to
allow the Plaintiffs to retain that interest would be to allow the Plaintiffs to
unjustifiably enrich themselves. Thus it is directed that as and when the
'"'( G
Plaintiffs receive interest at 19% on the sum of Rs.40.22 crores, the Plaintiffs
"'< must hand over the interest amount on Rs.40.22 crs. from 30 March 1992
onwards to the Custodian. Clarified that Plaintiffs will be entitled to keep
the interest amounts, even on Rs.40.22 crs., from 3rd January 1992 till
29th March 1992. This interest amount i.e. for the period 30th March 1992
onwards on Rs.40.22 crs. would be payable to the Custodian within four
weeks from the receipt of the amount by the Plaintiffs. H
1086 SUPREME COURT REPORTS [2013] 13 S.C~.

A t,he National Housing Bank drew a cheque on 3rd January,
1992 for an amount of Rs. 95.39 crores approximately on the
Reserve Bank of India in favour of the State Bank of
Saurashtra. Towards the end of April, 1992, "the Plaintiff found
that, while its records indicated that certain transactions had
B been entered into and were still outstanding, it did not
possess any Bank Receipts (hereinafter referred to as 'B.R. ') ;

or supporting documents or any securities in respect of such
transactions. 'On the basis of information gathered it was
thought that the said transaction was outstanding and that the t-
c 1st Defendant had not delivered the related securities or any
B. R. for the same. The Plaintiff, therefore, addressed letters
to the 1st Defendant drawing its attention tq the said fact and
request the 1st Defendant for delivery of B.R.!Securities or for
return of the said amount"
D 14. A blissfully vague statement regarding the nature of the
....__
"transaction" -,
I
r
15. Long correspondence ensued between the plaintiff and
the first defendant bank. The first defendant bank denied the
E existence of any "outstanding transaction" between the two and
its liability to issue either a B.R. or deliver any securities or •.
refund of the amount as claimed by the plaintiff bank. The
substance of the correspondence of the first defendant bank
as narrated in the plaint is "the 1st Defendant further stated \
-+
F that the amount of the cheque received by it had be~n for and
on account and for the benefit of the 2nd Defendant. The 1st
Defendant further stated that its action of crediting the
proceeds of the said cheque to the account of the 2nd
· Defendant was justified by a certain market/banking practice.
The 1st Defendant also stated that solely on the basis of
G y
instructions of the 2nd Defendant against the said cheque of
the Plaintiff it issued cheque on behalf of the 2nd Defendant
in favour of certain third parties." I

H
STATE BANK OF INDIA THR. GEN. MANAGER v. 1'087
NATIONAL HOUSING BANK [J. CHELAMESWAR, J,1
,
~· 16. The unamended plaint 5 contained assertions that the A
.. plaintiff Bank drew the cheque in issue for the purpose of
acquiring 9% IRFC Bonds of face value of Rs.100 crores, the
same was omitted by the amendment of the plaint. However,
vague references continued even in the amended plaint to a
transaction pertaining to the sale of 9% IRFC Bonds. B

17. The plaintiff based his prayers "on grounds which are
set out in the alternative and without prejudice to each other"'
~ The grounds of the plaintiff are:-

• 1. As there was no transaction between the plaintiff c
and the 1st defendant, the 1st defendant was bound
.. to hold the money realised by encashing the
cheque in question until further instructions were
issued by the plaintiff bank, but should not have paid
the proceeds of the cheque on the directions of the D
.Jr
2nd defendant. Therefore, the 1st defendant is
"liable for conversion of the cheque." In the same
breath the plaintiff also added "in any case is liable
to repay the amount on the basis of moneys had
and received without any consideration". E
2. The second ground on which the plaintiff based his
case in the alternative is "e;onspiracy, collusion and
~

5. Unamended Plaint - The records of the plaintiff, as mentioned by the Funds F
Management Group, show that a cheque bearing No.173756 dated
3.01.1992 drawn by the Pl~intiff on the Reserve Bank of India in the sum of
Rs.95,39,78,082.19 p. had been issued in favour of the 1st Defendant in
respect of the sale by the 1st defendant to the plaintiff of 9% IRFC Bonds
of the face value of Rs.100,00,00,000/-.
... y Amended Plaint - A cheque bearing No.173756 dated 3.01.1992 drawn by
G
the Plaintiff on the Reserve Bank of India in the sum of Rs.95,39,78,082.19
had been issued in favour of the 1st Defendant. The Plaintiff says that the
cheques was originally drawn in the name of State Bank of India and was
altered in the name of 1st Defendant and received as such as by the 1st
Defendant. However the documents and the records as maintained by
F.M.G. did not show a similar corresponding correction and continue as if
the deal was between the Plaintiffs and State Bank·of India. H
1088 SUPREME COURT REPORTS [2013] 13 S.C.R.

A fraud between the defendant Nos. 1 to 4" thereby "'- \

.;.
causing loss to the plaintiff bank.

18. On the other hand, the first defendant bank in its written
statement took a categorical stand that the records of the bank
did not show "that the cheque in dispute was issued in respect
B
of any alleged sale by the first defendant to the plaintiff of 9%
/RFC Bonds of face value of Rs. 100 crores", but went on to
say that the said cheque was issued for the benefit of the
second defendant Harshad S. Mehta, through whose employee, t
the cheque was delive{ed to the first defendant bank. The first
c defendant also took a stand that the cheque was delivered to
the first defendant under a covering letter dated 3rd January,
1992 of Harshad S. Mehta containing instructions to the first
defendant to make certain payments as detailed in the letter6.

D 6. (a) The said cheque for Rs. 95,39,78,082.19 p. dated 3rd January, 1992
was to the knowledge of the plaintiff issued for the sole benefit of Defendant
No. 2.
(b) .Under cover of a letter dated 3rd January 1992 the 2nd Defendant
delivered the said cheque to this Defendant. Pursuant to the instructions
contained in the said letter dated 3rd January, 1992 as varied by the
E subsequent oral instructions of Defendant No. 2 this Defendant issued
four cheques, as follows:-
Particulars Amounts (Rs.)
1. Bankers Cheque No. 202667 dated 3.1.92 79, 79,69,041.09
in favour of Canara Bank
2. Bankers Cheque No. 202669 dated 3.1.92 in 5,01,58,904.18
F favour of State Bank of India
3. Bankers Cheque No. 202668 dated 3.1.92 in 5,37,00,000.00
favour of ANZ Grindlays Bank
4. Bankers Cheque No. 202670 dated 3.1.92 in 4, 10,00,000.00
favour of Bank of India

'Y ,;
G Total 94,28,27,945.27

(c) Defendant No. 2, thereafter, by a letter dated 6th January, 1992
requested this Defendant to issue a Bankers cheque in -favour of ANZ
Grindlays Bank for Rs. 1, 10,00,000/- and debit his current account No. 2230,
titled as Harshad S. Mehta for the said sum of Rs.1, 10,00,000/-. This
Defendant carried out the aforesaid instructions.
STATE BANK OF INDIA THR. GEN. MANAGER v. 1089
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

19. The second defendant Harshad S. Mehta filed a A
written statement. According to him, the entire transaction in
question occurred in the following manner:-

''. .. (a) This Defendant states that on 3rd January, 1992, the
Plaintiffs undertook a set of two transactions in respect of B
9% IRFC Bonds with a view to make an assured profit,
without outlay of any funds of the Plaintiffs, of 4 paise per
face value of Rs. 100/- i.e. Rs. 4 lacs. Accordingly, the
Plaintiffs purchased 9% Tax-free Indian Railways Finance
Corporation (I RFC) Bonds of the face value of Rs. 100 C
crores @ Rs. 93.08 and delivered the same, under
instructions of this Defendant, to Canfina. This Defendant
states that accordingly the Plaintiffs delivered a Banker's
Receipt to Canfina and received a Banker's Receipt from
Defendant No. 1. ThisDefeDdant says that the terms of the
said transaction have been duly recorded in the D
computerised data of this Defendant and a copy of the
said data seized by the l.T. Department is also available
with the Office of Defendant No. 5. This Defendant craves
leave to refer to and rely upon the same as and when
produced. E

(b) This Defendant further states that the sale of 9% IRFC
Bonds of the face value of Rs. 100 cores by Defendant
No. 1 to the Plaintiffs as stated hereinabove was on behalf
of this Defendant under the routing facility offered by F
Defendant No. 1 as a customer to this Defendant. The sale
proceeds of the above bonds under the routing facility was,
therefore, received by Defendant No. 1 from the Plaintiffs
and were credited into its own account maintained by it
y with the Reserve Bank of India. Thereafter, th~ sale G
proceeds, as were due to this Defendant, were credited
to this Defendant's current account maintained with
Defendant No. 1.

9. This Defendant further states that sometime
thereafter in the month of March, 1992, before the H
1090 SUPREME COURT REPORTS [2013] 13 S.C.R.

A interest payment date fell due on 1st April, 1992, _..,
~
this Defendant initiated the process of liquidating
the outstanding banker's receipts issued by both the
Plaintiffs and Defendant No. 1. This Defendant
arranged for physical delivery of 9% Tax-free IRFC
B Bonds of a face value of Rs. 100 crores dire,gtly to
'
Canfina and instructed Canfina to tender the
discharged banker's receigt to the Plaintiffs to
enable the Plaintiffs to return the duly discharged
banker's receiQt issued by Defendant No. 1 . this }-

c Defendant states that it is an admitted position that
Canfina has received delivery of 9% IRFC Bonds
of a face value of Rs. 100 crores and it is also an
admitted position that the said Canfina has ..
discharged the Plaintiffs from all their liabilities
under the banker's receipt issued by the Plaintiffs.
D
.,l_
10. This Defendant says and submits that the above 9%
,
IRFC Bonds of the face value of Rs. 100 crores
covered under banker's receipt issued by
Defendant No. 1 would now constitute an attached
E property of this Defendant together with all the
accruals thereon. This Defendant, therefore,
submits that the Plaintiffs should be called upon to
surrender the said 9% IRFC Bonds of a face value
of Rs. 100 cores together with accrued tax free
+-
F benefits and interest on the same to Defendant No.
5 on behalf of this Defendant and accordingly this
suit be dismissed with costs."

20. The Special Court framed a large number of issues
arising between the plaintiffs and each of the 0efendants. The y
G
suit is decreed only against the first defendant Bank with a
further direction to the plaintiff to make payment of certain
amount to the second/fifth defendant.

21. The Special Court in the judgment under appeal clearly
H --
STATE BANK OF INDIA THR. GEN. MANAGER v. 1091
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]
»
rejected the case of the plaintiff based on the principle of A
money had and received. The Special Court held as follows:-

"Thus on that ground, it will have to be held that the claim
for money had and received would not be maintainable"
(Para 77) B
22. Coming to the allegations of conspiracy, collusion and
fraud, at para 92 of the judgment, the Special Court recorded
i "... it is absolutely unnecessary to decide the alternate case
whether there has been any fraud or not".
c
It also recorded:-

"On the case of fraud, no party has led any oral evidence,
the burden of proving fraud always lies on the party who
. ....- alleges it." (Para 92)
D
23. The Special Court also recorded that the only piece
of evidence relied upon on the plea of fraud is the Second
Report of the Janakiraman Committee, but opined that the
Report would not be sufficient to foist any liability on individuals.
(para 98). E

On the other hand, the Special Court held:-

"Having received, encashed plaintiffs cheque without there
being any transaction, the first defendant is now liable to
refund the money on the basis of conversion, fiduciary F
obligation and moneys paid without intending to do so
gratuitously." (para 84)
...,, 24. It can be seen from the judgment under appeal that
some of the issues were not pressed even before the Special G
Court. The issue regarding suppression of material facts by the
plaintiffs is common with reference to both the defendants.
However, issues Nos. 4 to 6 between the plaintiff and the 1st
defendant and issues Nos. 6 and 7 between the plaintiff and
the 2nd defendant imply (though inelegantly) that there was a H
1092 SUPREME COURT REPORTS [2013] 13 S.C.R.

A sale transaction of the !RFC bonds of face value of Rs.100
crores between the plaintiff which the 1st defendant Bank routed
through the 2nd defendant. In view of the specific assertion of
defendants 1, 2 and 5 and particularly the 2nd defendant in his
written statement that the plaintiff entered into two transactions
B on 03 January 1992 - one for the purchase and the other for
the sale of 9% !RFC Bonds and that the 1st defendant also
issued a B.R. (obviously for the value of the cheque in issue)
in favour of the plaintiff bank and the further assertion of the 2nd
defendant that he "arranged for physical delivery of 9%
c IRFC bonds" to CANFINA and instructed CANFINA to return
the duly discharged B.R. issued by the plaintiff bank in order
to enable the plaintiff to discharge the B.R. allegedly issued by
the 1st defendant bank - in our opinion, a more specific issue
- whether there were two transactions as alleged by the 2nd
defendant and also whether. the 1st defendant also issued a
D
B.R. for the value of the cheque in issue as averred by the 2nd
defendant, ought to have been framed.

25. The Special Court opined that the plaintiff had
disclosed all necessary facts in the plaint and was not guilty of
E suppression of material facts. A conclusion which in our opinion
is wrong and the consequences of suppression of material
facts require a further scrutiny at a later stage of this judgment.
i-
26. We have already noticed that the decree under appeal
F is in two parts. The first part of the decree is in favour of the
plaintiff and the second part virtually in favour of the second
defendant, though, the ultimate direction in this regard is that
the plaintiff should pay certain amounts to the fifth defendant
who is the statutory custodian of the 2nd defendant's property
G under the Special Court Act.

27. The plaintiff preferred Civil Appeal No. 364 7 of 1999
"being aggrieved by the judgment of the Special Court insofar
as it:-

H (A) directs the plaintiff (NHB) to hand over Rs. 4022
STATE BANK OF INDIA THR. GEN. MANAGER v. 1093"
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]
·- )>-
crores to the Custodian with interest thereon at 19% A
per annum from 30.3.92;

(B) directs the Plaintiff to pay costs of Rs. 10,000 to
Defendants 3 & 4 on the basis that no case of ,fraud
had been made out against them
B
(C) holds that the Plaintiff top management ''were aware
of what was going on"
·f
· 28. The 1st defendant also preferred an appeal being Civil
Appeal No. 2155 of 1999 ·aggrieved by the decree directing c
the payment to the plaintiff.

29. Under the Code of Civil Procedure, 1908 (for short "the
Code"), such a decree in favour of a defendant is permissible
in a case where defendant either pleads a set off or makes a
,\- counter claim as contemplated under Order VIII of the Code. D

30. The procedure that is required to be followed in the
cases of set off or counter claim is detailed under Order VIII of
the Code. From the record before us, it does not appear that
the procedure contemplated under Order VIII of the Code is E
followed in the instant case. However, we do notice that under
Section 9-A(4) of the Act, the Special Court is not bound by
-t- the procedure laid Clown. by the Code but shall be guided by
..the principles of natural justice and has the power to regulate
'
'its own procedure? F

7. Section 9-A(4) - While dealing with cases relating to any matter or claim
under this section, the Special Court shall not be bound by the procedure
laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be
guided by the prinCiples of natur_ar justice, and subject to the other
provisions of this Act and of any rules, the Special Court shall have power G
·to regulate its own procedure'.
8. . Section 9-A(1 )(a) 5
· (9-A. Jurisdiction, .powers, authority and procedure of Special Court in civil
matters.---(1) On and from the commencement of the Special Court (Trial
of Offences Relating to Transactions in Securities) Amendment Act, 1994,
the Special Court shall exercise all such jurisdiction,' powers and authority H
1094 SUPREME COURT REPORTS [2013] 13 S.C.R.

A 31. Under Section 9-A(1) of the Act8 , the Special Court has
all jurisdiction to adjudicate any matter or claim arising out of
a transaction in securities entered into during the period
specified in the said section in which a notified person is
involved in whatever capacity. We· therefore, -proceed- on the
B basis that the Special Court is authorised by law to adjudicate
the claim of the second defendant without being shackled by
the procedural fetters imposed under the Code.

32. In exercise of such jurisdiction, the Special Court
partially accepted the 'counter claim' made by the second
C defendant. Which counter claim as already noticed from the
written statement of the second defendant (relevant parts
already extracted} is based on the existence of two
transactions in securities that is (i} the sale and purchase .of
IRFC bonds between the plaintiff and CANFINA (which is not
D . a party to the suit), (ii) peti,veen the plaintiff and the first
defendant bank. According to the second defendant, both ·the
transactions were routed through him.

33. According to the second defendant under the first of
E the above-mentioned transactions, the plaintiff bank agreed to
sell the IRFC oonds to CAN FINA and received the agreed price
of the bonds without actually delivering the bonds and issued
a B.R. for the amount so received. The further. case of the
second defendant is that he got delivered the iRFC bonds to
F the satisfaction of CAN FINA and on rec.eipt of such bond_s
CAN FINA returned the disch,arged B.R. of the p1aintiff bank. In
the written statement, the second defendantdoes rmt dispute
the assertion of the plaintiff bank, that the second defendant 'gof
as were exercisable, immediately before such commencement, by_ any
G civil court in relation to any matter or claim---
(a) relating to any property standing attached under subsection (3) of
section. 3:
(b) arising out of transactions in securities entered into after the 1st day of
April, 1991, and on or before the 6th day of June, 1992, in which a person
notified under sub-section (2) of section 3 is involved as a party, broker,
H intermediary or in other manner.
. STATE BANK OF INDIA THR. GEN. MANAGER v. 1095
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]
~ _....._
possession' of the cheque which is the subject matter of dispute A
in the suit. It is also worthwhile noticing that the second
defendant does nat dispute (either in his written statement or
by way of any rejoinder to the written statement of the first
defendant) the categoric stand taken· by the first defendant that
the cheque in issue was in fact delivered by the second B
defendant to the first defendant with a covering letter dated
03.01.1992 \the content of which has already been taken note
of) the terms qf which were acted upon by the 1st defendant.
i
34. 2nd Defendant further took a categoric stand at para
9 of the written statement;
c
"9 ...... i:his Defendant arranged for physical delivery of
9% Tax-free IRFC Bonds of a face value of Rs. 100 crores
directly to Canfina and instructed Canfina to tender the
discharged banker's receiQt to the Plaintiffs to enable the D
~
Plaintiffs to return the duly discharged banker's receiQt
issued by Defendant No. 1. this Defendant states that it is
an admitted position that Canfina has received delivery of
9% IRFC Bonds of a face value of Rs. 100 crores and it
is also' an admitted position that the said Canfina has E
. discharged the Pl?Jintiffs from all their liabilities under the
banker's receipt issued by the Plaintiffs.

-r 35. Though not expressly stated, in the written statement
bµt it was argued that the cumulative effect of all the above-
F
merytioned fac~ors is that the 2nd defendant though
appropriated the proceeds of the cheque in issue, such an
appropriation is supported by consideration - i.e. he relieved
the plaintiff bank of its obligation to deliver the IRFC bonds
. -...,, which it was obliged to deliver to CANFINA. In the process of
lhe said transaction, the plaintiff Bank made a profit of Rs.4 G
lakhs in one day.
36. The first defendant al'so in his written statement
categ~.i;ically pleaded that th.ere was a security transaction
·between the pla)ntiff and the GANFINA on 3rd January, 1992 H
1096 SUPREME COURT REPORTS [2013] 13 S.C.R.

A (as alleged by the ?econp defendant in his written statement) .. ;
and in that context, the plaintiffissued a B.R. in favqur of
CAN FINA. The first defendant further took a stand that the
second defendant discharged the obligation of the plaintiff to
CANFINA under the said BR by delivering the said I.RFC Bonds
B to CANFINA9
37. The fifth defendant, the custodian also filed a written
statement. It is recorded by the judgment under appeal at para
37 as follows:- · ~-

"37. The 5th Defendant i.e. the Custodian avers that he is
c filing the Written Statement only for the purpose of Rlacing
facts before the Court. The 5th Defendant clarifies _that the
facts placed before the Court are on the basis of fhe
correspondence carried out by the Custodian with the
Plaintiffs, Standard Chartered Bank and Canfina."
D
38. The substance of the fifth defendant's written
9.. Para 10 of D1's Written Statement - (d). Defendant No. 2 discharged the
obligation of the plaintiff to CANFINA under the said BR by delivering the
said IRFC Bonds to CA().IFINA. The delivery to and receipt of the said IRF·c
Bonds by CANFINA has been admitted by CANFINA in an affidavit dated
E 10th July, 1995 cif Mr. S.A.F'_. Prabhu in Misc. petition no. 79of1994 filed by
this Defendant in this Hon'ble Court. This Defendant cra.ves leave to refer.
to and rely upon the said affidavit when produced.
10. Relevant portion of the 5th Defendant's Written Statement re.ads:-
"2. From the correspondence carried out by ·the Defendant No. 5 as
aforesaid, it appears as under:-
F (a) According to the Plaintiffs, on 3.1.1992, the Plaintiffs issued a chequ.e in .
favour of Defendant No. 1 for Rs. 95,39, 7'3,082.19p for the purchas~ o.f 9%
IRFC bonds of the face value of Rs. 100 crores on a ready forward b!'lsis.
No. B.R. _was received by the Plaintiffs from the Defendant no. 1 for the
aforesaid. . -
(b) On the s.ame day i.e. 3.1.1992, the Plaintiffs had a back to ..bacR deal
with Canfina for the sale of 9% IRFC bonds of the face value of Rs. 100
G crores. For this sale the Plaintiffs received from Canfina a cheque for Rs.
95,43, 78,082.19p and the same was credited into the Plaintiffs' account
with the RBI. In respect of the aforesaid transaction, the Plaintiffs issued
a B.R. dated 3.1.1992 in favour of Canfina. He said B.R. was returned by
Canfina, duly discharges to the Plaintiffs on 31.3.1992. The said B.R.
was returned as discharged by 8anfina, apparently as physical deliver}' of1
H the bonds in respect thereof was made by the Defendant No. 2."
STATE BANK OF INDIA THR. GEN. MANAGER v. 1097
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

-
-: )'-- statement 10 as culled out in the judgment under appeal in
paragraph 38 is also to the effect that there were two
transactions in securities contended by the second defendant
on 3rd January, 1992 and also that CANFINA had confirmed
by its letter to the Custodian stating that the B.R. issued by the
A

plaintiff was discharged on 31st March, 1993 and IRFC Bonds B
of face value of Rs. 100 crores were delivered by the second
defendant on behalf of the plaintiffs.

i 39. It is not clear either from the written statement of the
fifth defendant or from any other material on record, what was
the occasion for correspondence between the custodian and c

- the various parties whether the statements made to the
custodian by various parties involved in the transaction in the
letters allegedly written by them contained any facts relevant to
the adjudication of the issues'in the suit, and whether such
__.>,;- statements are evidence at all in the eye of law and if those D
statements are evidence what is the probative value of such
evidence are questions which are required to be decided if
such documents are sought to be proved. But we only note that
the fifth defendant also pleaded that there were two transactions
in securities as alleged by the first defendant and a B.R. was E
issued by the plaintiff in favour of the CAN FINA and the same
was returned discharged to the plaintiff bank.
_;.-
40. It is on the basis of such pleadings of the parties, the
Special Court passed the decree which is the subject matter
F
of these two appeals, though the plaintiff did not choose to
adduce any evidence in support of its pleadings.

41. Apart from the problem of the plaintiff'flQt adducing any
)- -y evidence, it is rather difficult to understand the process followed
by the Special Court to reach the conclusion that the plaintiff is G
entitled to the decree 4ls prayed for and at the same time not
entitled to retain the entire amount but should share a part of it
with the 2nd defendant.

42. Such conclusions are recorded on the basis of the H
1098 SUPREME COURT REPORTS [2013) 13 S.C.R. ~

A following findings

1. That the 1st defendant received the cheque in issue
without there being any consideration for the same.
""' ..
~-

2. There was a transaction between the plaintiff and
B CANFINA where the plaintiff agreed to sell IRFC
Bonds of face value R-s.100 crores to CAN FINA for
a consideration of Rs. 95.43 crores (appx.). Initially
the plaintiff issued a B.R. in favour of CANFINA ~
without actually delivering the bonds though the
c plaintiff received the sale price of the bonds.

3, The said B.R. was returned discharged by
CANFINA to the plaintiff.
•

4. Such discharge was a consequence of the receipt
D of the IRFC bonds of face value of Rs. 100 crores ;._
by CANFINA.

5. The said bonds were delivered to CANFINA partly
by the 2nd defendant and partly by the Standard
E Chartered Bank.

43. We are, therefore, required to examine the factual
correctness of the abovementioned fiv~ conclusions reached
by the Special Court. The first conclusion is obviously based -4
on the admission made by the 1st defendant in his written
F
statement. The content of para 8 of the written statement of the
1st defendant has already been taken note of wherein the 1st
defendant admits receipt of the cheque in question through the
2nd defendant. It is further specifically stated in para 8(d) of the
written statement of the 1st defendant as follows:- 'f- !
G
"8(d) On 3rd January, 1992 no amount was due and
payable by the plaintiff to this defendant. The proceeds of
the said cheque were intended for the benefit of defendant
No.2. The said cheque was, in fact, handed over by the
H plaintiff to defendant No.2. The said cheque was drawn in
9
STATE BANK OF INDIA THR. GEN. MANAGER v. 1099
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

favour of this defendant to facilitate defendant No.2 tp A
...... ·"" obtain same day credit of the proceeds of the said cheque.
Defendant No.2 was the intended beneficiary and real
owner of the proceeds of the said cheque."

44. Insofar as the remaining four conclusions are B
___,..
concerned, such findings can' arise only out of the pleadings of
the defendants 1 and 2 as the plaintiff never made any
reference to any transaction between the plaintiff and CANFINA.
However, it is the specific defence of the defendants 1 and 2
-'f that there was another transaction on the 3rd January, 1992
whereunder the plaintiff agreed to sell IRFC Bonds of face value
c
Rs.100 crores to CAN FINA and received the price of the same
of Rs. 95.43 crores (appx.) by a cheque which was
acknowledged by the plaintiff by issuing a B.R .. The said
receipt was subsequently returned discharged by CANFINA on
receipt of the abovementioned IRFC Bonds. It is the case of D
~ the 2nd defendant that the said bonds were delivered to
~
CANFINA by him and secured the discharge of B.R. given by
I the plaintiff to CANFINA. In support of such a plea, the 2nd
defendant examined a witness. The witness of the second
defendant clearly spoke to the fact that there were two E
transactions in securities, i.e. the sale and purchase of IRFC
Bonds of face value Rs. 100 crores (as alleged by the second
defendant) on 3rd January, 1992. whose evidence remains
undisturbed as there were no cross examination on this aspect
'""" by the plaintiff. Further, the said witness also spoke to the facts F
,.. pleaded by the second defendant that the plaintiff had issued
a B.R. to CAN FINA acknowledging the receipt of the payment
made by CANFINA towards the price of the IRFC Bonds
agreed to be sold by the plaintiff and the said B.R. was
returned discharged by CAN FINA to the plaintiff in view of the G
~ fact that CAN FINA had received the delivery of the IRFC Bonds
of face value Rs.100 crores.

45. From the judgment under appeal, it is obvious that the
Special Court accepted the defence of the 2nd defendant at
H
1100 SUPREME COURT REPORTS [2013] 13 S.C.R.
.'
>

A• least to the extent of (i) the existence of an obligation on the ·~ ....._
part of the plaintiff to deliver IRFC Bonds of face value Rs.100
crores, (2) the factum of delivery of the said bonds to CANFINA
and (3) the return of the duly discharged B.R. by CANFINA.

46. Whether the cheque in question was issued as a part
B
of the transaction which is alleged to be a 'back to back'
transaction between the CAN FINA Ltd, the plaintiff and the first
defendant is one of the issues which necessarily arose on the
above extracted pleadings. The second defendant specifically 'r
pleaded and adduced some evidence to prove the existence
c of 'back to back' transaction which remained unrebutted. The
said transaction is completely suppressed by the plaintiffs.

47. Scandalous thing about the litigation is that the plaintiffs
led no evidence. They merely tendered certain documents but
D did not bother to prove them in spite of a caution by the Special
Court. By the judgment under appeal, it is recorded in this -4

regard as follows: :-
l
"46. The Plaintiffs have led no oral evidence. The Plaintiffs
merely tendered documents. The 1st Defendant attempted
E
to lead evidence of a witness from Canfina. However, the
witness had no personal knowledge. 2nd Defendant then
led no further oral evidence. It also merely tendered some
documents. The 2nd Defendant has led evidence of his ~ '
dealer at the relevant time and tendered documents. The
F 3rd and 4th Defendants have led no oral evidence, but
merely tendered documents. At the time when these
documents were being tendered it was clarified to all
parties that mere tendering of documents would only
establish that there was in existence such a document and
G 't
that it stated what is stateo. It was clarified that the
contents of the documents would not be deemed to have
been proved. It was clarified that any party who wanted to
prove the truth of the contents had to do so by positive
evidence. As stated above, except for 2nd Defendant, no
H other party has led any oral evidence." )-

~
STATE BANK OF INDIA THR. GEN. MANAGER v. 1101
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.}

Further at para 48 the judgment under appeal records as A
follows:

"48. Apart from this oral evidence, Court has before it the
evidence ·of what was claimed by the parties in
correspondence. The truth of what was claimed in the
8
correspondence and in the various documents has not
been proveg. However, in the absence of any contrary
evidence Court is proceeding on footing that what parties
have stated to the Custodian is true."

49. The Special Court based its conclusions on C
Janakiraman Committee Report and the correspondence
between the various parties (whose details are nQt even
specified in the judgment).

50. We regret to say that the course adopted by the 0
learned Judge of the Special Court of looking into the
correspondence between the parties, which even according to
the learned. Judge had not been proved is not permissible in
law. The Special Court Act though declares that the Court is
not bound by the Code of Civil Procedure, it does not relieve
E
the Special Court from the obligation. to follow the Evidence
Act. Further, the learned Judge extensively relied upon the
second interim report of the Jankiraman Committee 11 on the
ground that the same was tendered 12 by the 1st defendant.

51. Irrespective of the fact whether such a report is F
admissible in evidence or not, it appears from the judgment
under appeal that the relevant part of the report is substantially
in accordance with the version of the 2nd defendant, as
contained in his written statement. It is recorded by the judgment
~ under appeal at para 45: G

11. Committee set up by RBI on 30.04.1992 which submitted 6 reports and
the Final Report was on 7.5.1993
12. Para 62 of the judgment - "As this document is tendered and relied upon
by the 1st defendant they are bound by what it contains.
H
1102 SUPREME COURT REPORTS [2013] 13 S.C.R

A "In respect of the Suit transactions the Janakiraman
Committee notes that on 3rd January 1992 the Plaintiffs
had entered into back to back transactions to purchase 9%
I RFC Bonds face value Rs.100 cfores from the 1st
Defendant and sell the same to Canfina. The Janakiraman
B Committee notes that the Plaintiffs Bankers Receipt to
Canfina stands discharged without the Plaintiffs having
made any delivery whatsoever. The Janakiraman
Committee notes that the Plaintiffs Bankers Receipt stood
• discharged by Canfina on ~1st March 1992 by taking
,.
c physical delivery of the Bonds from Defendant No.2
(herein). The Janakiraman Committee notes that for the
amount paid to the 1st Defendant, the Plaintiffs (herein)
have made a claim which claim is being disputed ~y the
1st Defendant (herein)."
D 52. It is well settled by a long line of judicial authority that
the findings of even a statutory Commission appointed under
the Commissions of Inquiry Act, 1952 are not enforceable
proprio vigore as held in Ram Krishna Da/mia v. Justice S.R.
Tendolkar and Others [AIR 1958 SC 538]and the statements
E made before such Commission are expressly made
inadmissible in any subsequent proceedings civil or criminal.
The leading judicial pronouncemen~s 13 on that question were
succinctlY:analysed by this Court in (2001) 6 SCC 181, Paras
29-34. Para 34 of the judgment inter alia reads:-
F
"34 ...... In our view, the courts, civil or criminal, are not
bound by the report or findings of the Commission of
Inquiry as they have to arrive at their own decision on the
evidence placed before them in accordance with law."
_,,...
G 53. Therefore, Courts are not bound by the conclusions and

13. Maharaja Madhava Singh v. Secretary of State for India in Council [(1903-
04) 31 IA 239 (PC), M.V. Rajwade v. Dr. S.M. Hassan [AIR 1954 Nag 71 :
55 Cri LJ 366], Ram Krishna Dalmia v. Justice S.R. Tendolkar [AIR 1958
SC 538, State of Karnataka v. Union of India [(1977) 4 SCC 608], Sham
H Kant v. State of Maharashtra [(1992) Supp (2) SCC 521.
STATE BANK-OF INDIA THR. GEN. MANAGER v. 1103
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

findings rendered by such Commissions. The statements made A
before such Commission cannot be used as evidence before
any civil or criminal court. It should logically follow that even the
conclusions .based on ·Such statements can also not be used
as evidence in<my-Court. Janakiraman Committee is not even
a statutory body authorised to collect evidence in the legal B
sense. It is a body set up by the Governor of Reserve Bank of
India obviously in exercise of its administrative functions,

" ......... the Governor, RBI set up a Committee on 30 April,
1992 to investigate into the possible irregularities in funds
management by commercial banks and financial
c
institutions, and in particular, in relation to their dealings
in Government securities, public sector bonds and similar
instr.uments. The Committee was required to investigate
various aspects of the transactions of SBI and other
commercial banks as well as financial institutions in this D
regard." 14 ·

Its terms of reference are: 15
14. See the Janakiraman Committee's first interim report - May 1992, page 1
15. Terms of Reference : E
The Committee is required to specifically
(a) enquire into the extent of non-compliance by banks and financial
institutions with the guidelines of the RBI regarding securities transactions
including transactions in PSU bonds, units, etc.,
(b) enquire into the inadequacies in systems and procedures in force in F
these institutions generally and the extent of use of Bank Receipts (BRs)
which have been in vogue in regard to the transactions in Government
securities and other instruments;
(c) suggest such corrective steps as may be necessary to have a more
efficient and accountable system in the future;
(d) examine and determine the extent of malpractices, if any, indulged in by G
officials of banks and financial institutions, where their funds have been
allowed to be used for speculative transactions by brokers and other
intermediaries, and whether undue benefits have been thereby derived by
brokers and others through unauthorized access to borrowed funds of the
banks/financial institutions and fix responsibility therefore and recommend
the action to be taken, and
H
1104 SUPREME COURT REPORT~ [2013) 13 S.C.R.

A 54. The report of such a Committee in our view can at best
be the opinion of the Committee based on its own examination
of the records of the various banks (including the plaintiff and
the 1st defendant) and the statements recorded (by the
Committee) of the various persons examined by the
s Committee .. In our considered view the report of Janakiraman
Committee is not evidence within the meaning of Evidence Act
- which the Special Court is bound to follow.

55. We find it difficult to approve the procec;lure followed 'r·
C by the Special Court to record such conclusions.

56. The first defendant summoned the Executive Vice
President, one Mr. Prabhu of the CANFINA and examined him.
The said Mr. Prabhu in his chief. examination categorically
admitted that there was a security transaction dated 3rd
D January, 1992 between the plaintiff and the CANFINA 16 •
Interestingly, the plaintiff did not choose to cross-examine the
said witness.

57. The only other witness examined in.this case before
E Special Court is one Hiten 8. Mehta who claimed that he was
working at the relevant point of time (1992) with the second
defendant as a Chief dealer. He also spoke to the existe!"ce
of two transactions and the issue of a B.R. by the plaintiff to
CANFINA as pleaded by the second defendant. He made a
F categoric statement in his chief examination as follows:-

"! got the discharged B.R. from Canfina and delivered the
same to NHB"

(e) scrutinize the procedure adopted by Public Debt Offices (PDOs) of the
G . RBI in regard to the maintenance of SGL accounts and other related
matters and suggest remedial measures to tone up the responsiveness
of the system.
16. On 3-1-1992 there were transactions in securities. On 3rd January, 1992
there was a transaction in securities between National Housing Sank and
Canfina. Canfina had purchased 9% IRFC Bonds f. v. Rs. 100 crores from
N.H.B.
H
STATE BANK OF INDIA THR. GEN. MANAGER v. 1105
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]
. )"
58. There is no cross-examination on behalf of the plaintiff A
in this regard.
59. Unfortunately, even the custodian himself did not
choose to ·prove the various letters alleged to -have been
received by him from various parties involved in the transaction, B
'
"' though the entire written statement of the cusk>dian is based
on such correspondence.
)
60. Coming to the conclusion of the Special Court that only
a part of the IRFC Bonds are delivered to CANFINA by the 2nd
=""'""
J defendant is based on the contents of the Janakiraman c
Committee Report and the "correspondence". The Special
Court recorded that-the plaintiffs had on 30th March, 1992
issued a cheque drawn on RBI in favour of the Standard
Chartered Bank for a sum of Rs: 55,18,43,647.07. When the
'
+
plaintiff sought to recover the said amount, the Standard D
Chartered Bank, took a stand that at the behest of the 2nd
" defendant they had delivered to CANFINA, IRFC Bonds of face
value Rs.80 crores and therefore, it was under no obligation to
refund to the plaintiffs the amount of Rs.55 crores (approx.) as
the same was paid to the Standard Chartered Bank towards E
the price of IRFC Bonds of face value Rs.80 crores which
eventually came to be delivered to CANFINA by the Standard
Chartered Bank on be~alf of the plaintiff-Bank.
'r
61. There is ab~olutely no evidence on record regarding
the payment of the above mentioned amount of Rs.55 crores F
(approx.) by the plaintiff-Bank to the Standard Chartered Bank
except the Janakiraman Committee Report and the
correspondence which is neither proved nor the content of the
~ correspondence is explained. On the other hand, the Special
Court recorded 17 with respect to the payment of Rs.55 crores G

17. The correspondence suggests that Canfina received 9% IRFC Bonds f.v.
Rs.100 crores from the 2nd Defendant. Having received 9% IRFC Bonds
f.v. Rs.100 crores, Canfina discharged Plaintiffs Bankers Receipt and
. handed it back to the Plaintiffs. The Plaintiffs were thus initially incli'ned
not to make a claim against the 1st Defendant. However. it then turns out
H
•
1106 SUPREME COURT REPORTS [2013] 13 S.C.R.

A (approx.) to the Standard Chartered Bank by the plaintiff -

. "In the plaintiffs record there is no clear indication
as to for what transaction this cheque had been issued.
The plaintiffs were, therefore, not sure for what this cheque
had been issued."
B
62. In the background of the above discussed pleadings
and evidence, we are of the opinion the suit is required to be
dismissed on the ground that there is no evidence led by the

c
plaintiff to establish ~ts case.

63. We must also record our disapprova.1 of the finding
--
recorded by the Special Court that the plaintiff did not suppress
the truth. We are of the opinion that the plaintiff approached the

that the Plaintiffs had on 30th March 1992 issued a RB.I. cheque in the
D name of Standard Chartered Bank in a sum of Rs.55,1S,43,657.07. The
said cheque had been accepted and encahsed by the Standard Chartered
Bank. In the Plaintiffs' records there is no clear indication as to for what
transaction this cheque had been issued. The Plaintiffs were therefore
not sure for what this cheque had been issued. Thus at different times
they claim/specify different securities. The Janakiraman Committee Report
E indicates that Standard Chartered Bank has given credit of the proceeds
of this cheque to one Growmore Research and Asset Management
Company Limited. This is one of the group companies run by the 2nd
Defendant. It must be mentioned that Growmore Research and Asset
Management Company Limited is also a Notified Party. The Plaintiffs
therefore made a claim against Standard Chartered Bank for the sum of
Rs.55, 1S,43,657.07. Standard Chartered bank then claimed that, a.t the
.F behest of the 2nd Defendant, they had delivered to Canfina 9% IRFC Bonds
f.v. Rs.SO crores. Standard Chartered Bank claimed that out of these 9%
IRFC Bonds f.v. Rs.SO crores they had delivered 9% IRFC Bonds f.v.
Rs.61.25 crores to Canfina on behalf of he Plaintiffs. Initially the'Plaintiffs
dispute this claim. Initially they claim that in their record_ there was no such
transaction and they had never authorised Standard Chartered Bank to make
any 'such delivery. Canfina however confirmed that out of the 9% IRFC
G Bonds f.v. Rs.100 cfa. received from 2nd Defendant they had received 9%
IRFC Bonds f.v. RsSO crores from Standard Chartered Bank. Canfina
confirms that these had been received towards Plaintiffs' liability under their
Bankers Receipt. Thus, it would appear that the amount of
Rs.55, 1S,43,657.07 received by Standard Chartered Bank was set off by
Standard Chartered Bank against 9% IRFC Bonds f.v. Rs.61.25 crores
H which it had delivered to Canfina.
STATE BANK OF INDIA THR. GEN. MANAGER v. 1107
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

Special Court with unclean hands by suppressing the relevant A
material. We shall first discuss the nature of the suppression
and then examine the legal consequences that should follow.

64. As already noticed that the plaint, as originally filed,
stated that the cheque in question was drawn "in favour of the B
1st defendant in respect of the sale by the 1st defendant to the
plaintiff of 9% IRFCBonds of face value Rs.100 crores". But
subsequently the plaint was amended omitting the reference of
the purchase of the abovementioned IRFC Bonds.

~ 65. It is pertinent to no~e that the defendants 1, 2 and 5
pleaded and the defendants 1 and 2 add_yced oral evidence
to prove that the plaintiff incurred an obligation to deliver IRFC
c

Bonds e>f face value Rs.100 crores on 3.1.1992 to CAN FINA
Ltd. It, therefore, appears that in order to discharge its
obligation to CANFINA to deliver the abovementioned Bonds, D
the plaintiff sought to purchase the Bonds from the 1st
defendant and drew the cheque in question. We may also note
that such a stand is not taken by the defendants for the first time
in the written statement. Plaintiffs were aware of the stand of
the 1st defendant in the light of the correspondence that took E
place be!tween the.1st defendant and the plaintiff prior to the
filing of the suit. Such knowledge on the part of the plaintiffs is
obvious from the averments made in the plaint itself. In the
\' background of such a stand of the 1st defendant and the stand
' of the plaintiff in the unamended plaint that its record revealed
F
that the cheque in question was issued "in respect of the sale
by the 1st defendant to the plaintiff of 9% IRFC Bonds", the
plaintiff owes a basic duty to the Court to explain in the plaint
and prove by producing its records in evidence (i) as·to how
~-
such a transaction came to be entered in its records, who was
G
responsible for such entry, (ii) who took the decisioP to
purchase the IRFC Bonds from the 1st defendant, (iii) who
signed the cheque in question and (iv) how the 2nd defendant
got custody of the cheque. None of this information is given in
the plaint.
H
1108 SUPREME COURT REPORTS (2013] 13 S.C.R.

A 66. On the other hand, we cannot ignore the pleading of
the 3rd defendant who took a categoric stand that the decision
such as the one to purchase or sell securities are taken at a
higher level of the plaintiff-Bank. It is only on the instructions of
the appropriate higher authorities, cheques such as the one in
B question, are prepared.

67. Assuming for the sake of argument that the cheque in
question came to be handed over to the 2nd defendant without
the knowledge of the higher authorities, it is difficult to believe
· that those who are responsible for the management of the
C plaintiff bank at a higher level did not bother to verify till the
scandal broke out as to how a debit of Rs. 95 crores came to
be made to the account of the plaintiff-Bank - we are unable to
believe that such a failure is only an accident. Even the
judgment under appeal records that the plaintiff's top
D management "were aware of what was going on".

68. The suppression of the original case coupled with the
very fact that the 1st defendant paid various amounts in
accordance with the instructions of the 2nd defendant after
E encashing the cheque in question coupled with the 1st
defendant's consistent stand that the cheque was issued for the
benefit of the 2nd defendant, leads us to a possible inference
that the 1st defendant acted on the instructions of some body
high up in the administration of the plaintiff Bank. Neither of the
F banks explained the genesis of such practice. But from the very
history of this litigation and the background in which the Special
Court Act came to be passed, we can safely presume that both
the banks herein, (along with other banks), did not follow any
procedure when it came to the dealings in which the 2nd
d.efendant was involved. Eventually when the bubble burst,
G everybody tried to disown the responsibility trying to project an
image of innocence. The entire effort of the plaintiff in the suit,
according to us, is to suppress all the relevant information we
are convinced that such a process is resorted to in order to
shield the delinquent officers of the bank (whoever'they are)
H
STATE BANK OF INDIA THR. GEN. MANAGER v. 1109
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.]

r >- who are responsible for such dealings by taking shelter under A
the legal principles such as unjust enrichment and moneys had
arid received etc. to recover the money paid by the plaintiff to
the 1st defendant through the cheque in question.

69. Whether the payment in question was made in
B
discharge of any existing legal obligation such as the one set
up by the defendants 1 and 2 or not could be knolJ'!n only when
the full facts are disclosed. But disclosure of full facts might
-T (though we are almost certain) lead to trouble to somebody or
the other in the management of the plaintiff-Bank or perhaps
both the Banks and God knows who else. It is equally
c
irresponsible on the part of the 1st defendant to have acted on
the instructions of the 2nd defendant without there being any
legal authority in writing on the part of the 2nd defendant to issue
instructions regarding the disbursement of the proceeds of the
cheque in question. We may not be far from truth if we draw D
-<t-·
an inference that such payments were obviously made on the
unwritten instructions by somebody in the plaintiff bank. The
whole attempt of both the banks is to shield the officers on
either side taking refuge under attractive legal pleas '"""which if
examined in the context of the limited facts pleaded give a E
picture that the suit transaction is an innocuous transaction ,_
which unfortunately for the country is not. In our opinion the suit
is a sheer abuse of the legal process.
\-
70. On the other hand, the dispute such as the one on F
hand, where the contesting parties are either organs of the
State or ifa instrumentalities, is better resolved through a
Committee of Secretaries of the Government of India or the
States, as the case may be, as directed by this Court on more
~- than one occasion. Unfortunately, such orders remain
G
unimplemented. In fact, it appears from the judgment under
appeal that even in this case the Special Court had directed
such a settlement without any success. The Special Court in
paras 2 to 5 of the judgment under appeal elaborately recorded
the legal requirement of settling the dispute to the Committee
H
1110 SUPREME COURT REPORTS [2013] 13 S.C.R.

A of Secretaries and efforts made by the Special Court to have
the matter so settled and eventually directed -

"Officer on Special Duty is directed to send a copy of this
judgment to the Ministry of Law and Ministry of Finance
and the Governor of Reserve Bank of India with a request
B
to take action on this and on the aspect set out in paras
27, 73, 74 ' ............. "

71. Even during the pendency of the instant appeal, this
Court on 18.02.2009, passed an order to the following effect:
c
"These appeals are filed by the State Bank of
Saurashtra against the National Housing Bank and others.
Having regard to the dispute between these two Public
Sector Banks, we feel it appropriate that the matter be
D considered at the level of the Finance Minister, Union of
India to explore the possibility as to whether there could
be any settlement between the parties. Therefore, we
adjourn these appeals and request the Finance Minister,
Union of India to look into the matter and suggest any
possibility of settlement between the parties. Parties would
E
be at liberty to bring this order to the notice of the Finance
Minister, Union of India.

Adjourned by three months."

F Still the Government did not think it fit to settle the matter.

72. By a letter dated 11th June, 2010, signed by one
Raman Kumar Gaur, Under Secretary to the Government of
India, Ministry of Finance, Department of Financial Services,
addressed to the Registrar of this Court, it was informed as
G under:

"8. The Special Court had gone into all aspects of
the matter including the transaction of NHB with Standard
Chartered Bank and Canfina pefore arriving at his
H conclusions. The Hon'ble Court has also gone into the
STATE BANK OF INDIA THR. GEN. MANAGER v. 1111
NATIONAL HOUSING BANK [J. CHELAMESWAR, J.)

·.> alteration in the cheque, the initial stand of NHB before.the A
Court etc. The Court has even awarded costs to NHB and .
C>thers looking into the conduct of SBS before it. The
Hon'ble Court has also observed that each transaction has
to be dealt with independently and did not agree with the
-.<
.. contention of SBS about satisfaction of !ts liability by B
delivery of bonds by Harshad Mehta to Canfina. As,(ar as
an amicable solution is concerned, all along SB( has
insisted that it be given 50% of total amount received by
NHB for which NHB is not agreeable. Thus, it was felt that
the Special Court has looked into all the above aspects c
of the matter and has given its well reasoned judgement.
It has therefore been decided, with the approval of Finance
Minister, that there seems to be no reason to suggest any
change in the decision of the Special Court."

A reading of the letter demonstrates utter callousness on D
the part of the Government in dealing with the matter. We must
also place our disgust at the audacity of the author of the letter
to state-

"that there seems to be no reason to suggest any change E
in the decision of the Special Court."

73. Apart from the question of propriety of the language
.... employe\d in the said suggestion, the content of the letter
' indicates that both the plaintiff and respondent Banks simply
F
reiterated their respective stands before the Committee of
Secretar~es. No attempt appears to have been made by the
Government to find·out the truth as to (1) how the plaintiff Bank
parted with a high denomination cheque and gave custody of
the same to Harshad Mehta and (2) as to how the first defendant
'"!'
,,. Bank paid the various amounts to the dictation of Harshad G
Mehta in the absence of any authorisation by the plaintiff Bank.
Be that as it may, if really the Government believed that the
judgment of the Special Court does not require any interference,
nothing stopped the Government from directing both the Banks
to withdraw thP.ir anneals before this Court. H
1112 SUPREME COURT REPORTS (2013) 13 S.C.R.

A 74. The whole exercise appears to be an eye wash. A thinly
veiled scorn for the order's of this Court.

75. The professed purpose of the Special Courts Act -1he
back drop of the scandal that shook the nation.- ana the manner
in which the litigation was conducted coupled with the absolute
8
indifference of the Government to get at the truth only
demonstrates the duplicity with which Governments can act.

76. We dismiss the suit and set aside the decree in toto.
-
The consequences follow insofar as the appeals are concerned.
C But in the circumstances, we do not award any costs.

Bibhuti Bhushan Bose Appeals disposed of.

..'
•