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SC rules that NPCIL bonds are owned by Standard Chartered

Written by: Staff

New Delhi, May 10 (UNI) The Supreme Court has held that 9 per cent tax free bonds issued and sold by Nuclear Power Corporation of India Ltd.(NPCIL) to Andhra Bank Financial Services Ltd (ABFSL) and in turn sold to Standard Chartered Bank(SCB) by ABFSL on Feb 27,1992 are owned by the SCB and not by Canbank Mutual Fund (CMF).

A bench comprising Chief Justice Y K Sabharwal, Mr Justice B N Srikrishana and Mr Justice P P Naolekar vide judgment dated May 5 directed that SCB, as owner of the bonds was entitled to be registered as such in the register of NPCL.

The apex court while setting aside the order of the special court holding that CMF was the owner of suit bonds, observed, ''In these circumstances, we are not satisfied that the evidence on record proves that Hiten P Dalal (HPD), a share broker, became the owner of the suit bonds or that CMF legitimately acquired the suit bonds from HPD or any other person by paying bona fide purchase value for them consequently we must hold that CMF acquired no right, whatsoever to the suit bonds. The suit bonds always remained the property of SCB irrespective of how they found their way into the hands of CMF.'' NPCL issued two series of bonds- 9 per cent tax free and 17 per cent taxable bonds.

ABFSL offered to buy bonds worth Rs 100 crores of both series.

When securities scam broke out in April/May, 1992 and during investigation the officers of SCB found that there was no original copy of the Letter of Allottment (LOA) in the bank and there was only photocopy of LOA. ABFSL wrote to NPCL that it had no objection if duplicate LOA was issued to SCB.

On June 8,1992 Hiten P Dalal, who was acting as a broker in large number of securities transactions of banks and financial institutions was declared a 'notified person' under section 3 of the Special Courts (Trial of offences Relating to Transactions in ecurities) Act,1992.SCB lodged an FIR against HPD and its ownemployees alleging that due to conspiracy several monies and securities had been misappropriated by HPD. CMF claimed ownership of suit bonds on the basis of claim of purchase of bonds through HPD.

Apex court in its 89-page judgment written by Justice Srikrishna concluded,''We therefore, hold that CMF has utterly failed to prove its story that it had paid consideration for purchase of the suit bonds on Feb. 27,1992.'' UNI AKS/SC RP GC1938

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