Interim custody of securities may be released against equivalent bank guarantee where ownership is undisputed and merits remain pending.

In an interim custody dispute over mutual fund units, the SC balanced preservation of the asset with the applicant's undisputed ownership and the need to avoid further loss from prolonged retention. As the alleged fraud and related merits remained sub judice in companion proceedings, the Court declined to comment on liability, but modified the interim arrangement by directing release of the units to the applicant's demat account against a bank guarantee of equivalent value to the satisfaction of the Trial Court. The merits of the main appeals were left untouched.

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Issues: Whether the interim order should be modified so that the mutual fund units be released to the applicant on furnishing an equivalent bank guarantee.

Analysis: The dispute over the alleged fraud and the respective parties' involvement was still sub judice in the companion appeal and investigations, and the Court declined to express any opinion on the merits. At the same time, the applicant's ownership of the mutual fund units was not disputed, the securities were likely to appreciate in value, and the prolonged pendency made continued retention under the earlier arrangement less practical. The Court balanced preservation of the subject matter with protection of other parties by requiring security equivalent to the value of the units.

Conclusion: The interim order was modified and the mutual fund units were directed to be transferred to the applicant's demat account, subject to furnishing a bank guarantee of equivalent value to the satisfaction of the Trial Court.

Final Conclusion: The application was allowed in part by altering the interim arrangement, while keeping the earlier order operative against the remaining parties and leaving the merits of the main appeals untouched.

Ratio Decidendi: In interim custody disputes involving valuable securities, the Court may protect the rightful owner's interest by ordering release of the asset against equivalent security, where merits remain unresolved and preservation of value requires a pragmatic balancing of equities.

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