B O I FINANCE LIMITED Vs. CUSTODIAN

JUDGEMENT

(1.) 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 Courts Act, 1992 had been made applicable.

(2.) The appellant banks had prior to 6th June, 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 buyback 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 inter-connected 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 latter 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 were completed with the appellants paying the agreed price and receiving the delivery of the securities which were agreed to be purchased.

(3.) Before the forward leg of the transactions could be completed, a Special Court (Trial of Offences relating to transactions in securities) Ordinance, 1992 was issued on 6-6-1992 which was subsequently replaced by the Act, Special Courts Act, 1992: