Case: Citibank N.A Vs. Statndard Chartered Bank

the section, performance "by a stranger, accepted by the promisee, produces the result of discharging the promisor, although the latter has neither authorised nor ratified the act of the third party."52. The learned Special Court tell in error in holding that S.41 of the Contract Act would be more appropriately applicable. S.41 for the reasons set out above would not be applicable to the facts of the present case. It also fell in error in holding that Citi Bank did not plead complete discharge from performing its obligation in terms of S.63. In our opinion, Citi Bank has specifically pleaded that it stood discharged from the performance of the original obligation on the delivery of SGLs to the SCB, which were asked for and accepted by SCB for reasons best known to it, SCB instead of the original satisfaction accepted another satisfaction, deemed fit by it, in terms of S.63 of the Indian Contract Act." 47. Learned Special Court recorded a finding that SCB by accepting BR 1401 of CANFINA at the highest agreed to act as an agent of Citibank and colle9t bonds of the face value of Rs. 50 crores from CANFINA and appropriate them towards Citibanks obligation to deliver the bonds of the face value of Rs. 50 crores. If CANFINA refused, then, there was no way that the SCB could enforce any claim against CANFINA as there was no contract between CANFINA and SCB. Under the circumstances the obligation of the Citibank to deliver the bonds would not stand discharged unless such time the SCB received the said bonds. The learned Special Court has erred in recording the abovesaid finding. The question of conferring authority or constituting SCB agent of Citibank for receiving bonds from CANFINA are matters of fact. In the absence of any issue or evidence led by SCB, the burden cast on SCB could not be deemed to be discharged. The finding recorded by the Special Court that SCB acted as an agent of Citibank is not sustainable. 48. When SCB discharged Citibank from its obligation under BR 47 by endorsement and delivery thereof to Citibank, it would be inconceivable that simultaneously it would make the discharge conditional on SCB being able to obtain bonds from CANFINA. An agent acts only for his principal and the collection of bonds, if at all, would be for the benefit of Citibank and not for SCB. It is not even pleaded by SCB that SCB was given authority to appropriate the bonds to itself. 49. Shri Shanti Bhushan, learned senior advocate during the course of the arguments placed reliance on the following judgments to contend that discharge was conditional. Mohan Lal Jogani Rice & Atta Mills v. Ramlal Onkarmal Firm and Ors. AIR 1957 Assam 133; Maung Chit v. Roshan AIR 1934 Rang 389 : ILR 12 Rang 500 (FB); Ramdayal v. Maji Devdiji AIR 1956 Raj. 12 : Kandswami Gounder v. K.P. Sivasubramania Iyer AIR 1963 Mad. 16 : 1962 (2) MLJ 518 ; Firm Basdeo Ram Sarup v. Firm Dilsukharai Sewak Ram AIR 1922 All.461 ; Firm Budhu Mal v. Gokal Chand and Ors. AIR 1926 Lah. 328 : ILR 7 Lah. 113; Har Chandi Lal v. Sheoraj Singh AIR 1916 PC 68; Chegamull Suganmull v. V. Govindswami Chetty (AIR 1928 Mad. 972 ). 50. Most of these judgments were cited before us during the course of the hearing of the Citibanks case (supra). The same were distinguished and after elaborate discussion, it was held that none of these cases would be applicable to the facts of the present case (refer to para.57). It was observed in para.59 as follows: "In the present case, as stated in the foregoing paragraphs, SCB had substituted its original satisfaction by asking for and taking SCB of CMF as deemed fit for its own reasons which have not been disclosed to the Court. The cases cited by Mr. Nariman referred to in this paragraph under the circumstances would have no applicability." 51. In view of our discussion in the Citibanks earlier cases, we need not to discuss individual authorities cited at the bar. 52. A faint attempt was made in the end to contend that even if the Court comes to the conclusion that as a matter of fact Citibank is discharged under S.63 of the Indian Contract Act the decree should not be reversed and the same should only be modified by this Court in exercise of its special jurisdiction under Art.142 to do complete justice between the parties. In case both the decrees in the suit Nos. 24 of 1994 and 1 of 1995 are reversed, CANFINA would be unjustly enriched and SCB would lose Rs. 50 crores with interest and such a result would be contrary to all notions of justice. It was contended that irrespective of any view this court may take on documents, the Court has the power to do complete justice between the parties under Art.142 of the Constitution of India by maintaining the decree in favour of SCB. Suit No. 24 of 1994 and Suit No. 1 of 1995 were back to back suits and the enforcement of decree in Suit No. 1 of 1995 was contingent upon a decree being passed in Suit No. 24 of 1994. Acceptance of the submission of SCB would be that this Court would be passing a decree against CANFINA indirectly. Submission of SCB that since a decree has been passed in the contingent suit, to the extent of decretal amount paid in the contingent suit, suit filed by SCB should be decreed, cannot be accepted. Similar submission was rejected after elaborate discussion by this Court in Citibanks case (supra). It was observed that: "Acceptance of the submission of SCB would mean that though SCBs suit does not deserve to succeed but still it be maintained by passing a decree in the contingent suit which cannot be done. It would be a travesty of justice rather than doing justice". (Refer to SCC p. 41, para.60).

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]42. Admittedly, the original BR 47 was discharged and delivered back to Citibank. The same has been produced by the Citibank from its possession. The return of original with an endorsement on its reverse duly signed by the officer of SCB amounts to discharge of the BR. This was the mode of discharge of BRs. The discharged BR being in possession of the Citibank would raise a presumption in law under S.114 of the Indian Evidence Act, 1872, that the BR stood duly discharged. S.114 of the Evidence Act provides that the Court may presume the existence of any fact which it thinks likely to have happened regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustration (i) of S.114 provides that Court may presume that when a document creating an obligation is in the hands of the obligor, the obligation has been discharged. BR 47 dated 19.2.1992 was in the custody of the Citibank. Its possession would raise a rebuttal presumption of the discharge of the said BR. The onus to rebut the presumption was upon SCB. SCB has failed to rebut the presumption by leading any evidence that the obligation under BR 47 did not stand discharged. Finding recorded by the Special Court that there was nothing on the record to show that there was an absolute discharge granted to the Citibank by SCB cannot be accepted.For the reasons stated above, it is held that SCB voluntarily and unconditionally received and accepted non transferable CANFINAs BR 1401 with an obvious inference that SCB desired the said CANFINA BR for its own purpose for the reasons best known towas contended that irrespective of any view this court may take on documents, the Court has the power to do complete justice between the parties under Art.142 of the Constitution of India by maintaining the decree in favour of SCB. Suit No. 24 of 1994 and Suit No. 1 of 1995 were back to back suits and the enforcement of decree in Suit No. 1 of 1995 was contingent upon a decree being passed in Suit No. 24 of 1994. Acceptance of the submission of SCB would be that this Court would be passing a decree against CANFINA indirectly. Submission of SCB that since a decree has been passed in the contingent suit, to the extent of decretal amount paid in the contingent suit, suit filed by SCB should be decreed, cannot beneed not deal with the contentions raised by learned senior counsel as we have accepted the Civil Appeal No. 7426 of 1996 and set aside the decree passed against the Citibank in Suit No. 24 of 1994. The consequence of the acceptance of the said appeal would be that this appeal is accepted.In view of acceptance of Civil Appeal No. 9063 of 1996 and as a consequence dismissal of the suit No. 1 of 1995 filed by the Citibank, this appeal has become infructuous and disposed of as such.