CITIBANK N A Vs. STANDARD CHARTERED BANK

JUDGEMENT

(1.) This judgment shall dispose of Civil Appeal No. 7941 of 1995 arising in Suit No. 22 of 1994 (filed by Standard Chartered Bank against Citi Bank and others) decided on 10th July, 1995 and Civil Appeal No. 8340 of 1995 arising in Suit No. 20 of 1994 (filed by Citi Bank against Standard Chartered Bank and others), decided on 7th July, 1995. Suits were tried by the Special Judge appointed under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, hereinafter referred to as the Act.

(2.) During 1991-92, Reserve Bank of India noticed that large scale irregularities and malpractices were committed in transactions in both the Government and other securities, 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. To deal with this situation and, in particular, to ensure speedy recovery of the huge amount involved and to punish the guilty and restore confidence in and maintain the basic integrity and credibility of the banks and financial institutions, this Act was enacted for establishment of Special Courts to be presided over by a sitting Judge of the High Court to be nominated by the Chief Justice of the High Court within the local limits of whose jurisdiction the Special Court is situated, with the concurrence of the Chief Justice of India. The Act provided for appointment of one or more Custodian for attaching the properties of the offenders with a view to prevent diversion of such property by the offenders. The Custodian, on being satisfied, on information received that any person has been involved in any offence relating to transactions in securities after the 1st day of April, 1991 and on and before 6th June, 1992 could notify the name of such person in the Official Gazette. Special Courts were given the jurisdiction to deal with cases of civil as well as criminal liability of the notified person.

(3.) The present appeals arise out of a set of transactions between three parties, namely, the Citi Bank, Standard Chartered Bank (for short SCB) and Canbank Mutual Fund (for short CMF) through its trustees.