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2019 DIGILAW 2034 (BOM)

L. M. Devare v. Bhupen C. Dalal

2019-08-30

A.K.MENON

body2019
JUDGMENT : A.K. Menon, J. This miscellaneous application is filed by the Official Liquidator of Bank of Karad (In Liquidation). It seeks an order against the 1st respondent to pay a sum of Rs.14,31,00,092/- towards balance said to be outstanding towards interest in an overdraft facility availed of by the 1st respondent at the material time from the Bank of Karad (In Liquidation), (hereinafter referred to as "the Bank"). In the alternative, it seeks a direction against the 1st respondent to prove his claim to ownership over certain securities within a time to be fixed by this court and a direction against the 2nd respondent-Custodian to pay to the applicant the amount to the extent of the value of the securities over which the 1st respondent claims title from and out of the amounts deposited with the Custodian by the applicant. 2. A brief description of the parties will be appropriate. The applicant is the Official Liquidator of the Bank of Karad, which came to be wound-up by an order of the High Court in Company Petition No.229 of 1992. The 1st respondent is a party notified under the Special Court [Trial of Offences Relating to Transactions in Securities] Act, 1992, (hereinafter referred to as "the Special Court Act"). The 2nd respondent is the Custodian appointed under the Special Courts Act. This application has been filed by the Official Liquidator, pursuant to liberty said to have been granted to the Liquidator vide an order dated 14th November 2014 passed in Miscellaneous Application No.85 of 2012. At all material times, the 1st respondent was a broker dealing in securities transactions with many banks, including the bank in liquidation. The applicant states that the bank in liquidation was victim of several irregularities and malpractices arising out of diversion of funds. That an Overdraft Account bearing No.348 was opened in the name of the 1st respondent in the Bank of Karad. The 1st respondent was notified under the Special Courts Act on 2nd July 1992. The overdraft account had a debit balance of Rs.18,22,682/- as on 27th May 1992 i.e. the date on which an order directing liquidation to the Bank of Karad was passed. 3. The 1St respondent, it transpires, had filed Miscellaneous Application No.85 of 2012 in this court, claiming a sum of Rs.1,71,96,700/- being the amount of face-value of certain securities lying with the bank in liquidation. 3. The 1St respondent, it transpires, had filed Miscellaneous Application No.85 of 2012 in this court, claiming a sum of Rs.1,71,96,700/- being the amount of face-value of certain securities lying with the bank in liquidation. The applicant contended that the Books of Accounts and records of the Bank of Karad were found to be containing several inaccuracies. The bank did not maintain records, which could provide particulars of the securities received and delivered to the bank through various parties. That despite appointing professionals, including the Chartered Accountants, to conduct an investigation, it has not been possible to establish, beyond doubt, the ownership of the securities as vesting in the 1st respondent. In Miscellaneous Application No.85 of 2012, an order came to be passed by this court on 14th November 2014, directing the applicant to deposit redemption amount in respect of various securities with the 2nd respondent-the Custodian, to be placed in a separate account. 4. According to the applicant, the ownership of the securities had not been established. The applicant handed over to the Custodian a net amount of Rs.2,84,64,587/-, said to be due as on 27th May 1992, being the principal amount of the securities and interest thereon received from the Reserve Bank of India (RBI), after deducting the debit balance of Rs.18,22,682/-. This amount excluded interest from 1st April 1992 till date. The contractual rate of interest agreed between the 1st respondent and the bank in liquidation was 18% p.a. It is therefore contended that the 1st respondent had filed Miscellaneous Application No.41 of 2015, praying for a direction that the applicant herein, namely, the Bank of Karad (In Liquidation), should remit monies earned on credit balances in the account of the 1st respondent and invested in banks. 5. The miscellaneous application was opposed on the ground that the government securities deposited in the Bank of Karad (In Liquidation) were to provide security for repayment of outstanding dues in the overdraft account and that only the principal amount was adjusted, as contemplated in the order dated 14th November 2014. It was inter alia contended that the relief prayed for in Miscellaneous Application No.41 of 2015 was already the subject matter of Miscellaneous Application No.85 of 2012, which had been rejected, because the 1st respondent had then sought interest on a sum that was yet to be determined. It was inter alia contended that the relief prayed for in Miscellaneous Application No.41 of 2015 was already the subject matter of Miscellaneous Application No.85 of 2012, which had been rejected, because the 1st respondent had then sought interest on a sum that was yet to be determined. This court had dismissed Miscellaneous Application No.41 of 2015 vide order dated 26th August 2016. 6. Mr. Kamat on behalf of the applicant has contended that on 14th December 2015, the Liquidator had submitted a claim in respect of the outstanding overdraft amount of Rs.18,22,682/-, along with interest @ 18% p.a. from 1st April 1992 to 30th September 2005, aggregating to Rs.1,97,49,771/-. Since the ownership over the securities had not been proved by the 1st respondent, the court directed the Custodian to keep this amount in a separate account and the 1st respondent had no right to claim the value of the securities received from the RBI. The Bank of Karad was ordered to be wound-up on 27th May 1992 and the Official Liquidator was appointed in July 1994. That the 1st respondent was liable to pay interest due on the overdraft account that has been due for 22 years and the Liquidator has been attempting to recover a legitimate amount from the 1st respondent. It was contended that the 1st respondent has failed to prove that he was owner of the securities lying with the RBI. Meanwhile, interest in the overdraft account is now amounting to Rs.14,31,00,092/-. The applicant claims the amount due from the 1st respondent, based on a computation of interest annexed to the application. It is the contention of Mr. Kamat that, if the 1st respondent proves the ownership over the securities beyond doubt, the Liquidator has preferential lien and, therefore, is entitled to set-off for the amount lying with the Custodian. The amount was initially lying with the applicant, who was directed to deposit the same with the Custodian and the applicant was to have the first right over the said amount. It is on this basis that Mr. Kamat has advanced his submissions in support of the application. 7. Mr. The amount was initially lying with the applicant, who was directed to deposit the same with the Custodian and the applicant was to have the first right over the said amount. It is on this basis that Mr. Kamat has advanced his submissions in support of the application. 7. Mr. Kamat has invited my attention to the order dated 14th November 2014 passed in Miscellaneous Application No.85 of 2012 and submitted that the Custodian was directed to place the redemption amount of various securities with the Custodian, who was required to maintain it in a separate account. It is submitted that the rate of interest was of 18% and compounded quarterly. The rate of interest was disputed. The 1st respondent had in Miscellaneous Application No.85 of 2012 specifically sought a prayer for adjustment only to the extent of Rs.18,22,682.03 and to exclude the interest amount. This prayer was not granted. On the contrary, in paragraph 6 of the said order, the court has recorded that the applicant has himself submitted that the Bank of Karad is entitled to charge interest. It is the issue of title to the securities, which is still at large. 8. Mr. Kamat has relied upon the compilation of documents, all of which, he submitted, were admitted documents, which are described as follows :- Sr. No. Description of the Document 1. Demand Promissory Note dated 21st September 1990 for the overdraft facility for an amount of Rs.25 Lakhs. 2. Letter of Lien and set off dated 21st September 1990. 3. Letter of continuing security for the Demand Promissory Note dated 21st September 1990. 4. Agreement for an overdraft limit of Rs.25 Lakhs dated 21st September 1990. 5. Letter dated 21st September 1990 by M/s. Bhupen C. Dalal, respondent to Bank of Karad, Applicant. 6. Letter to the Custodian dated 14th December 2005, informing that an amount of Rs.1,97,49,771/- is outstanding from respondent No.1. 9. It is submitted that the documents referred to above were evidence of the liability of the 1st respondent. That on 14th December 2015, the applicant had addressed a letter to the Custodian in response to a public notice issued by the Custodian, calling for claims against the persons and entities involved in the securities scam. 9. It is submitted that the documents referred to above were evidence of the liability of the 1st respondent. That on 14th December 2015, the applicant had addressed a letter to the Custodian in response to a public notice issued by the Custodian, calling for claims against the persons and entities involved in the securities scam. The Liquidator has filed the claim in respect of the debit balance of Rs.18,22,682.03, along with interest @ 18% p.a. on compounded basis, which was payable from 27th May 1992 till the date of payment. Thus, the 1st respondent was indebted to the bank in liquidation, as aforesaid, and as of that date, a sum of Rs.1,97,49,771/- was due and payable by the 1st respondent, along with further interest on compounded basis. Mr. Kamat has submitted that in Miscellaneous Application No.218 of 1993, the Liquidator had filed an affidavit dated 13th June 1994, in which he had set out the fact that the Subsidiary General Ledger maintained by the Bank of Karad (In Liquidation) for recording transactions in securities had revealed irregularities in accounting procedures and that he had not been able to come to a correct status of holdings of the securities in the books of the bank and to the account of the broker-clients of the bank, including the notified parties. 10. Mr. Kamat stressed upon the fact that due to non-availability of the full record, it was not possible to identify debits and credits in the respective Ledger Accounts of broker-clients corresponding with purchase and sale transactions and, therefore, he could not certify ownership of physical securities in the possession of the Liquidator and those with the Public Debt Office of the RBI in SGL Account No.107. The Liquidator has put on record the fact that the brokerclients should provide the particulars of the cheque numbers, dates and amounts, together with the drawee bank's name, in order to enable the Liquidator to ascertain the ownership. Based on the position of balances of various securities, a list of securities and broker-clients had been prepared and scrutiny of the said record revealed that an amount of Rs.18,33,083.69, along with interest thereon, was due from M/s. Bhupendra Champaklal Devidas. The court was, therefore, requested to pass appropriate orders. Based on the position of balances of various securities, a list of securities and broker-clients had been prepared and scrutiny of the said record revealed that an amount of Rs.18,33,083.69, along with interest thereon, was due from M/s. Bhupendra Champaklal Devidas. The court was, therefore, requested to pass appropriate orders. The fact that this amount was outstanding in the account of M/s. Bhupendra Champaklal Devidas, the proprietary concern of the 1st respondent, was also reiterated in the letter dated 4th March 1994, addressed by the Provisional Liquidator to the Custodian. He has also relied upon a letter dated 3rd April 2003, addressed by the Liquidator to the Custodian, reiterating the fact that the overdraft account was still showing debit balance of Rs.18,22,682.03, on which the interest @ 18% p.a., which was accruing was and is payable from 27th May 1992 till the date of payment. A Statement of Account was also referred to show the debit balance brought forward as on 30th September 2005. Mr. Kamat submitted that the Liquidator cannot verify title to the securities with the limited record available. 11. On the other hand, the 1st respondent-Bhupen C. Dalal has not contested the claim, nor did he seek adjustments in the year 1992. It is precisely because the title to the securities was not clear, that the letter dated 4th March 1994 was written. By inviting my attention to the affidavit-in-reply dated 16th August 2017, Mr. Kamat submitted that Mr. Dalal has not demanded these securities right from the year 1992. Mr. Dalal has not established title over the securities and hence it is not possible to reconcile the claim. My attention was also drawn to the averments made in paragraph No.9 of the said affidavit-in-reply, where the 1st respondent had stated that it is safe to infer that the securities are the properties of the 1st respondent. In paragraph No.18, it is contended by the 1st respondent that, at the time of hearing of Miscellaneous Application No.85 of 2012, the respondent has stated that the amount recovered by the Liquidator be paid to the Custodian, after deducting a sum of Rs.18,22,682.03. Referring to the statement of the 1st respondent, as recorded in the order dated 14th November 2014, the Liquidator claims that he is entitled to interest. 12. Referring to the statement of the 1st respondent, as recorded in the order dated 14th November 2014, the Liquidator claims that he is entitled to interest. 12. In the affidavit-in-reply, the deponent states that what he meant was interest from 27th May 1992 till the overdraft was wiped-off by redemption of securities that matured in 1992. In paragraph No.19, the deponent has referred to certain amounts of six securities and according to Mr. Dalal, the entire overdraft was cleared by 2nd September 1992 and, therefore, the demand for interest is misconceived. Furthermore, the Liquidator has collected the money from 1992 till 2014. The two other securities, as mentioned in paragraph No.20 of the reply, are also stated to be with the Liquidator. A further affidavit has been filed by Mr. Dalal on 14th March 2018, in which Exhibit-A is a list of securities in the form of bonds, pro-notes etc. held in the physical possession of the Liquidator and said to be belonging to the notified parties. The caption in the statement itself suggests that the statement is only indicative of some of these securities belonging to the notified parties. 13. The 1st respondent has contended that the RBI governs the securities market and operated in government securities. RBI had delivered and received the securities through the banks and the dealers, and brokers had to deal through banks to deliver or receive the securities. He has contended that, at the material time, he had securities overdraft accounts in Bank of India, Bank of Baroda and Bank of Karad, which banks acted on instructions of the 1st respondent. They received the securities and debited the clients with the costs. The deponent states that the routing bank dealt with government securities at a price, which would be subject to an additional levy of interest accrued from the date of last payment till the date of delivery. Such inter bank delivery was directly between the banks and without the knowledge of the broker. If the securities were received in a larger denominations, they were to issue a bank receipt and send the bonds for sub-division. 14. Respondent No.1 contended that in Miscellaneous Application No.218 of 1993, the Bank of Karad had filed an affidavit dated 13th June 1994, setting out the securities from the overdraft account of the 1st respondent. He has relied upon the aforesaid statement in support of his contention. 14. Respondent No.1 contended that in Miscellaneous Application No.218 of 1993, the Bank of Karad had filed an affidavit dated 13th June 1994, setting out the securities from the overdraft account of the 1st respondent. He has relied upon the aforesaid statement in support of his contention. Exhibit-A to the said affidavit is the list of the securities, as aforesaid, showing the name of the notified persons i.e. broker or client, to whom it is ascribed; the description of the security, face-value and certain remarks. In the first statement, there are about 33 items, 30 of which are attributed to M/s. Bhupendra Champaklal Devidas and 3 to late Abhay D. Narottam. Exhibit-B to the said affidavit is the list of securities shown as balances in the SGL Account No.107 of the Bank of Karad, reflecting the Securities Ledger maintained by the bank, setting out names of the notified persons, description of the security, face-value and remarks. This list contained 28 items, of which 26 are attributed to M/s. Bhupendra Champaklal Devidas and 2 are attributed to late Abhay D. Narottam. The affidavit also annexes to it a statement of the Overdraft Account No.348 for the period from 9th November 1991 to 12th May 1992. I may point out here that, during the course of the submissions made before me, neither party referred to this bank statement. 15. On 21st September 2018, this court directed the Custodian to file an affidavit stating whether the securities in respect of which the respondent was seeking relief was subject-matter of any report of the Chartered Accountant submitted to the Custodian. An affidavit dated 7th December 2018 filed by the Custodian discloses that the court had appointed M/s. Haribhakti & Co. for auditing the accounts of respondent No.1 and the Auditor has dealt with the claim made by the applicant and made it clear that he was unable to make any comment on the claim since supporting documents and bank statements were not available. It is further submitted that on a review of General Ledger, the Auditor had observed a credit balance of Rs.31,35,345/- as on 31st March 1992. It is further submitted that on a review of General Ledger, the Auditor had observed a credit balance of Rs.31,35,345/- as on 31st March 1992. The Custodian has stated that it had filed Miscellaneous Application No.218 of 1993 seeking possession of securities held by the applicant on behalf of respondent No.1 and in the order dated 13th January 2000, the court observed that there were several claims pending in relation to the securities and there was nothing on record to show that the securities belonged exclusively to the notified parties. It is contended that it is not possible for the court at the current stage to direct the Liquidator to handover the securities or conclude that securities belonged to a notified party. 16. In these circumstances, the Liquidator was directed to hold the securities and has deferred the application made by the Custodian for possession of the securities till disposal of the relevant company petitions. It is further contended that a public notice had been issued, calling upon the members of the public to intimate the office of the Custodian of any claims that they may have. This notice was issued pursuant to the directions of the Special Court granting eight weeks time to lodge claims. In response to the public notice, the applicant-Liquidator had, by a letter dated 14th December 2005, claimed a sum of Rs.1,94,49,771/- as on 30th September 2005. At that stage, respondent No.1 was having outstanding of Rs.18,22,682.03 in the Overdraft Account No.348. After receipt of the said letter, respondent No.2-Custodian, on 8th April 2010, pointed out that respondent No.1 has, in his affidavit, stated that Bank of Karad was holding the securities of Rs.1.75 crores and on maturity thereof, the overdraft account must have been satisfied. At that stage, the applicant-Liquidator, by a rejoinder dated 27th August 2010, mentioned the fact that the 1st respondent in his letter of 22nd April 2010 had not claimed ownership of the subject securities. 17. According to the Custodian, while the 1st respondent has claimed ownership, he had failed to submit documentary proof of title and that the 1st respondent had incorrectly contended that the securities belonged to him and was seeking adjustment of the same against the overdraft account facility. 17. According to the Custodian, while the 1st respondent has claimed ownership, he had failed to submit documentary proof of title and that the 1st respondent had incorrectly contended that the securities belonged to him and was seeking adjustment of the same against the overdraft account facility. In paragraph 12 of that affidavit, it is further stated that the Custodian has received a cheque for Rs.2,84,64,587/-, favouring the Custodian and the maturity value of the same was Rs.3,02,87,269/-, from which the overdraft amount of Rs.18,22,682/- was deducted and the balance amount of Rs.2,84,64,587/- was handed over to the Custodian and which has been deposited in a separate bank account. Thus, it is the Custodian's case that respondent No.1 has not established title to the securities. As far as the overdraft account is concerned, there can be no dispute about the fact that M/s.Bhupendra Champaklal Devidas has executed a Demand Promissory Note of Rs.25 lakhs, letter of lien and set-off, securities delivery letter in overdraft account and the overdraft agreement. 18. It is in this background that Mr. Deshmukh on behalf of respondent No.1 has, during the course of his submissions, placed reliance on the list of 12 securities, which appears in the extract marked as 'X', He has submitted that a joint verification of the ownership of the securities was carried out by respondent No.1 in the office of the applicant and as referred to in the order dated 14th November 2014. The joint verification of the ownership of the securities was admitted and it is only thereafter that the court has given directions. It is contended that by the order dated 14th November 2014, the court had directed the applicant to deposit the redemption amount, after adjusting the overdraft amount. On 2nd September 1992, the applicant had received a sum of Rs.39,42,183.25 against the then outstanding amount of Rs.20,02,245/-. The applicant was depositing only the interest received from RBI in 2015, but has not deposited the interest accrued on redemption and yet in another statement, the dates of investment, description and amounts are provided. 19. Mr. Kamat persisted with his submission that on the report dated 22nd September 1997, at the request of the Custodian, M/s. Amit Ray & Co., Chartered Accountants, had informed the Custodian of their attempt to reconcile the investments of the account of M/s. Bhupendra Champaklal Devidas and Bank of Karad. 19. Mr. Kamat persisted with his submission that on the report dated 22nd September 1997, at the request of the Custodian, M/s. Amit Ray & Co., Chartered Accountants, had informed the Custodian of their attempt to reconcile the investments of the account of M/s. Bhupendra Champaklal Devidas and Bank of Karad. In its report, the said Chartered Accountants have stated that they have perused certain records in the form of profit and loss and statements filed before the Special Court. The Chartered Accountants had also scrutinized the list of the securities held by the Provisional Liquidator, as referred above, and the list of securities shown in the SGL Account No.107 also, as referred above. The report of the said Chartered Accountants indicates that Mr. B.C. Dalal, the sole proprietor of M/s. Bhupendra Champaklal Devidas and Managing Director of CIFCO Ltd., along with his relatives, held about 84% of the equity of that company. Mr. B.C. Dalal was also one of the Directors of Bank of Karad from 29th March 1969 to 10th March 1984 and from 27th July 1991 to 27th May 1992. 20. In the meantime, Mr. A.D. Narottam was Director from 10th March 1984 to 27th December 1991. There was a close business nexus between numerous notified parties and after detailed consideration of the record, the Chartered Accountants had opined that certain aspects required further attention. Most of the records were seized by the C.B.I. and only copies of some of the records were available and even those were not clear. However, they were of the opinion that there was inadequate adherence to normal checks and balances. Due to deficiencies in documentation, the accountants were not able to get necessary explanations and information. In these circumstances, on the basis of the numerous documents and books and records, including Security Ledgers, Missing Deal-slips, Vouchers, unreconciled position of statement and nonavailability of third party delivery orders, cost memos etc. and given those state of affairs, no reliance could be placed on the certificate issued by the Bank of Karad to Mr. B.C. Dalal on 31st March 1992, of the balance of securities then aggregating to Rs.1,71,96,700/-. 21. The securities held by the bank upon its own investment account and those belonging to various brokers had been inter-mixed and as a result, the securities could not be segregated. No documents and/or record could be shown. B.C. Dalal on 31st March 1992, of the balance of securities then aggregating to Rs.1,71,96,700/-. 21. The securities held by the bank upon its own investment account and those belonging to various brokers had been inter-mixed and as a result, the securities could not be segregated. No documents and/or record could be shown. In these circumstances, the Chartered Accountants concluded that they were not able to reconcile the holdings of the brokers reflected by the Security Ledgers balances shown by the Bank of Karad with its physical securities held by the Official Liquidator of Bank of Karad, as listed in Exhibits 'A' and 'B'. 22. In the course of their submissions, a reference was made to these two exhibits, which were enclosed along with the second affidavit filed on behalf of respondent No.1. It was submitted that the table at Exhibit-A to the affidavit of Mr. Shreeram Lele described Exhibit-A is a list of the securities, which were in his physical possession, and Exhibit-B as list of the securities prepared as per the Securities Ledgers maintained by the Bank of Karad. These statements themselves are under the caption that the securities positions are "indicative" of their belonging to notified persons. No conclusion had been drawn. 23. An attempt was made to reconcile the securities referred to in Exhibit-A with those mentioned in paragraph No.19 of the affidavit dated 16th August 2017 filed by the 1st respondent. The first two entries are both pertaining to securities described as 63/4 IDBI Bonds 1992. A similar item finds reference in item No.3 at Exhibit-A. However, the number of bonds is not identifiable and the value also does not match. Item No.9, however, appears to have been matched with the first item in paragraph No.19 of the affidavit dated 16th August 2017. The only method used is an identification in pencil with the initials of Mr. B.C. Dalal. As far as the other items in paragraph No.19 are concerned, item Nos.10, 11 and 20 of the affidavit of Mr. Dalal appear to have been connected with the description. The Orissa Bonds at item No.8 in Exhibit-A finds reference in paragraph No.19, however the figure does not match. B.C. Dalal. As far as the other items in paragraph No.19 are concerned, item Nos.10, 11 and 20 of the affidavit of Mr. Dalal appear to have been connected with the description. The Orissa Bonds at item No.8 in Exhibit-A finds reference in paragraph No.19, however the figure does not match. The question to be considered is whether any relief can be granted on the basis of this disclosure and the Liquidator's own statement that it is not possible to clearly identify the ownership of those securities, which are owned by the notified parties. In my view, the pencil markings cannot be relied upon to prove ownership about a documented record indicating the name of the author of the remark and backup evidence. 24. There is also a reference in paragraph 19 to the securities described as 63/4 Tamil Nadu 1992 and 63/4 UP 1992. According to the 1st respondent, the overdraft account was cleared on 2nd September 1992, when the maturity value of the six securities referred in paragraph 19 was received and, therefore, the 1st respondent contends that the demand for interest is totally misconceived and since the Liquidator has enjoyed the money collected from 1992 to 2014. It is also contended that two other securities, being 11% Maharashtra 2001 (Stock Certificate) in the name of KMA Limited Gratuity Fund valued @ Rs.3,69,000/- and 9% Maharashtra 1999 (Stock Certificate) in the name of KMA Limited Provident Fund, were lying with the Liquidator. These stock certificates were blank and could have been transferred by the Liquidator, but he failed to do so. The respondent was able to recover the said amounts from the Reserve Bank of India pursuant to the order dated 20th February 2015, but had lost the interest on the securities from 1992 to 2009 and 2011, including the interest to KMA (Provident Funds). The KMA itself went into liquidation. Thus, all chances of recovery were lost. The respondent no.1 blames the Liquidator for having neglected these aspects. The respondent no.1 admits in paragraph 22 of the reply that the Liquidator is entitled to interest only from 27th May 1992 to 6th June 1992 on Rs.18,22,682.03 and interest on Rs.8,67,682.03 from 6th June 1992 till 2nd September 1992. Thus, all chances of recovery were lost. The respondent no.1 blames the Liquidator for having neglected these aspects. The respondent no.1 admits in paragraph 22 of the reply that the Liquidator is entitled to interest only from 27th May 1992 to 6th June 1992 on Rs.18,22,682.03 and interest on Rs.8,67,682.03 from 6th June 1992 till 2nd September 1992. It is not in dispute that the amount of Rs.18,22,682.03 was demanded on 11th September 1992 by the Liquidator vide 'Notice of Recall', a copy of which is annexed at Exhibit-A to the reply. The respondent no.1, however, makes a grievance that from 27th May 1992, the Liquidator has not written a single letter, but for the demand vide letter dated 11th September 1992. 25. One fails to understand the logic of this submission. Perusal of Exhibit-A to the reply reveals that there is an endorsement that the notice was received on 17th September 1992. The amount was specified therein, particulars of the accounts were also provided and it was for respondent no.1 to have dealt with it at the particular time or within reasonable time thereafter. There does not seem to be any effort made in that direction. Exhibit-B collectively to the reply is a letter dated 13th March 2013, in which the respondent no.1 seeks to record the meetings held with the Liquidator's representative recording the fact that certain securities were available with the Liquidator. It is evident from that letter that the securities mentioned therein required re-conciliation. On 5th February 2014, once again respondent no.1 seeks to record availability of the KMA Stock Certificates as well as 6 IDBI 1992 (Combined Stock). The Liquidator has thereafter written to the Custodian on 13th February 2015, enclosing a cheque of Rs.2,84,64,587/- to be credited to the "Custodian Account Shri B.C. Dalal in Miscellaneous Application No.85 of 2012", as per the order of the Special Court dated 14th November 2014. This amount was arrived at after deducting the principal sum of Rs.18,22,682/- out of the total amount of maturity received from RBI being Rs.3,02,87,269/-. The letter also includes summary of principal and net interest received in respect of the individual securities. 26. In a further affidavit-in-reply dated 14th March 2018, the 1st respondent, while reiterating his contentions in the earlier affidavit, states that he was one of the two main dealers in securities transactions at the retail level. The letter also includes summary of principal and net interest received in respect of the individual securities. 26. In a further affidavit-in-reply dated 14th March 2018, the 1st respondent, while reiterating his contentions in the earlier affidavit, states that he was one of the two main dealers in securities transactions at the retail level. Since no bank would deal in retail securities transactions, the RBI governs the securities market and operate in government securities as a part of open market operations and these are conducted only through banks. Respondent no.1 claims to have securities overdraft accounts in Bank of Baroda, Bank of India and Bank of Karad, which acted on the instructions of the broker. In fact, any redemption of securities or collecting of interest from RBI, they would credit stock account of the broker. A "routing bank" was also required because government securities had to be dealt with a price plus accrued interest formula, the interest being computed from the date of last payment till the date of delivery. The inter-bank delivery of securities was conducted between the banks and the broker would have no knowledge of this aspect. If the securities were in larger denominations and that the buyer required it in smaller lots, the bank will issue a Bank Receipt during the period of the bonds, which were sent for subdivision. According to respondent no.1, in Miscellaneous Application No.218 of 1993, the Bank of Karad had filed an affidavit dated 8th June 1994, in which the securities dealt with are set out. According to respondent no.1, this affidavit reflects the securities, which matured on different dates and relevant issues in the matter. 27. The date of filing of various company petitions is not known today and none of the parties have addressed me on this aspect and therefore, I am proceeding on the basis that no order has been passed in those company petitions, which would affect the status of the securities, which continued to be held by the applicant-bank in liquidation in accordance with the order dated 13th January 2000 passed by the Special Court in Miscellaneous Petition No.218 of 1993. 28. 28. Having considered the various defences taken up, the present application being filed pursuant to the liberty reserved to the Liquidator in the order passed by the Special Court on 14th November 2014, in which case the adjustment of the principal sum of Rs.18,22,682.03 is complete, the only issue remaining pertained to the interest on the overdraft account. The affidavits-in-reply reveal the defences that the Liquidator was holding securities and those securities belonged to the 1st respondent and hence there is no liability to pay interest, as claimed. The one of the issue raised by Mr. Deshmukh is that in an affidavit of June, 1994 filed by the Liquidator in Miscellaneous Application No.218 of 1993, he has admitted that the securities belong to the notified parties and Exhibit-A thereof mentions the name of the 1st respondent, a reference of which is made in paragraph 8 of the said affidavit. After the joint verification of the ownership of the securities was carried out, which is recorded in the order dated 14th November 2014, the court directed the applicant to deposit redemption amount after adjusting the overdraft amount. 29. It was contended by Mr. Deshmukh that as on 2nd September 1992, the applicant had received the sum of Rs.39,42,183.25 as against the sum of Rs.20,02,245/- in the overdraft account. The applicant deposited only the principal sum of the redemption and it has not deposited the interest accrued. An attempt has been made to draw reference to the twelve different securities mentioned in the statement annexed to Exhibit-C, being a letter addressed to the Custodian dated 13th February 2015, to the affidavit-in-reply dated 16th August 2017 and to Exhibit-A to the subsequent affidavit-in-reply dated 14th March 2018. Relying upon the 'summary of principal and net interest received on securities', annexed to the aforesaid letter dated 13th February 2015 of the Liquidator addressed to the Custodian, Mr. Deshmukh sought to rely upon a table containing 14 items. 30. The present case has to be decided on pleadings. No attempts have been made to lead evidence and establish ownership. Relying upon the 'summary of principal and net interest received on securities', annexed to the aforesaid letter dated 13th February 2015 of the Liquidator addressed to the Custodian, Mr. Deshmukh sought to rely upon a table containing 14 items. 30. The present case has to be decided on pleadings. No attempts have been made to lead evidence and establish ownership. The trail of documentary evidence on record, including correspondence, list of the securities prepared by the Liquidator and as referred to in the affidavit of the Liquidator dated June, 1994 in Miscellaneous Application No.218 of 1993, does include a statement that the securities mentioned in Exhibit-A to the affidavit dated June, 1994 in physical possession of the Liquidator were "belonging to the various notified parties". In paragraph 7, the deponent states that he had prepared a list of securities "indicating the names of broker-clients, as per bank's books and records", but those were not authentic and cannot be fully relied upon and it will be absolutely necessary to call upon the concerned notified persons to establish their rights to these securities. 31. In the following paragraph, the deponent not only refers to certain securities standing in the name of Bhupendra Champaklal Devidas, but also refers to the amounts due towards interest. Although Mr. Deshmukh had sought to rely upon this aspect and the deposition in the affidavit that certain pencil marking on the statements show the names of the brokers, I am of the view that this is insufficient to establish ownership. The statements themselves are qualified with a remark that these lists of securities are "indicative" of being owned by the notified parties. This aspect has been awaiting resolution ever since June, 1994. The principal sum has since been provided by sale of some securities, which were not in this doubtful category of securities. 32. Factoring in the documentary evidence, as aforesaid, the statements on oath of the Liquidator in prior proceedings referred to herein, the affidavits-insupport and in reply to the current application is the report of the Chartered Accountant M/s. Amit Ray & Co., which has not been questioned by respondent no.1, I am of the view that respondent no.1 has not discharged the burden of proving ownership. Merely because no one has claimed ownership over several years would not be the justification for rejecting the bank's claim for interest. 33. Merely because no one has claimed ownership over several years would not be the justification for rejecting the bank's claim for interest. 33. Having considered the scope of this application, the 1st respondent has not been able to establish ownership beyond reasonable doubt, but has raised various areas of uncertainty. The Special Courts Act was enacted to ensure recovery of amounts forming subject matter of irregularities and malpractices noticed in the transactions in government and other securities indulged in by the brokers, employees of the banks and financial institutions, which led to diversion of funds, including public funds through private individuals. To that extent, the intention of the legislature must not be lost sight of while interpreting the provisions. Chapter VII of the Evidence Act deals with the burden of proof. Section 101 provides that whoever desires a court to give judgment as to a legal right or liability depending upon existence of facts asserted by him must prove that those facts exists and by that reasoning burden of proof lies upon that person. Section 102 provides that the burden of proof in a suit or proceedings lies on that person, who would fail if no evidence at all was given on either side. Section 106 provides that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Under section 114, the court may presume existence of certain facts, which the court thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in relation to the facts of the case. These presumptions are no doubt rebuttable. The existence of the securities was not called in question, but its ownership has. In my view, it is incumbent upon respondent no.1 to establish ownership beyond reasonable doubt. I am alive to the fact that it is an off-repeated contention of the 1st respondent that all records were seized by the C.B.I., the authorities and the law enforcement agencies. The question is whether that will exempt the 1st respondent from establishing ownership. The law of evidence inter alia deals with the aspects of the facts to be proved. In Izhar Ahmed Khan Vs. Union of India, 1962 AIR SC 105, the Supreme Court had occasion to consider some aspects of the law of evidence. 34. The question is whether that will exempt the 1st respondent from establishing ownership. The law of evidence inter alia deals with the aspects of the facts to be proved. In Izhar Ahmed Khan Vs. Union of India, 1962 AIR SC 105, the Supreme Court had occasion to consider some aspects of the law of evidence. 34. In the present case, there can be no presumption in favour of respondent no.1 as to the ownership of the securities. It must be proved. Thus far, respondent no.1 has not succeeded in doing so. Whether the efforts made were sufficient is not the aspect that needs to be considered at this stage. Respondent no.1 could have made efforts to retrieve their records or copies of the documents required from the CBI. Quoting from the Principles of Law of Evidence by William Best, the Supreme court highlighted the fact that the judicial evidence with which the Evidence Act deals, is a species of the genus evidence and according to that, learned author is, for the most part, "nothing more than natural evidence restrained or modified by rules of all courts of law". In view of the Rules of Evidence that come into play, it is observed that, that system of law is best, which leaves the least to the judges' discretion. Under the rules of evidence, there are presumptions, which are rebuttable. 35. In this background, I am called upon to consider the reliefs sought. The compilation-of-documents, the Demand Promissory Note and the overdraft facility documentation clearly talk of liability to bear interest @ 18% p.a.; however, with quarterly *"rates" (*sic). This is, however, clarified in Exhibit-D, which is the agreement for an overdraft limit dated 21st September 1990, as being quarterly rests. The claim is for this very interest. Upon the public notice being issued by the Custodian in October, 2005, the Liquidator has reiterated its claim for the debit balance of Rs.18,22,682.03 and interest thereon @ 18% p.a. on compoundable basis. What must be borne in mind is that despite the contention of respondent no.1 that he is the owner of the securities in Miscellaneous Application No.85 of 2012, at the disposal of Miscellaneous Application No.85 of 2012, he has submitted to adjustment of the said amount and the only dispute was pertaining to interest, which is now claimed. What must be borne in mind is that despite the contention of respondent no.1 that he is the owner of the securities in Miscellaneous Application No.85 of 2012, at the disposal of Miscellaneous Application No.85 of 2012, he has submitted to adjustment of the said amount and the only dispute was pertaining to interest, which is now claimed. If the ownership had been established at that stage, or, if it was the case of the respondent no.1 that he was the owner of those securities lying with the bank, there was no reason for adjustment of the amount of Rs.18,22,682/-. The securities, ownership of which is not in dispute, had already been dealt with after the joint verification conducted pursuant to filing of Miscellaneous Application No.85 of 2012 and it is that joint verification that has been referred to. It is in this background that the reliefs have to be viewed. 36. Prayer clause (a) of this miscellaneous application seeks a direction to pay Rs.14,31,00,092/-. Prayer clause (b) is an alternative prayer, which requires the respondent no.1 to prove ownership beyond reasonable doubt within a period to be set by this court and to direct the Custodian to pay to the applicant-bank in liquidation the amount due to respondent no.1 towards securities, of which he proves ownership from the amounts deposited with the Custodian and kept in a separate account towards the monies due on interest on the overdraft facility and to direct respondent no.1 to pay the balance outstanding sum, if any, towards interest on the overdraft facility. 37. In this respect, I am of the view that respondent no.1 be given one last opportunity to make good his contention as to the ownership and to discharge the burden of proof that he shoulders. If he does so, the consequences contemplated in prayer clause (b) should follow. If not, the applicant would be entitled to the relief in terms of prayer clause (a), the computation not being in dispute. 38. The only other question that arises is whether the Liquidator was justified in having waited this long to have made this application, which appears to have been prompted by the Miscellaneous Application No.85 of 2012. That is a matter which would be considered at the appropriate stage, if the applicant fails to establish ownership. 38. The only other question that arises is whether the Liquidator was justified in having waited this long to have made this application, which appears to have been prompted by the Miscellaneous Application No.85 of 2012. That is a matter which would be considered at the appropriate stage, if the applicant fails to establish ownership. I have also factored the effect of the order dated 26th August 2016, when came to be passed by this court in Miscellaneous Application No.41 of 2015 filed by the 1st respondent, in which I have recorded that the order dated 14th November 2014 has attained finality, since no appeal was filed against that order. This court has also held that Miscellaneous Application No.41 effectively sought the very same relief, which was part of Miscellaneous Application No.85 of 2012. The rate of interest being in dispute, the evidence is to the contrary inasmuch as the admitted overdraft facility documentation provides for 18% interest p.a. The dispute raised on the rate of interest in that sense is not a bonafide dispute. Reconciliation of accounts, as contemplated in the affidavit-in-rejoinder in Miscellaneous Application No.41 of 2015, to which this court has adverted to in paragraph 9 of the order dated 26th August 2016, has not yielded any results, which would support the claim of the 1st respondent, except for attributing delays to the Liquidator. In that view of the matter, I pass the following order :- (i) Miscellaneous Application is allowed in terms of prayer clauses (b) and (c), which reads as follows :- (b) That in the alternative, in the event of respondent no.1 being able to prove his ownership over the securities in question beyond reasonable doubt within the period as may be decided by this Hon'ble Court, to direct respondent no.2 to pay to the applicant, such amount as is due to respondent no.1 towards the securities over which he proves his ownership, from the amount already deposited by the applicant with respondent no.2 and kept in a separate account, towards the monies due on interest on the overdraft facility availed by the respondent no.1 with Bank of Karad Ltd. (now in liquidation). (c) That respondent no.1 be directed to pay to the applicant the balance outstanding sum, if any, towards interest due on the overdraft facility of respondent no.1 with the then Bank of Karad Ltd., after deducting the monies received from respondent no.2, as prayed for in clause (b). (ii) The respondent no.1 shall be at liberty to establish ownership, if necessary, by leading evidence within a period of six months from the date of this order. In the event, no application is made, there will be an order in terms of prayer clause (a), albeit with simple interest @ 6% p.a. on Rs.14,31,00,092/-. In the event, the 1st respondent seeks extension of time to establish ownership, such an application will be entertained, provided he deposits with the Custodian the amount of Rs.14,31,00,092/-, along with 6% interest thereon from 1st January 2017 till date of deposit, which, if deposited, will be invested in a separate account by the Custodian. (iii) No costs.