NARESH K. AGGARWALA AND CO.versusCANBANK FINANCIAL SERVICES LTD. AND ANR.

                      [2010] 6 S.C.R. 1


            NARESH K. AGGARWALA AND CO.                            A
                               v.
    CAN BANK FINANCIAL SERVICES LTD. AND ANR.
            (Civil Appeal No. 5173 of 2004)

                        MAY 5, 2010
                                                                  ·s
   [B. SUDERSHAN REDDY AND SURINDER SINGH
                  NIJJAR, JJ.]

     Shares and Securities:
                                                                  c
     Appellant entered into a transaction for purchase of 1
lakh RIL shares with the respondent 1 - After few days entered
into another transaction for purchase of 1 /akh RIL shares with
the respondent 1 - Respondent no. 1 delivered only 1 lakh RIL
shares - Claim by appellant for balance 1 lakh RIL shares - D
Held: Not sustainable as the first transaction was cancelled
by appellant - The entries made in the statement of.aocount
of appellant showed that the delivery of shares pertained to
the second transaction - Appellant did not produce
documentary evidence to show that in his books of accounts, E
the contract was shown as incomplete.

     Securities Contract Regulation Act, 1956 - s. 16 -
Circular dated 27.6.1969 - In terms of the Circular,
transactions into securities which were permissible were spot
delivery contract; contract for cash; hand delivery and special   F
delivery - Contract note issued by the appellant in relation to
the transaction in question showed that it was not a spot
delivery contract - Thus, transaction was contrary to the
circular and was not capable of being enforced.
                                                                  G
     Plea - Plea of bias against the Presiding Officer - Held:
It has become .a common practice for the losing party after
receiving an unfavourable verdict, to make allegations of bias
- On facts, wild and bald a/legation of bias was without any
                              1                                   H
    2       SUPREME COURT REPORTS                 '[2010] 6 S.C.R.


A basis hence rejected.

          Words and phrases: 'Spot delivery contract - Meaning
    of, in the context of s. 2(i) of Securities Contract Regulation
    Act, 1956.
B     On 14.2.1992, a contract was entered into between
  the appellant and the respondent no.1 for purchase of
  one lakh shares of RIL at a price of Rs.154 per share. On
  23.3.1992, the appellant entered into another contract
  with the respondent no.1 for purchase of one lakh shares
C of RIL at a price of Rs.375 per share. On 27.2.1992,
  another contract was entered into by the appellant for
  purchase of 5 lakh shares of SAIL at a price of Rs.51 per
  share.

0         It was the case of appellant that the balance one lakh
    RIL shares pursuant to contract dated 23.3.1992 were not
    delivered by respondent no.1, inspite of assurances
    given by respondent no.1 from time to time. On 27.7.1992,
    appellant requested respondent no.1 that the transaction
E   with regard to the SAIL shares be squared up at the time
    when the shares were purchased. They were priced at
    Rs.51 per share and market rate according to appellant
    on 27.7.1992 was Rs.130 per share. Appellant asked
    respondent no.1 to credit Rs.79 per share for five lakh
    shares of SAIL to the account of appellant. By letter d~ted
F   17 .9.1992, respondent no.1 resiled from the contract
    regarding sale of shares of SAIL. On 27.5.1993
    respondent no.1 issued a notice demanding an amount
    of Rs.2.56 crores. By letter dated 14.6.1993, the appellant
    informed the respondent no.1 that after reconciliation of
G   the account, the respondent no.1 was liable to pay to the
    appellant an amount of Rs.2.59 crores. The appellant
    further claimed that according to its statement of account
    as on 31.7.1993 an amount of Rs.3.18 crores was due to
    it from respondent no.1. Appellant filed suit for recovery
H   of Rs.3.18 crores together with interest@ 24% .
      NARESH K. AGGARWALA AND CO. v. CAN BANK             3
              FINANCIAL SERVICES LTD.

     Respondent no.1 opposed the claim and also filed A
counter claim of the amount of Rs.2.53 crores with
interest w.e.f. 22.4.1992. It stated that the appellant had
agreed to purchase one lakh sh.ares of RIL on 14.2.1992
@ Rs.154/- per share, but this contract was cancelled by
the appellant on the very same date. Thereafter, the 8
appellant intimated about another contract for purchase
of one lakh shares of RIL on 23.3.1992. Against the said
contract, the delivery of one lakh shares was made by the
respondent No.1 to the appellant on 22.4.1992. After the
receipt of a letter dated 15.9.1992 when the Management c
of respondent No.1 changed, the appellant started
claiming that the delivery of one lakh shares on 22.4.1992
had been adjusted against the cancelled contract dated
14.2.1992. The counter claim by respondent No.1 was
based on the difference of price in shares between two D
periods of contralf.t i.e. 14.2.1992 and 23.3.1992.
     The Special Court allowed the counter claim of
responde'nt No.1 and dismissed suit filed by the appellant.
It held that the transaction dated 27.2.1992 was illegal and
  ~

therefore was not capable of being enforced. It also held      E
that the appellant was not entitled to make any claim either
in relation to RIL shares or in relation to SAIL shares.
Hence the appeal.

      Dismissing the appeal, the Court                         F
    Held: 1. It is true that in the examination-in-chief, the
appellant had stated that he had made the claim against
respondent No.1 on the basis of difference in price of RIL
shares as on 14.2.1992 and as on 23.3.1992, i.e., Rs.375-
Rs.154 for one lakh shares. The Special Court correctly G
observed that in the absence of pleadings the statement
made by the appellant had to be ignored. Respondent
No.1 took a categorical plea that contract dated 14.2.1992
was cancelled by appellant on the same day. The conduct
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    4       SUPREME COURT REPORTS                [2010] 6 S.C.R.

A of the appellant showing delivery made on 22.4.1992 as
  delivery against the contract dated 23.3.1992 indicated
  that he was also treating the contract dated 14.2.1992 to
  be cancelled. Had that not been so, he would have made
  entries in the books of account to show that the delivery
B of shares were against the contract dated 14.2.1992. Till
  27.7.1992, the RIL shares were not in issue. The letter
  written by the appellant to the Respondent No 1 talked
  only of the SAIL shares. Therefore it was for the appellant
  to produce documentary evidence to show that in his
c books of accounts, the contract was shown as
  incomplete. But the appellant failed to produce the
  necessary evidence. [Para 17] [20-F-H; 21-A-D]

         2.1. It is clear from the circular dated 27.6.1969 issued
    under Section 16 of the Securities Contract Regulation
D   Act 1956 that transactions into securities by spot delivery
    contract; contract for cash; hand delivery and special
    delivery were only permitted. A Spot delivery contract as
    defined in Section 2(i) is the contract where actual
    delivery of the securities and the payment of price is
E   either on the same day or on the next day. Admitted
    position is that the contract- note issued by the appellant
    in relation to this transaction showed that it was not a
    spot delivery contract. In terms of the circular dated
    27.6.1969, if the rules made under the Act, bye laws and
F   regulations of a recognized Stock Exchange permit
    contract for cash, hand delivery or special delivery, those
    types of transactions would also be permitted by the
    circulars. The provisions of the bye-laws of Delhi Stock
    exchange clearly permitted spot delivery transaction,
G   hand delivery transaction and special delivery
    transaction. The appellant was aware of the illegality of
    the transaction. It is evident from the letter dated
    27.7.1992 written by the appellant to the respondent No.1
    wherein it was cle<\"IY stated that "technically this was
H
    NARESH K. AGGARWALA AND CO. v. CANBANK               5
            FINANCIAL SERVICES LTD.

incorrect since contracts relating to unquoted shares. A
would be outside the purview· of Delhi Stock Exchange
rules, bye-laws and ·t'egulations." [Paras 18, 19) [22-F-H;
23-A-D-F; 24-C-D]
     2.2. Admittedly the contract note issued in relation to
                                                             8
the transaction for SAIL shares by the appellant did not
show that it was a spot delivery contract, therefore the
transaction was clearly contrary to the cir.cular.
Consequently in terms of the provisions of Sub-section(2)
of Section 16 the transaction was illegal and was not
capable of being enforced. Special Court correctly held C
that the appellant was not entitled to make any claim either
in relation to the RIL Shares or in relation to contract for
                                       '
SAIL shares. Further as the appellant was not entitled to
claim any amount from the respondent on account of
those transactions, there was no question of the appellant D
being entitled to any interest. [Paras 20, 21] [25-B-E]
     2.3. The contract with regard to SAIL shares being
contrary to law was void ab initio. Therefore, the appellant
could not possibly claim anything against the SAIL shares E
on account of any difference in the contracted rate and
the rate when the same were listed on the Delhi Stock
Exchange. Therefore, the appellant was liable to pay to
respondent No.1 for the RIL Shares @ Rs.375/- per share,
the contract dated 14.2.1992 having been cancelled. Thus F
the Special Court, correctly concluded that the appellant
was liable to pay to the respondent No.1 the amount of
Rs.2.53 crores. [Para 22] [27-B-D]
     3. Apart from the bald submissions, there was no
material placed on the record to indicate that the G
judgment of the Special Court was coloured and affected
by bias. It has become a common practice for the losing
party after receiving an unfavourable verdict, to make
allegations of bias against the Presiding Offjcer. ,Such
vyild and bald submissions with'out any factual b;lsis is H
    6       SUPREME COURT REPORTS                [2010) 6 S.C.R.


A rejected. [Para 24) [27-F-H; 28-A]

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    5173 of 2004.
        From the Judgment & Order dated 15.04.2004 of the
B   Special Court (Trial of Offences Relating to Transactions in
    Securities) Act 1992 at Bombay in Suit No. 4 of 1998.
        Rupinder Singh Suri, Sanjay Agnihotri, Kripa Shankar
    Prasad, Chanchal Kumar Ganguli for the Appellant.
c       Jayant Bhushan, Sunita Dutt, Nilesh Parikh, Rajiv Mehta,
    Subramonium Prasad for the Respondents.
        The Judgment of the Court was delivered by
        SURINDER SINGH NIJJAR, J. 1. This Statutory First
D Appeal under Section 10 of the Special Court (Trial of offences
  relating to Transactions in Securities) Act, 1992 (in short the
  'Special Court Act' ) is directed against the judgment and
  decree dated 15.4.2004 passed by the Special Court at
  Bombay in Suit No.4 of 1998.
E      2. The aforesaid suit was initially filed by the appellant in
  the High Court of Delhi at New Delhi on its original side being
  Suit No.1827/1993. It was transferred to the Special Court in
  view of the appellant being notified on or about 17.6.1997
  under the provisions of the Special Court and thereafter the suit
F was numbered as Suit No.4/98 before the Special Court. The
  appellant had prayed for money decree in the amount of
  Rs.3, 18,06,868/- together with interest at the rate of 24%.
  Respondent No.1, Can Bank Financial Services Limited, had
  opposed the claim and also lodged a counter claim, claim and
G decree in the amount of Rs.2,53,75,000/- from the appellant .
  with interest w.e.f. 22.4.1992. The appellant claims to be a
  stock broker, being a sole proprietory concern of Mr. Naresh
  K. Aggarwala. The respondent No.1, Can Bank Financial
  Services Limited, is a wholly owned subsidiary of Canara
H Bank.
    NARESH K. AGGARWALA AND CO. v. CAN BANK                      7
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]
      3. The appellant had prayed for a decree against                A
respondent No.1 in respect of net amount payable arising out
of two sets of transactions in shares i.e.; (i) two transactions in
the shares of Reliance Industries Limited (RIL) (ii) one
transaction in respect of Steel Authority of India Limited (SAIL).
It is claimed that on 14.2.1992 a contract was entered· into          B
between the appellant and Can Bank for purchase of one lakh
shares of RIL at a price of Rs.154 per share inclusive of all
charges. On 23.3.1992 another contract was entered into by
the appellant with Can Bank for purchase of one lakh shares
of RIL at a price of Rs.375 per share net. On 27.2.1992 another       C
contract was entered into by the appellant for purchase of five
lakh shares of SAIL at a price of Rs.51 per share net and a
contract note was issued. In the plaint it was averred that of the
two lakh RIL shares purchased by the appellant only one lakh
shares were delivered by respondent No.1. These shares
according to the appellant were appropriated towards the              D
contract dated 14.2.1992. It was the case of the appellant that
the balance one lakh RIL shares pursuant to contract dated
23.3.1992 have not been delivered by respondent No.1.
According to the appellant, respondent No.1 had been wrongly
claiming that the entire two lakh shares had been duly delivered      E
to the appellant. The appellant claims that this fact is amply
borne out from the various letters written by respondent No.1
to the appellant wherein respondent No.1 claims to have
delivered one lakh shares to its Bombay office and the
remaining one lakh shares allegedly to a broker/one Mr. Hiten         F
P. Dalal. The appellant states that on inquiry Mr. Dalal has sated
that no such shares had been delivered on behalf of respondent
No.1. In communication dated 07.08.1992 respondent No.1
acknowledges only one delivery and seeks intimation whether
his broker, Mr. Hiten P. Dalal, on their account has delivered        G
one lakh shares or not. Therefore respondent No.1 is, in fact,
aware that no such delivery had been made. Respondent No.1,
in fact, in its communication dated 15.09.1992 acknowledges
the factum of both the contract notes. In letter dated 28.09.1992,
the appellant reiterated that at no stage it had received any         H
    8       SUPREM~ COURT REPORTS                   [2010] 6 S.C.R.


A share from Mr. Hiten P. Dalal on account of respondent No.1.
  It was also stated that Mr. Hiten P. Dalal had confirmed that he
  had not given any Reliance shares on account of respondent
  No.1 to the appellant. It was also averred that in spite of
  assurances having been given by respondent No.1 from time
8 to time, the balance one lakh shares were not delivered.
       4. It was further claimed by the appellant that on 27.07.92
  respondent No.1 was requested that the transaction with regard
  to the SAIL shares should have been squared up at the time
  when the shares were purchased. They were priced at Rs.51
C per share. The market rate, according to the appellant, on
  27. 7.1992 was Rs.130 per share. Therefore appellant asked
  the respondent No.1 to credit Rs. 79 per share for five lakh
  shares of SAIL to the account of the appellant-company. The
  appellant claimed that by letter dated 17.09.1992 respondent
D No.1 resiled from the contract regarding sale of shares of SAIL.
  The appellant therefore by letter dated 19.09.1992 once again
  requested for the cooperation of the respondents as the delivery
  had to be effected within reasonable period of time to avoid
  substantial losses. In this letter the appellant reiterated that one
E lakh shares only had been delivered and no other delivery had
  been made in respect of Reliance shares. Against contract
  note dated 14.02.1992 Rs.1 ,54,000/- was credited to the
  account of respondent No.1 but the respondent No.1 reiterated
  its stand in the letter dated 17.9.1992.
F
       5. The appellant further stated that on 27 .05.1993
  respondent No.1 issued a notice demanding an amount of
  Rs.2,56,25,000/- on the basis of account maintained up to 08/
  02/1992. By letter dated 14.06.1993 the appellant informed the
G respondent No.1 that after reconciliation of the account, the
  appellant was liable to be paid by respondent No.1 an amount
  of Rs.2,59, 75,000/-. It was further claimed that according to the
  statement of :\ccount of the appellant as on 31.7.1993 an
  amount of Rs.3, 18,06,868/- is due to the appellant from
  respondent No.1. According to the appellant, respondent No.1
H
    NARESH K. AGGARWALA AND CO. v. CANBANK                      9
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]

is liable to pay this amount to the appellant with interest at the   A
rate of 24 % per annum.

     6. Respondent No.1 in his written statement took a
preliminary objection stating that the suit is wholly misconceived
and a fictitious claim has been put forward solely with the
                                                                     8
intention of delaying or avoiding payment of a sum of
Rs.2,53, 75,000/- and interest thereon to the answering
respondent No.1. It was also stated that along with the written
statement respondent No.1 is preferring a counter claim against
the appellant for the recovery of the ·aforesaid amount. The
averments made in paragraph 1 to paragraph 6 of the plaint           C
were admitted by the respondents.

     7. With regard to the other avefments, it is however stated
that as averred by the appellant in the plaint both the parties
were maintaining running accounts with regard to the business        D
transactions with each other. The contracts dated 14.2.1992
and 23.3.1992 are admitted. It is however claimed by the
respondents that the contr'\ct dated 14.2.1992 was cancelled
rescinded by the appellant on the very day, namely, 14.2.1992.
It was also claimed that the claim made by the appellant with        E
regard to the running account is not correct. The running
account maintained by respondent No.1 shows a sum of
Rs.2,53,75,000/- as due from the appellant on 31.3~1993.
Hence the counter claim had been preferred in the written
statement itself. It is however, claimed that since the contract
                                                                     F
dated 14.2.1992 was cancelled, there was only one contract
in existence i.e. contract dated 23.3.1992 against which
delivery had been made. Therefore, nothing is payable by
respondent No.1 to the appellant on account of this contract.
The version of the communication between respondent No.1
and Shri Dalal as given by the ai:ipellant is denied. The query      G
dated 7.8.1992 was necessitated to make sure that no wrong
delivery or excess delivery was made by file broker, Shri Dalal,
in respect of the cancelled contract dated 14.2.1992.. the
appellant has tried to take undue advantage of the query made
                                                                     H
    10      SUPREME COURT REPORTS                    [2010] 6 S.C.R.


A by respondent No.1 for the purpose of keeping the record
  straight. The appellant had admitted the non-existence of the
  contract dated 14.2.1992 and did not show the amount as
  outstanding. This position is confirmed by the appellant in the
  statement of account signed on 17. 7 .1992 and again
B reconfirmed on 24.8.1992. It is only after the inquiry by
  respondent No.1 dated 15.S.1992 about the position of one
  lakh shares that appellant got the ma/a fide idea of seeking
  illegal advantage of the cancellation entry having been recorded
  in respondent No.1 books. This is particularly so because by
C then the share prices had gone up. Under these circumstances
  the appellant submitted a revised statement of account on
  19.9.1992. According to respondent No.1 the averments made
  in the plaint by the appellant do not convey the true position.
  Once the contract dated 14.2.1992 was cancelled, the question
  of delivery did not arise. Therefore nothing is payable by
0 respondent No.1 to the appellant on account of the contract
  dated 14.2.1992.
       8. With regard to the contract in relation to SAIL shares,
  the fact that the appellant entered into a deal with respondent
E No.1 on 27.2.1992 for purchase of five lakh shares of SAIL at
  the price of Rs.51 is admitted. It was however denied that a
  contract note was issued to evidence the transaction. It is stated
  that the contract note was neither in accordance with the
  prevalent practice, nor in accordance with the rules and bye-
F laws of the Delhi Stock Exchange and the contract note is also
  opposed to the law including the Securities Contracts
  (Regulation) Act, 1956 and hence void ab initio. It is further
  stated that the irregularity of the contract note was admitted by
  the appellant himself in his letter dated 27. 7.1992. It is submitted
G that the contract itself being contrary to law, no amount could
  be claimed by the appellant against this contract.
        9. In the counter claim it was pleaded that the appellant has
    admitted in paragraph 8(a)(i) that on 23.3.1992 a contract was
    entered into between respondent No.1 and the appellant
H
    NARESH K. AGGARWALAAND CO. v. CANBANK                     11
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]

  whereunder the respondent No.1 agreed to sell and the A
  appellant agreed to purchase one lakh shares of Reliance
  Industries Limited on 23.3.1992 at Rs.375 per share. This
  averment is affirmed by respondent No.1. According to the
  respondent No.1 the aforesaid one lakh shares were delivered
  by respondent No.1 to appellant on 22.4.1992. This delivery has  s
  also been admitted by the appellant. It is further stated that
  appellant had wrongly contended after a long lapse of time that
  this delivery was in respect of another alleged contract dated
  14.2.1992. The appellant, according to respondent No.1, has
  illegally and wrongly accounted for its liability to pay to      c
  respondent No.1 in respect of one lakh shares sold on
  23.3.1992 only at Rs.154 per share instead of Rs.375 per
  share. Thus the difference between the rate per share at
  Rs.375, which was the actual contract rate, and the rate at
  which the appellant has accounted for i.e. Rs.154 per share
                                                                    0
  comes to Rs.2,21,00,000/~. According to respondent No.1 this
  amount is payable by the appellant to the respondent No.1 with
  interest. It is accepted that there were dealings between the
  appellant and respondents and the accounts were settled
  periodically .. Therefore on 31.3.1993 the statement of mutual
  account between the parties shows that a sum of . E
  Rs.2,53,75,000/- is due and payable by the appellant to the
. respondent No.1. The interest at the rate of 24% from 22.4.1992
  till 31.5.1994 amounts to Rs.1,28,47,397.26/- which is also due
  and payable.
                                                                    F
         10. In its replication the appellant has reiterated the
  averments made in the plaint. It is stated that the counter claim
  is frivolous and is to delay and avoid payment of the contractual
  obligations, of respondent No.1. The appellant reiterates that
  the only one lakh shares of RIL were d.elivered against contract G
  dated 14.2.1992. It is denied that the contract dated 14.2.1992
  was cancelled by the appellant. It is further reiterated that the
  respondent No.1 is liable to make delivery of the remaining one
  lakh shares; contract is to be purchased by the appellant vide
  contract note dated 23.3.1992. It is further stated that the H
     12        SUPREME COURT REPORTS                (2010] 6 S.C.R.

A appellant is still ready and willing to perform his part of the
  contract but the respondents are trying to wriggle out of their
  contractual obligations.
          11. On the basis of the pleadings the Special Court framed
s·   the following issues:

          "1.    Whether Plaintiffs prove that Rs.2,59, 75,000/-
                 money is due from and payable by Defendant No.1
                 on account of transactions undertaken on behalf of
                 or with Defendant No.1 after accounting for all
c                transactions in the running account as alleged in
                 para 7 of the Plaint?
          2.     Whether Plaintiffs have correctly appropriated one
                 Lac shares delivered towards the contract note
D                dated 14.2.1992 (i.e. for Reliance Industries Ltd.
                 shares) purchased @ of Rs.154/- as alleged in
                 para Ba (ii) of the Plaint?
          3.     Whether the Plaintiffs prove that no shares were
                 received from the broker of Defendant No.1
E                towards the Contract dated 23.3.1992 as averred
                 by the Plaintiffs in para No.Sa (iv) of the Plaint?
          4.     Whether the Plaintiffs have correctly given credit of
                 Rs.154/- per shares for one Lac shares delivered
F                and since one Lac shares have not been delivered
                 as alleged in para Ba (v) of the Plaint?
          5.     Whether the Contract dated 14th February 1992 for
                 purchase of 1,00,000 shares at the rate of Rs.154/
                 - per share of Mis. Reliance Industries Ltd. placed
G
                 by the Plaintiffs on Defendant No.1 was cancelled/
                 rescinded as alleged by Defendant No.1 as alleged
                 in paras 8 and 9 of the Written Statement?
          6.     Whether Plaintiffs' contract note dated 27 .2.1992
H                (SAIL) had been issued as per prevalent practice
    NARESH K. AGGARWALA AND CO. y, CANBANK           13
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.J.

           as alleged in para Sb (ii) of the Plaint?                  A

    7.     Whether Defendant No.1 by its leiter dated
           17.9.1992 has resiled from its contractual
           obligations as alleged in para Sb (vi) of the Plaint?

    8.     Whether the Plaintiffs are entitled for a decree or        B
           Rs.3, 1S,08,S68/-?

    9.     Whether the Plaintiffs are entitled for interest at the
           rate of 24% per annum?

    1O.    Whether Defendant No.1 is entitled to payment of
                                                                      c
           Rs.2,53, 75,000/- with interest as claimed in paras
           1 to 4 and 8 of the Counter Claim?

     11.   What orders and decree?"
                                                                      D
    12.    The Special Court notices that both the parties
           have filed documents. On behalf of the appellant
           one witness has been examined. The respondent
           No.1 has not led any evidence. It is also noticed that
           some documents have been admitted in evidence              E
           by consent of the parties. Issues Nos.2 to 5 were
           taken up together as they relate to the transactions
           in RIL shares. All these issues have been decided
           in favour of respondent No.1 and against the
           appellant. It is further held that the transaction dated
                                                                      F
           27.2.1992 was illegal and therefore is not capable
           of being enforced. Therefore issues No.6 and 7
           have also been decided against the appellant.
           Issues Nos. 1, 8 and 9 have also been decided
           against the appellant. It has been held that the
           appellant is not entitled to make any claim neither        G
           in relation to RIL shares nor in relation to SAIL
           shares. So far as issue No.10 is concerned, the
           Special Court has clearly held that the counter claim
           of respondent No.1 succeeds and is allowed.
                                                                      H
    14     SUPREME COURT REPORTS                      [201 OJ 6 S.C.R.


A                Therefore, a decree in an amount of
                 Rs.2,53,75,000/- with an interest at the rate of 12%
                 per annum from 22.4.1992 till the date of realisation
                 is passed against the appellant. The appellant was
                 also directed to pay costs entitled to the
B                respondents.

         13.       The present appeal has been filed by the appellant
                   being aggrieved by the aforesaid judgment and
                   decree. Mr. Rupinder Singh Suri, learned Senior
                  Counsel for the Appellant, had made elaborate
c                  submissions in Court which have been reiterated
                   in the written arguments, filed later. He submits that
                  the impugned judgment in addition to being totally
                  contrary to the facts, records and law in general, is
                   a classic case wherein the prejudice against the
D                  appellant is writ large, owing to the fact that he is a
                · notified person. The Special Court has totally
                  disregarded the evidence adduced by the appellant
                  in support of its case. The counter claim has been
                  erroneously decreed merely on surmises and
E                 conjectures. It is also submitted that the interest at
                  the rate of 12% w.e.f. 22.4.1982 till realisation has
                  been illegally granted without there being any
                  evidence in support. In support of his submission,
                  Mr. Suri, has relied on numerous documents which
F                 were on the record. Mr. Suri has placed heavy
                  reliance on the letter dated 7.8.1992 which pertains ·
                  to the statement of account between the parties for
                  the period 1.4.1991 to 25.7.1992. According to the
                  learned counsel this letter will show that only one
G                 lakh shares of RIL had been delivered. Therefore,
                  respondent No.1 was seeking confirmation that only
                 one lakh shares had been received by the appellant.
               . This letter would also show that respondent No.1
                  had intimated that suitable decision with regard to
H                 contentions of the appellant on SAIL shares will be
    NARESH K. AGGARWALA AND CO. v. CAN BANK                        15
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]
                 given in due course. He then made a reference to A
                  letter dated 15.9.1992 written by one Ashok Kumar
                 Kini, Executive Vice-President of respondent No.1
                 wherein he stated that there 'were two contract
                 notes. This l.etter shows that even according to
                 respondent No.1 the physical delivery of one lakh. B
                 shares at Rs.375/- was made by the office of
                 respondent No.1 at Bombay and one lakh shares
                 at Rs.154/- of RIL were delivered. by Mr. Hiten P.
                 Dalal on its be~alf. The appellant had replied to the
                 aforesaid letter pn 19.9.1992, and reiterated that c
                 only one lakh shares had been received. According
                 to Mr. Suri on 21.9. 1992 respondent No.1 wrongly
                 claimed that appellant had al.I along been
         r       maintaining that there was only one deal. Therefore
                 appellant t!1rough letter dated 28.9.1992 reiterated·
                                                                          D
                 its stand that on checking its account there seemed .....
            '- to have be~n.no re~ord of r~c'3iptof any share from
  ........ .
        '
                 Hiten P. Dalal.
                         '  -'
                                  Mr, Suri further
                                          '  ·-   . submitted
                                                       .
                                                       -·-,
                                                              that in the
 4d t.,..JG      written statement in paragraph 8 respondent No.1
              . had wrongly claimed that        .   the
                                                     .· contract
                                                         --·
                                                                  dated
                                                                    .
   ! '           14. 2.1992 had been cancelled. In fact there was no E..
     .J i I   .. evidence led by respond-ent No.1, on issue No.5
                •which was relevant to this claim. In support of this
                 learned counsel relied on extract of the account for
              · the period 1.4. 1991 to 31.3. 1992 which shows the
                 existence of both the transactions. Therefore F
                 according to Mr. Suri the respondent No. 1 has
                 wrongly claimed that contract dated 14.2. 1992 was
                 cancelled. Finally it is submitted by Mr. Suri that one
                 lakh shares were adjusted against the contract
                 dated 23.3. 1992 on the basis of trade practice. As G
~t.,.            the appellant is a broker he has corresponding
                 commitments to every client. Mr. Suri submits that
(                the Special Court has wrongly concluded that it was
                 for the appellant to prove that the contract dated
                 14.2.1992 was not in existence. Mr. Suri further ,H
    16   SUPREME COURT REPORTS                  [2010] 6 S.C.R.

A          submitted that learned Special Court has wrongly
           concluded that the contract with regard to SAIL
           shares being itself illegal could not be enforced in
           law. In fact respondent No.1 had all along
           maintained that contract note dated 27.2.1992
B          would be honoured in due course. It is only on
           17.9.1992 that respondent No.1 for the first time
           tried to wriggle out of the contract by stating that the
           transaction was against law and hence void and
           unenforceable. According to Mr. Suri this plea is not
c          acceptable and there is no bar in law for entering
           into such a contract. The reliance placed by the
           Special Court on the circular dated 27.6.1969 is
           totally misplaced and contrary to the facts of the
           case. According to learned senior counsel, Mr. Suri,
           the circular would not be applicable to sale/
D
           purchase of securities on a contract for cash. It was
           for this reason th~t statement of account of
           respondent No.1 would show that the contract was
           alive till at least 31.3.1992 when it was reversed in
           the books of accounts. This, according to Mr. Suri,
E          was just a ploy on the part of respondent No.1 to
           escape its liability under the contract dated
           27.2.1992. Mr. Suri submitted that the bias of the
           Special Court is evident from the manner in which
           only selected pieces of evidence have been used
F          to decree the counter claim of respondent No.1.
           The evidence, which was in favour of the appellant,
           had been ignored by the Special Court. According
           to Mr. Suri this was clearly due to the undue
           importance attached by the Special Court to the
G          facts that appellant is a notified person under the
           Act. It is further submitted by Mr. Suri that there was
           no legal justification for awarding 12% interest to
            respondent No.1 w.e.f. 22.4.1992 as there was no
           evidence in support of such a claim. In any event
H
    NARESH K. AGGARWALA AND CO. \I. CANBANK         17
FINANCIAL SERVICES LTD. [SURINDER SINGH NiJJAR, J.]
          the Special Court could only grant interest from the       A
          date of the filing of the counter claim and not from
          an earlier date. Mr. Suri submitted that the Special
          Court also erred in law in coming to the conclusion
          that the requisite averments to constitute a suit for
          damages are absent in the present case.                    B
          According to Mr. Suri a perusal of the plaint would
          clearly show that it is a case for damages arising
          out of breach of contract on the part of respondent
          No.1. Mr. Suri then submitted that the Special Court
          has wrongly drawn an adverse inference against the         C
          appellant on account of non-production of the
          "sauda books". According to the learned senior
          counsel the sauda books were not at all relevant for
          proving the case of the appellant. There was ample
          evidence on record to show that respondent No.1            D
          was guilty of breach of contract. Therefore,
          respondent No.1 was liable to make good the
          damages suffered by the appellant. The appellant
          having produced the best evidence available, it was
          not necessary to produce the sauda books at all.           E
          Therefore the learned Special Court has wrongly
          concluded that the best evidence rule would be
          applicable in the facts of the present case.

    14.   On the other hand, Mr. Bhushan, learned senior
          counsel, submits that the findings of the Special          F
          Court are based on clear and cogent evidence. He
          has also made reference to the correspondence
          between the parties and submitted that the entire
          claim of the appellant is based on a deliberate
          misreading of the same. Learned senior counsel             G
          relied on letter dated 17.7.1992 which shows that
          by that time the Reliance shares were not on issue.
          This letter has been written by the appellant to
          respondent No.1 and talks only of the SAIL shares.
          In this letter appellant has, in fact, admitted that the   H
    18   SUPREME COURT REPORTS                [2010) 6 S.C.R.


A         contract with regard to SAIL shares was technically
          incorrect since contract relating to unquoted shares
          would be outside the purview of Delhi Stock
          Exchange Rules, By-Laws and Regulations. It is
          also admitted that the shares at the relevant time
B         were not quoted at any centre. This admission is
          reiterated in the letter dated 18.8.1992 seeking to
          make clarification in response to the letter dated
          7.8.1992. It was confirmed by the appellant that only
          one lakh shares of RIL had been received from the
c         Bombay office of respondent No.1 and that no
          delivery was received from H.P. Dalal. By letter
          dated 20.4.1992 it was clearly stated that barring
          the outstanding transaction of five lakh shares of
          SAIL there is nothing outstanding. Mr. Bhushan
D         submits that the letter dated 15.9.1992 is being
          misinterpreted by the appellant which is merely an
          observation made by respondent No.1. According
          to Mr. Bhushan by that time the scam had been
          discovered, a new management had taken over and
          the letter had b~en written on going through the
E
          records. Hence it was observed that against two .
          sale contracts of RIL, for one lakh shares each,
          physical delivery had been given of one lakh shares
          by Hiten P. Dalal. To take advantage of the
          aforesaid letter, the appellant writes the letter dated
F         19.9.1992 stating that there were two contracts for
          two lakh RIL shares. Against these two lakh shares,
          appellant had received only one lakh shares which
          had been credited against the contract dated
          14.2.1992. The appellant further claimed delivery of
G         one lakh shares under contract dated 23.3.1992.
          Having taken this stand in its letter dated 14.6.1993
          the appellant does not claim any damages on
          account of non-delivery of one lakh shares against
          the contract note dated 23.3.1992 at the rate of
H         Rs.375/- per share. The only plea is that delivery of
    NARESH K. AGGARWALA AND CO. v. CANBANK                    19
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]

           one lakh shares has been credited against the            A
           contract dated 23.3.1992. Therefore, credit due to
           respondent No.1 would be only Rs.1,54,00,000/-
           and not Rs.3,75,00,000/- as shown by the
           respondent No.1 in its account. Mr. Bhushan further
           submits that even if the plea of the appellant is        B
           accepted that the transaction has been shown in the
           account as being incomplete, it still. had to be
           reflected in the sauda books. However during the
           course of the trial sauda books were not produced
           and therefore an adverse inference has been drawn        c
           against the appellant. With regard to the SAIL
           shares, Mr. Bhushan submits that the contract was
           contrary to law. The appellant was aware of this
           legal position and admitted the same in the letter
           dated 27.7.1992.
                                                                    D
     15.     Upon consideration of the submissions made by
             the learned counsel for the parties we have
             examined the m(lterial on the record. It is not
             disputed before us that there were, in fact, two
             transactions with regard to RIL shares dated E
           . 14.2.1992 and 23.3.1992. ·The Special Court
             notices that the appellant claims to have adjusted
             the delivery of one lakh shares of RIL against the
             contract dated 14.2.1992 which is said to have
             been cancelled by respondent No.1. The Special · F
             Court also notices that if the case of the appellant
             that the contract dated 14.2.1992 was alive is
             accepted, then the transaction will remain
             incomplete and unfulfilled. The Speci(ll Court further
             observed as follows:                       ·           G

     "In my opinion, even without recording any finding as to
   · whether the contract dated 14-2-1992 was cancelled on
     the same day or not, the Plaintiff cannot be granted any
     relief in relation to the contract dated 14-2-1992, assuming   H
     20       SUPREME COURT REPORTS                     [2010] 6 S.C.R.

A         it to be outstanding because the only relief that might have
          been claimed by the Plaintiff if the contract dated 14-2-
          1992 was unfulfilled contract was relief for damages for
          breach of contract."

        16. The Special Court also upon reading of the plaint
8
  concludes that it is not a suit filed by the appellant.for a decree
  in the amount of damages for breach of contract. In our opinion,
  the aforesaid findings cannot be said to be erroneous or based
  on no evidence. In fact in paragraphs 6 and 7 of the plaint the
C appellant had stated as follows:

          "6. The plaintiff and defendant No.1 have been doing
          regular business over a fairly long period of time and are
          maintaining running accounts respectively.

 0       7. The present suit is in respect of recovery of money
   which is due from the defendant No.1 on account of
   transactions undertaken on behalf of with the defendant No.1
   after accounting for all the transactions in the running accounts
   and the amount whereof has not been paid to the plaintiff in
 E spite of requests for the same."

          17. In the face of these averments, we find it a little difficult
          to appreciate the submission of Mr. Suri that the findings
          on these issues are erroneous or not supported by any
          evidence. The Special Court also notices that the appellant
.F        had, in fact, adjusted the delivery of shares towards the
          contract dated 23.3.1992. It is true that in the examination-
          in-chief appellant had stated that he had made the claim
          against respondent No.1 on the basis of difference in price
          of Reliance shares as on 14.2.1992 and as on 23.3.1992,
G         i.e., Rs.375-Rs.154 for one lakh shares. In our opinion, the
          Special Court has correctly observed that in the absence
          of pleadings the statement made by the appellant had to
          be ignored. We are also unable to accept the criticism of
          Mr. Suri that the burden of proving the continuance of the
H
NARESH K.AGGARWALAAND CO. v. CANBANK FINANCIAL 21
   SERVICES LTD. [SURINDER SINGH NIJJAR, J.]
   contract dated 14.2.1992 was not on the appellant. We          A
   may notice here that respondent No.1 had taken a
   categorical plea that contract dated 14.2.1992 was
   cancelled by appellant on the same day. The conduct of
   the appellant showing delivery made on 22.4.1992 as
   delivery against the contract dated 23.31992 indicated that    B
   he was also treating the contract dated 14.2.1992 to be
   cancelled. Had that not been so, he would have made
   entries in the books of account to show that the delivery
   of shares were against the contract dated 14.2.1992. In
   our opinion Mr. Bhusan, has rightly pointed out that till      C
   27.7.1992, the reliance shares were not in issue. The letter
   written by the appellant to the Respondent No 1 talks only
   of the SAIL shares. Therefore it was for the appellant to
   produce documentary evidence to show that in his books
   of accounts the contract had been shown as incomplete.
                                                                  0
   But the appellant failed to produce the necessary
   evidence, which led the Court to observe that:

   "The burden was on the plaintiff to prove that the contract
   dated 14.2.1992 remained incomplete. In my opinion,
   therefore, it was for the plaintiff to produce documentary     E
   evidence to show that in his Books of Accounts the contract
   is shown as incomplete. It becomes necessary for the
   plaintiff to produce the document to show that the
   transaction in his Books of accounts is shown as
   incomplete. The conduct of the plaintiff of showing delivery   F
   made on 22.4.1992 as delivery made on 23.3.1992
   indicates that he was also treating the contract dated
   14.2.1992 as cancelled. Had that not been so he would
   have made entries in the Book of account to show that the
   delivery of shares were against contract dated 14.2.1992.      G
   "

   In our opinion the view expressed by the special Court is
   an acceptable view, and does not call for any interference.

   18. With regard to issues no 6 & 7, we again do not find       H
    22       SUPREME COURT REPORTS                    [2010} 6 S.C.R.


A any merit in the submissions of Mr. Suri. Admitted position is
  that on the date.when the contract with regard to the SAIL shares
  was entered into, the shares were unlisted. It is also the admitted
  position that on that day, the circular dated 27 .6.1969 issued
  under Section 16 of the Securities Contract Regulation Act 1956
B was in existence and in force. Relevant portion of the afore said
  circular reads as follows:

          "S.O. 2561 In exercise of the powers conferred by sub-
         section (1) of Securities Contract (Regulation) Act 1956
         (42of1956) the Central Government being of opinion that
c        it is necessary to prevent undesirable speculation in
         securities in the whole of India, hereby declares that no
         person in the territory to which the said Act extends shall
         save with the permission of the Central Government enter
         into any Contract for the sale or purchase of securities
D        other that such
         Spot delivery contract or
         Contract for cash or
E        Hand delivery or

         sp·ecial Delivery
         in any securities as is permissible under the said act and
         the rules, bye laws and regulations of a recognized Stock
F        Exchange."

         It is thus clear from the circular that after issuance of these
         Circular, transactions into securities by (i) Spot delivery
         contract; (ii) Contract for cash; (iii) Hand delivery and (iv)
G        Special Delivery are only permitted. The term 'spot
         delivery' is defined in Section 2 (i) of the Act, which reads
         as under:-
         "Spot delivery contract means a contract which provides
         for:-
H
     NARESH K. AGGARWALA AND CO. v. CANBANK          23
 FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]
       (a)   actual delivery of securities and the payment of a A
             price therefore either on the same day as the date
             of the contract or on the next day, the actual period
             taken for the dispatch of the securities or the
             remittance of money therefore through the post
             being excluded from the computation of the period . B
             aforesaid if the parties to the contract do not reside
             in the same town or locality;

       (b)   transfer of the securities by the depository from the
             account of a. beneficial owner when such securities
             are dealt with by a depository; "                          C

      A perusal of the aforesaid definition would show that spot
 delivery contract is the contract where actual delivery of the
 securities ahd the payment of price is either on the same day
 or on the next day. Admitted position is that the contract note • D
 issued by the appellant in relation to this transaction shows that
 it was not a spot delivery contract.

        19. As regards the other types of contracts, the terms,
· contract for cash, hand delivery or special delivery are not          E
  defined by the Act. Therefore in terms of the circular dated
  27.6.1969 quoted above, if the rules made under the act, bye
  laws and regulations of a recognized Stock Exchange permit
  contract for cash, hand delivery or special delivery, those types
  of transactions would also be permitted by the circulars. The
  provisions of the bye-laws of Delhi Stock exchange clearly            F
  permits spot delivery transaction, hand delivery transaction and
  special delivery transaction. It was noticed by the Special court
  that

      "It was not even the case of the Plaintiff that the transaction   G
      into SAIL shares in relation to which contract note has been
      issued by the plaintiff was either hand delivery, spot
      delivery or special delivery contract."

      It was argued before the Special Court that the tram;action       H
    24     · SUPREME COURT REPORTS                 (2010] 6 S.C.R.


A        was a cash del!very contract. The Special Court negated
         such contention, observing as follows:

         "Firstly there are no pleadings to that effect. There is no
         evidence to that effect and there is no provision to that
         effect either in the Act, rules framed by the Delhi Stock
B
         Exchange. Therefore cash delivery contract unless it is
         permitted by the Act, bye laws and regulations of the Stock
         Exchange is prohibited by the circulars."                   ·

        The appellant was aware of the illegality of the transaction.
C It is evident from the letter dated 27th of July, 1992 written by
  the appellant to the respondent No.1 wherein it is clearly stated
  that "technically this was incorrect since contracts relating to
  unquoted shares would be outside the purview of Delhi Stock
  Exchange rules, bye-laws and regulations." In the face of such
D an dmission, the Special Court, in our opinion, has correctly
  concluded, as noticed above. In our opinion the view expressed
  by the Special Court does not call for any interference.

      20. The contention that the circular did not apply to unlisted
E securities was duly considered and rejected by the Special
  Court. The Special Court thoroughly considered the term
  'securities' as defined in Section 2(h) of the Act. It reads as
  under:-

         "2(h) Securities include-
F
         (i) shares, scrips, stocks, bonds, debentures, debenture
         stock or other marketable securities of a like nature in or
         of any incorporated company or other body corporate;

         (ia) derivative;
G
         (ib) units or any other instrument issued by any collective
         investment scheme to the investors in such schemes.

         (ii) Government securities;
H
        NARESH K. AGGARWALA AND CO. v. CANBANK          25
    FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.)

        (iia) such other instruments as may be declared by the A
        central Government to be securities; and

        (iii)   rights or interests in securities; "

        Perusal of the above quoted definition shows that it does
        not make any distinction between listed securities and B
        unlisted securities and therefore it is clear that the Circular
        will apply to the securities which are not listed on the Stock
        Exchange. Admittedly the contract note issued in relation
        to this transaction by the appellant does not show that it
        was a spot delivery contract, therefore the transaction was C
        clearly contrary to the circular. Consequently in terms of the
        provisions of Sub-section(2) of Section 16 the transaction
        was illegal and is not capable of being enforced.

      21. With regard to issues no 1,8 & 9, it was correctly D
 observed by the Special Court that the Plaintiff i.e. Appellant
 herein is not entitled to make any claim either in relation to the
.Reliance Industries Shares nor in relation to contract for SAIL
 shares. Further as the appellant is not entitled to claim any
 amount from the respondent on account of the aforesaid E
 transactions, there is no question of the appellant being entitled .
 to any interest.

         22. On Issue No.10, Mr.Suri has submitted that the Special
    Court has illegally allowed the counter claim of respondent No.1.
    It was submitted that the Special Court has come to a contrary F
    conclusion even though the fact situation was identical in the
    claim put forward by both the parties. We are unable to accept
    the submissions made by the learned senior counsel. Once it
    is concluded that the appellant is not entitled to claim any
    amount from respondent No.1 in relation to the aforesaid three G
    transactions i.e. contract dated 14.2.1992, contract dated
    23.3.1992 forone lakh RIL shares each and contract dated
    27.2.1992 relating to one lakh SAIL share. It needed to be
    determined as to whether the appellant in fact needed to
1
                                                                     H
    26      SUPREME COURT REPORTS                 (2010] 6 S.C.R.


A compensate respondent No.1. In the counter claim, the
  respondent No.1 clearly stated that the appellant had agreed
  to purchase one lakh shares of RIL on 14.2.1992 @ Rs.154/-
  per share, but this contract was cancelled by the appellant on
  the very same date. Thereafter, the appellant had intimated
B about another contract for purchase of one lakh shares of RIL
  on 23.3.1992 @ Rs.375/- per share. Against the aforesaid
  contract, the delivery of one lakh shares was made by the
  respondent No.1 to the appellant on 22.4.1992. After the receipt
  of a letter dated 15.9.1992 when the Management of
c respondent No.1 had changed, the appellant started claiming
  that the delivery of one lakh shares on 22.4.1992 had been
  adjusted against the cancelled contract dated 14.2.1992. The
  respondent No.1 had based the counter claim on the difference
  of price in shares between two periods of contract i.e. 14.2.1992
  and 23.3.1992. The difference of amount of Rs.2,21,00,000/-
0
  was claimed as the amount due from the appellant to the
  respondent No.1. A perusal of the letter dated 27 .5.1993, which
  contains a statement of account with the subject "settlement of
  outstanding" clearly shows that the respondent No.1 is claiming
  a sum of Rs.2,56,25,000/- as outstanding against the appellant
E from various transactions as per the details given therein.
  Against the entry dated 4.3.1992, there is a clear entry with
  regard to the sale of one lakh RIL shares@ Rs.375/- per share
  given a total consideration of Rs.3, 75,00,000/-. The respondent
  No.1 had clearly requested the appellant to settle account by
F paying Rs.2,56,25,000/- immediately. In the letter dated
  14.6.1993, the appellant offered its comment on the statement
  of account for payment by respondent No.1 on 27.5.1993.
  Herein, the appellant states that the credit claimed by the
  respondent No.1 should be Rs.2,21,00,000/- instead of
G Rs.2,56,25,000/-. This balance was claimed by the appellant on
  the ground that the credit claimed by respondent No.1 of
  Rs.3,75,00,000/- has to be reduced by Rs.1,56,00,000/- i.e. the
  difference in price of shares of the two contracts dated
  14.2.1992 and 23.3.1992. The appellant also claimed that a sum
H of Rs.2,95,00,000/- was also required to be adjusted in respect
    NARESH K. AGGARWALA AND CO. v. CANBANK          27
FINANCIAL SERVICES LTD. [SURINDER SINGH NIJJAR, J.]

of SAIL shares. The appellant had claimed the difference in A
contract price of shares of SAIL @ Rs.51/- per share against
the official quotation of the Delhi Stock Exchange @ Rs.110/-
per share. Thus he had claimed that respondent No.1 was liable
to pay for the difference of ~s.59/- per share (Rs.11 O/-Rs.51/-
per share amounting to Rs.2,95,00,000). It was held by the B
Special Court, which finding has been affirmed by us, that the
contract with regard to SAIL shares being contrary to law was
void ab initio. Therefore, the appellant could not possibly claim
anything against the aforesaid SAIL shares on account of any
difference in the contracted rate and the rate when the same     c
were listed on the Delhi Stock Exchange. Therefore, the
irresistible conclusion was that the appellant was liable to pay
to respondent No.1 for the RIL Shares @ Rs.375/- per share,
the contract dated 14.2.1992 having been cancelled. Thus the
Special Court, in our opinion, correctly concluded that the D
appellant was liable to pay to the respondent No.1 the amount
of Rs.2,53, 75,000/-. In view of the above, we find no reason to
interfere with the findings of the Special Court on Issue No.1 O
also.

     23. We also do not find any cogent reason to interfere or   E
to reduce the amount of interest awarded by the Special Court
in the peculiar facts and circumstances of this case.

     24. Mr.Suri had submitted that the entire approach of the
Special Court was biased against the appellant simply because F
the sole proprietor of the appellant was duly notified under the
Special Courts Act. We are of the considered opinion that the
aforesaid submission has to be merely stated to be rejected.
The allegations of bias and mala fide had to be proved by
cogent and clear evidence. In the present case, apart from the G
bald submissions made by Mr.Suri, no material was placed on
the record to indicate that the judgment of the Special Court
was coloured, let alone being affected by any bias. It seems to
have become a common practice these days for the losing party
after receiving an unfavourable verdict, to make allegations of
                                                                 H
    28      SUPREME COURT REPORTS                [2010) 6 S.C.R.

A   bias against the Presiding Officer. We decline to give any
    credence to such wild and bald submissions without any factual
    basis.

        25. In view of the above, we find no merit in this appeal
    and the appeal is dismissed. No order as to costs.
8
    D.G.                                      Appeal dismissed.