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Chennai, Oct. 15 IN what is termed as a precedent-setting judgement, the High Court of Madras has ruled that contracts of derivatives are not contracts of wager and are not null and void.

The case is of a dispute between the Axis Bank and Rajshree Sugars over whether the company is liable to pay dues to the bank arising out of a derivatives contract. (Typically, in such contracts, the bank will pay an agreed sum if one named currency moves in one direction against another specified currency. If the movement is in the other direction, the company would pay the bank.)

Petitioners Rajshree Sugars had argued that the derivatives contract the company entered into with Axis Bank (formerly UTI Bank) was a wager and speculative in nature. Hence it could not be enforced.

More Stories on : Private Banks | Courts/Legal Issues | Sugar

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