STANDARD CHARTERED BANK AND ANR. ETC. versus CUSTODIAN AND ANOTHER ETC.

STANDARD CHARTERED BANK AND ANR. ETC. versus CUSTODIAN AND ANOTHER ETC.

Appellant bank is entitled to retain and sell original shares, right shares, bonus shares, and accretions (dividend and interest) pledged by R-2, to recover its proven loss of Rs. 280.80 crores. Bonus shares, dividend, and interest are integral accretions to the pledged property. Custodian cannot demand their return unless redemption occurs. Award of costs against R-2 is justified.

Parties
Appellant: Standard Chartered Bank; Respondent (r 2) / Appellant in Cross Appeal: Hiten P. Dalal; Respondent (r 1): Custodian
Jurisdiction
India
Judgment Date
18 April 2000
Procedural Posture
Civil Appeal / Appeal From Special Court (trial of Offences Relating to Transactions in Securities) Act, 1992, Mumbai, Suit No. 17 of 1994, Judgment Dated 24.12.98
Outcome
Appeal No. 762 of 1999 partly allowed; Appeal No. 1878 of 1999 dismissed.
Legal Topics
Pledge of Shares, Bailment, Accretion to Pledged Property, Bonus Shares, Dividend and Interest on Pledged Securities, Attachment and Recovery of Property Under Special Court Act
Securities Law Company Law Contract Law Pledge of Shares Bailment Accretion to Pledged Property Bonus Shares Dividend and Interest on Pledged Securities +1 more

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Parties

Standard Chartered Bank

Appellant

Hiten P. Dalal

Respondent (r 2) / Appellant in Cross Appeal

Custodian

Respondent (r 1)

Procedural Posture

Civil Appeal / Appeal From Special Court (trial of Offences Relating to Transactions in Securities) Act, 1992, Mumbai, Suit No. 17 of 1994, Judgment Dated 24.12.98

Legal Issues

  1. 1 Whether bonus shares, dividend, and interest accruing on pledged shares form part of the pledged security and can be retained by the pledgee bank against liabilities.
  2. 2 Whether the Custodian can demand the handing over of pledged shares and accretions to the notified party under Special Court Act, 1992.
  3. 3 Extent of loss suffered by the appellant bank and right to retain and dispose of shares and securities.

Ratio Decidendi

Appellant bank is entitled to retain and sell original shares, right shares, bonus shares, and accretions (dividend and interest) pledged by R-2, to recover its proven loss of Rs. 280.80 crores. Bonus shares, dividend, and interest are integral accretions to the pledged property. Custodian cannot demand their return unless redemption occurs. Award of costs against R-2 is justified.

Court Disposition

Appeal No. 762 of 1999 partly allowed; Appeal No. 1878 of 1999 dismissed.

Orders

  • Appellants proved loss of Rs. 280.80 crores; affirmed.
  • Bonus shares, dividend, and interest are part of pledged property; cannot be ordered to be handed over unless redemption.