Case: Citibank N.A Vs. Statndard Chartered Bank

4. The facts giving rise to these appeals are:On 30th of December, 1991, Citibank purchased 9% IRFC Bonds of the face value of Rs. 50 crores from CANFINA. Citibank made full payment for the abovementioned bonds to CANFINA. In consideration thereof CANFINA, in accordance with the market practices, delivered to the Citibank Bankers Receipt No. 1401 dated 30th December, 1991. On or about 3rd February, 1992, Citibank purchased similar 9% IRFC Bonds of the face value of Rs. 65 crores from CANFINA. Citibank made full payment for the same as well. In consideration whereof, the CANFINA delivered their Bankers Receipt No. 1541 dated 3rd February, 1992 to the Citibank. On or about 5th February, 1992 Citibank sold to CANFINA 9% IRFC Bonds of the face value of Rs. 105 crores. By way of delivery for the same, Citibank first decided to return to CANFINA abovementioned two Bankers Receipts Nos. 1401 and 1541. Citibank affixed its stamp and made an endorsement on the reverse of the BR No. 1401 to the effect "BR exchanged against our sale of date". But subsequently instead of returning the banker receipt No. 1401 to CANFINA, a fresh banker receipt of Citibank for Rs. 40 crores was issued and sent to CANFINA along with bankers receipt No. 1541 of Rs. 65 crores. These bankers receipts were accepted by CANFINA against the Citibanks liability to CANFINA for Rs. 105 crores of 9% of IRFC Bonds. According to the Citibank, as banker receipt No. 1401 of CANFINA was not utilised the Citibank cancelled the endorsement written on the reverse of the bankers receipt No. 1401. According to Citibank CANFINAs liability continued to remain subsisting under the said BR.5. On or about 19th February, 1992 Citibank sold to SCB 9% IRFC Bonds of the face value of Rs. 72.50 crores. Citibank received payment for the same and issued BR No. 47 dated 19th February, 1992 in favour of the SCB in the sum of Rs. 72.50 crores.6. On 28th February, 1992, CANFINA wrote a letter to the Citibank requesting the Citibank to collect the IRFC Bonds of the face value of Rs. 50 crores from SCB and release their Bankers Receipt No. 1401.7. On 4.3.1992 SCB discharged BR 47 dated 19.2.1992 for Rs. 72.50 crores and returned the same to Citibank with an endorsement of due discharge on the reverse of the BR in exchange for CANFINA BR 1401 of the face value of Rs. 50 crores and Citibanks fresh BR No. 47 (coincidentally the number is same) for Rs. 22.50 crores for the balance amount in favour of SCB. BR 47 dated 4th March, 1992 of the face value of Rs. 22.50 crores was honoured and duly discharged and there is no dispute about the same. According to the Citibank, its liability under BR No. 47 dated 19.2.1992 for Rs. 72.50 crores was discharged as it had delivered BR No. 1401 of Rs. 50 crores given to it by CANFINA and BR No. 47 dated 4th March, 1992 of the face value of Rs. 22.50 crores in favour of SCB.8. BR 47 dated 19.2.1992 and BR 47 dated 4.3.1992 would be referred to respectively as original BR and fresh BR wherever necessary.9. SCB through its attorney made a demand for delivery of bonds from Citibank under BR 1401 by its notice dated 4.6.1992, a copy of the letter was endorsed to CANFINA as well. Citibank sent a reply to the attorneys letter dated 4.6.1992 through its own attorney on 6.7.1992 denying its liability to deliver any securities or make payment of any amount to SCB.10. In or about 27th November, 1992, SCB filed a suit being No. 3828 of 1992 against the Citibank in the Bombay High Court alleging therein that the Citibank had failed to deliver to them the securities given by the said BR No. 1401 and claiming from it the securities and/or the value of the securities. On or about 25th July, 1994 that suit was transferred to the Special Court and renumbered as Suit No. 24 of 1994.11. On 29th December, 1994, Citibank filed a suit in the Special Court, being Suit No. 1 of 1995, inter alia, against the CANFINA. The said suit was in the nature of the third party proceedings as a consequence of the abovementioned suit No. 24 of 1994 filed by the SCB. In Suit No. 1 of 1995 Citibank claimed that if the Citibank was held liable to the SCB in suit No. 24 of 1994, the Citibank was entitled to make a claim as against CANFINA for non performance of their obligation under BR No. 1401 and were entitled to the securities or their face value. Suit No. 1 of 1995 in substance is in the nature of third party proceedings arising from Suit No. 24 of 1994 filed by the SCB against the Citibank.12. SCB took out chamber summons dated 30th December, 1994 being chamber summons 18/94 to join CANFINA as a party in Suit No. 24 of 1994, The said chamber summons was opposed by CANFINA on the ground that SCB could have no claim against it and therefore it was neither a necessary nor a proper party. The learned Special Court by its order dated 7th February, 1995 held that CANFINA was a necessary and proper party to the suit and the question as to whether the SCB could have any claim against CANFINA or not was a question on merits which would be decided at the final hearing of the suit.13. Reversing its stand SCB on 2nd January, 1996 made an application to drop CANFINA as a party defendant in Suit No. 24 of 1994. CANFINA opposed this application as well but the learned Judge by an order dated 22nd January, 1996 allowed SCB to drop CANFINA from the said suit and adjourned the suit for 2nd March, 1996 for final hearing. The learned Judge thus delinked the two suits, although both the suits concerned the same question i.e. whether the Citibank or CANFINA were liable for the outstanding Bankers Receipt No. 1401 of CANFINA.14. On 1st March, 1996, Citibank made an application to the Special Court in Suit No. 1 of 1995 that both the suits, Suit No. 24 of 1994 and Suit No. 1 of 1995 be heard together as common questions of law and facts arise for consideration in both the suits. The Special Court dismissed the application by its order dated 1.3.1996. Citibank, being aggrieved, against the orders dated 22.1.1996 and 15.2.1996 filed two special leave petitions in this court which were withdrawn by Citibank on 15th March, 1996 as the trial of Suit No. 24 of 1994 had commenced by that time.15. It needs to be mentioned that Citibanks Suit No. 1 of 1995 initially was against four defendants namely (1) Hiten P. Dalal (2) Standard Chartered Bank (3) Canbank Financial Services Ltd. and (4) A. K. Menon, the Custodian but later on Citibank got the suit dismissed against defendants Nos. 1, 2 & 4 for non prosecution and allowed the suit to proceed only against CANFINA.16. By judgment dated 12th/13th March, 1996 the Special Court decreed the Suit No. 24 of 1994 filed by SCB and ordered the Citibank to pay to the SCB a sum of Rs. 482,791,096/as and by way of return of consideration and/or on the basis of monies had and received inclusive of accrued interest at the coupon rate of 9%. The learned Jude awarded interest @ 20% per annum equivalent to Rs.The costs of Rs. 15,49,462/were also awarded to SCB being the actual cost. The Citibank therefore paid a total amount of Rs. 899,155,086/to SCB under the said decree. Citibank, being aggrieved, has therefore filed Civil Appeal No. 7426 of 1996 against SCB.17. After conclusion of Suit No. 24 of 1994, the trial of Suit No. 1 of 1995 commenced in the middle of March, 1996. By its order dated 26th April, 1996 the Special Court passed a decree in favour of the Citibank by ordering the CANFINA to deliver to Citibank 9% IRFC Bonds of the face value of Rs. 50 crores within a period of 16 weeks along with the coupon interest @ 9% per annum from 15th July, 1991 till the "bonds were delivered. The learned Judge awarded an interest @ 9% per annum from 30th December, 1991, the date CANFINA received the consideration till the date of repayment. Parties were directed to bear their own costs. CANFINA, being aggrieved, against the aforesaid judgment has filed Civil Appeal No. 9063 of 1996 against Citibank.18. Aggrieved against the findings of the learned Judge to the effect that Suit No. 1 of 1995 was not in the nature of third party proceedings and therefore the Citibank was not entitled to recover the amount ordered by the Court to be paid to the SCB in Suit No. 24 of 1994 and the fact that the learned Judge did not grant the Citibank interest @ 20% per annum as had been granted in Suit No. 24 of 1994 and also that costs were not awarded, the Citibank has filed Civil Appeal No. 9138 of 1996.19. Facts in nutshell around which the controversy revolves are that Citibank held BR No. 1401 of face value of Rs. 50 crores issued by CANFINA in its favour. On 19th February, 1992 Citibank sold to SCB bonds of the face value of Rs. 72.50 crores. Citibank received payment for the same and issued original BR No. 47 dated 19th February, 1992 in favour of SCB in the sum of Rs. 72:50 crores. On 28th February, 1992 CANFINA wrote a letter to the Citibank requesting the Citibank to collect the IRFC Bonds of the face value of Rs. 50 crores from SCB and release their bankers receipt. On March 4, 1992 SCB "discharged" original BR 47 dated 19.2.1992 and took from Citibank the CANFINA BR No. 1401 of the face value of Rs. 50 crores and Citibanks fresh BR No. 47 dated 4th March, 1992 of the face value of Rs. 22.50 crores, Almost after three months of discharge of the original BR 47 and after break up of the scam, SCB by its attorney dated 4.6.1992 made a demand for delivery of bonds from Citibank under BR 1401 while endorsing a copy of letter to CANFINA. Citibank sent a reply to the attorneys letter dated 4.6.1992 through its own attorney on 6.7.1992 denying its liability to deliver any securities or to make payment of any amount to the SCB. Thereafter SCB filed the suit, reference to which has been made in detail in the foregoing paragraphs.20. Case of the SCB in the suit is that having purchased bonds of face value of Rs. 72.50 crores on 19.2.1992 SCB received from Citibank original BR 47 dated 19.2.1992 of the face value of Rs. 72.50 crores. Thereafter on 4th March, 12993 SCB discharged and handed over original BR 47 to Citibank. Against the same Citibank issued to the SCB fresh BR 47 of the face value of Rs. 22.50 crores and delivered CANFINA BR 1401 dated 30.12.1991 of the face value of Rs. 50 crores. It was contended that endorsement and delivery of CANFINA BR to SCB was on the footing that CANFINA would honor the same. At best the delivery of CANFINA BR merely conferred an authority on SCB to receive bonds from CANFINA and it was an implied term of the arrangement between SCB and Citibank, that if for any reason SCB did not receive bonds from CANFINA, Citibanks obligation would continue or would stand revived.21.Case of the Citibank in its written statement is that SCB duly discharged original BR 47 dated 19.2.1992 of the face value of Rs. 72.50 crores. On receipt of CANFINA BR 1401 of the face value of Rs. 50 crores and Citibank fresh BR 47 dated 4.3.1992 of the face value of Rs. 22.5 crores which was duly encashed. That the aforesaid discharge of Citibank original BR 47 and receipt by SCB of CANFINA BR 1401 was unconditional and the Citibank was discharged of its obligation in respect of transaction dated 19th February, 1992. That the Citibank was under no obligation to either delivery the securities or the amount thereof and in any event, right, if any, of SCB was only against CANFINA. That SCB should take action against CANFINA.On the pleadings of the parties the following issues were framed by the SpecialWhether the suit is not maintainable and should be dismissed for non joinder of Canbank Financial Services?(ii) Whether upon the original Bankers Receipt No. 47 being handed over duly discharged to the defendants the plaintiffs ceased to have any right in respect thereof or for the IRFC Bonds of the face value of Rs. 72.50 crores mentioned therein, the said discharge being in view of the plaintiffs accepting unconditionally from the defendants the said CANFINA Bankers Receipt No. 1401 for Rs. 50 crores and the defendants Bankers Receipt for IRFC Bonds of the face value of Rs. 22.5 crores as alleged in Para.8 of the written statement?(iii) Whether there was an established and accepted market practice to deliver and accept Bankers Receipts in effective discharge of the obligations to deliver physical securities as stated in para.6(c) and para.12 of the written statement?(iv) Whether the plaintiffs are estopped from denying that the defendants have discharged their obligations in respect of the IRFC Bonds of the face value of Rs. 50 crores or from contending that the defendants obligations in that behalf remains outstanding or subsisting as alleged in Para.3 and 12 of the written statement?(v) Whether the plaintiffs remedy is against CANFINA only and not against the defendants as alleged in Para.12 and 13 of the written statement of the defendants?(vi) Whether the plaintiffs are entitled to any relief and if so, whatNo oral evidence was led by SCB in the suit. Citibank also did not lead any oral evidence. The matter was thus required to be decided only on the basis of the documentary evidence and facts admitted by the parties.24. Under Issue No. 1 it was held that suit was maintainable and was not liable to be dismissed for non joinder of CANFINA. Issue Nos. 2 & 4 were taken up together and were answered against the Citibank and in favour of the SCB. It was held that the Citibank had failed to discharge its obligation in respect of IRFC bonds of the face value of Rs. 50 crores and its obligation continued in this behalf. That there was no valid discharge of original BR 47 and mere handing over of original BR 47 with an endorsement, of due discharge on the reverse of it did not amount to a valid discharge. That acceptance of BR 1401 for Rs. 50 crores of CANFINA and Citibanks BR for IRFC bonds of the face value of Rs. 22.5 crores did not amount to a valid discharge of original BR 47 and the Citibank continued to remain under obligation to return the securities or the amount thereof. That there was a failure of consideration inasmuch as neither the Citibank nor the CANFINA had delivered bonds worth Rs. 50 crores to SCB. Issue No. 3 was held to be not proved. Issue No. 5 was answered in the negative. Issue No. 6 was relief clause and was answered as per order.25. In order to come to the conclusion arrived at on Issue Nos. 2 & 4 the Special Court relied upon its own decision in Suit No. 22 of 1994 dated 10th July, 1995 and Suit No. 20 of 1994 dated 7th July, 1995 between the same parties relating to another set of transactions. The orders passed by the Special Court in Civil Suit No. 22 of 1994 and Civil Suit No. 20 of 1994 were subject matter of Civil Appeal No. 7941 of 1995 and Civil Appeal No. 8340 of 1995. These two appeals were accepted by this Court by its judgment dated 8th October, 2003, titled Citibank N. A. v. Standard Chartered Bank, (2004 (1) SCC 12 ) and judgment and order of the Special Court was set aside.26. Since the Special Court in the impugned judgment had relied upon its own judgment in Suit No. 20 of 1994 and Suit No. 22 of 1994 to decree the SCBs suit and held that facts of the present case are identical to the facts in Civil Suit No. 20 & 22 of 1994, it would be necessary to refer to the facts of those cases in detail before proceeding and examining the submissions made by the respective learned counsel appearing for the parties in these appeals.27. In those cases also the SCB had a transaction in securities with the Citibank on 18th & 19th September, 1991. In those cases as well the original SGL transfer form which had been issued by the Citibank to the SCB was exchanged by another SGL of a smaller amount of the Citibank and SGL transfer form issued by CMF to the Citibank. SGL transfer forms of CMF were handed over to SCB on the basis of a letter issued by an officer of the SCB. SCB filed Suit No. 22 of 1994 against the Citibank and Canara Bank and Others, trustees of CMF. Citibank filed Suit No. 20 of 1994 against the brokers in the transaction, (1) Hiten P. Dalal, (2) the SCB, and (3) CMF. Suit No. 20 of 1994 was termed as a third party proceedings as has been contended in Suit No. 1 of 1995.28. One of the question which arose for consideration before the Special Court was whether the mere handing over of the SGL transfer form there could be any discharge of liability. It was held that mere handing over of SGL transfer form would not amount to discharge of the original consideration. There could be no discharge unless there was a satisfaction. Special Court also held that S.41 and not S.62/63 of the Indian Contract Act would be applicable in the facts and circumstances of the case. Plea of Citibank that as the discharged SGL came from its possession/custody, a rebuttal presumption be raised against SCB under illustration (i) of S.114 of the Indian Evidence Act and, as SCD had failed to rebut the presumption by leading any evidence, it be deemed that Citibank was duly discharged of its obligation was rejected. Similarly, the plea raised by the Citibank mat an adverse inference be drawn under illustration (g) of S.114 of the Indian Evidence Act against SCB as it had failed to produce/disclose the material piece of evidence which would have thrown much light on the issue in controversy was rejected. The Court also held that there could be no discharge unless there was satisfaction and the SCB could sue the Citibank on its original consideration.29. In Citibanks case (supra) the findings recorded by the Special Court on the applicability of S.41, 62 and 63 of the Indian Contract Act were set aside. It was held that S.41 was not applicable. S.63 of the Indian Contract Act would be applicable. That SCB had token the SGL of CMF for the reason best known to itself. Citibank stood discharged of its obligation under the SGL and no recovery could be made from it. Since the SGL duly discharged was produced by the Citibank a rebuttal presumption under illustration (i) of S.114 of the Indian Evidence Act of due discharge of its liability by the Citibank could be raised which the SCB tailed to discharge by leading any evidence. Further as SCB had failed to produce the material evidence which was in its possession or gave any explanation as to why it had accepted SGL of CMF drawn in favour of Citibank, an adverse inference under illustration (g) of S.114 of the Indian Evidence Act could be raised against it. Appeals were accepted, Suit filed by the SCB was dismissed. Consequently, the appeal filed by CMF against Citibank, being a contingent suit, was also accepted and the suit filed by the Citibank against CMF was ordered to be dismissed.30. Learned Judge of the Special Court in the present appeals has held that the facts being similar as in the previous cases, the law applicable in the present case would be the same. The finding on points of law on the applicability of S.41, 62 and 63 of the Indian Contract Act were reiterated. The benefit of illustrations (I) and (g) of S.114 of the Indian Evidence Act was denied to the Citibank. It was held that the plaintiff SCB at the highest agreed to act as an agent of the defendant (Citibank) and collect the 50 Crores Bonds from CANFINA and appropriate them towards the Citibank obligation to deliver 50 crores Bonds. On the failure of the CANFINA to honour the commitment there was no way that the SCB could enforce any claim against CANFINA as there was no privity of contract between SCB and CANFINA. As the CANFINA had refused to honour the BR, the Citibank was not discharged of its obligation until such time as CANFINA honoured its commitment. The Citibanks obligation to deliver the bonds could not be deemed to be discharged unless such time as SCB received the bonds. On the failure of the CANFINA to honour the commitment the SCB could fall back on the original consideration.In the yearReserve Bank of India noticed that large scale irregularities and mal practices were committed in transactions in both the Government and other securities, by some brokers in collusion with the employees of various banks and financial institutions. The said irregularities and malpractices led to the diversion of funds from banks and financial institutions to the individual accounts of certain brokers. The Act was enacted to deal with this situation and, in particular, to ensure speedy recovery of the huge amount involved and to punish the guilty and restore confidence in and maintain the basic integrity and credibility of the banks and financial institutions. The Special Courts were to be presided over by a sitting Judge of the High Court to be nominated by the Chief Justice of the High Court within the local limits of whose jurisdiction the Special Court is situated, with the concurrence of the Chief Justice of India. The Act also provided for appointment of one or more Custodian for attaching the properties of the offenders with a view to prevent diversion of such property by the offenders. The Custodian, on being satisfied, on information received that any person has been involved in any offence relating to transactions in securities after the 1st day of April. 1991 and on or before 6th June, 1992 could notify the name of such person in the Official Gazette. Special Courts were given the jurisdiction to deal with cases of civil as well as criminal liability of the notified person.3. A common object namely Banker Receipt (for short BR) No. 1401 is the subject matter of two suits in which there are three major players namely Standard Chartered Bank (for short SCB), Citibank and Canbank Financial Services Ltd. (for short CANFINA). The present appeals arise out of a set of transactions between these three parties. Suit No. 24 of 1994 filed by SCB has been decreed against the Citibank and that is how the Citibank is in appeal in Civil Appeal No. 7426 of 1996 and Suit No. 1 of 1995 filed by the Citibank has been decreed against the CANFINA and that is how CANFINA is in appeal in Civil Appeal No. 9063 of 1996. Civil Appeal No. 9138 of 1996 has been filed by Citibank against CANFINA feeling partially aggrieved by the judgment and order of the Special Court in Civil Suit No. 1 of 1995.The facts giving rise to these appeals are:On 30th of December, 1991, Citibank purchased 9% IRFC Bonds of the face value of Rs. 50 crores from CANFINA. Citibank made full payment for the abovementioned bonds to CANFINA. In consideration thereof CANFINA, in accordance with the market practices, delivered to the Citibank Bankers Receipt No. 1401 dated 30th December, 1991. On or about 3rd February, 1992, Citibank purchased similar 9% IRFC Bonds of the face value of Rs. 65 crores from CANFINA. Citibank made full payment for the same as well. In consideration whereof, the CANFINA delivered their Bankers Receipt No. 1541 dated 3rd February, 1992 to the Citibank. On or about 5th February, 1992 Citibank sold to CANFINA 9% IRFC Bonds of the face value of Rs. 105 crores. By way of delivery for the same, Citibank first decided to return to CANFINA abovementioned two Bankers Receipts Nos. 1401 and 1541. Citibank affixed its stamp and made an endorsement on the reverse of the BR No. 1401 to the effect "BR exchanged against our sale of date". But subsequently instead of returning the banker receipt No. 1401 to CANFINA, a fresh banker receipt of Citibank for Rs. 40 crores was issued and sent to CANFINA along with bankers receipt No. 1541 of Rs. 65 crores. These bankers receipts were accepted by CANFINA against the Citibanks liability to CANFINA for Rs. 105 crores of 9% of IRFC Bonds. According to the Citibank, as banker receipt No. 1401 of CANFINA was not utilised the Citibank cancelled the endorsement written on the reverse of the bankers receipt No. 1401. According to Citibank CANFINAs liability continued to remain subsisting under the said BR.5. On or about 19th February, 1992 Citibank sold to SCB 9% IRFC Bonds of the face value of Rs. 72.50 crores. Citibank received payment for the same and issued BR No. 47 dated 19th February, 1992 in favour of the SCB in the sum of Rs. 72.50 crores.6. On 28th February, 1992, CANFINA wrote a letter to the Citibank requesting the Citibank to collect the IRFC Bonds of the face value of Rs. 50 crores from SCB and release their Bankers Receipt No. 1401.7. On 4.3.1992 SCB discharged BR 47 dated 19.2.1992 for Rs. 72.50 crores and returned the same to Citibank with an endorsement of due discharge on the reverse of the BR in exchange for CANFINA BR 1401 of the face value of Rs. 50 crores and Citibanks fresh BR No. 47 (coincidentally the number is same) for Rs. 22.50 crores for the balance amount in favour of SCB. BR 47 dated 4th March, 1992 of the face value of Rs. 22.50 crores was honoured and duly discharged and there is no dispute about the same. According to the Citibank, its liability under BR No. 47 dated 19.2.1992 for Rs. 72.50 crores was discharged as it had delivered BR No. 1401 of Rs. 50 crores given to it by CANFINA and BR No. 47 dated 4th March, 1992 of the face value of Rs. 22.50 crores in favour of SCB.8. BR 47 dated 19.2.1992 and BR 47 dated 4.3.1992 would be referred to respectively as original BR and fresh BR wherever necessary.9. SCB through its attorney made a demand for delivery of bonds from Citibank under BR 1401 by its notice dated 4.6.1992, a copy of the letter was endorsed to CANFINA as well. Citibank sent a reply to the attorneys letter dated 4.6.1992 through its own attorney on 6.7.1992 denying its liability to deliver any securities or make payment of any amount to SCB.10. In or about 27th November, 1992, SCB filed a suit being No. 3828 of 1992 against the Citibank in the Bombay High Court alleging therein that the Citibank had failed to deliver to them the securities given by the said BR No. 1401 and claiming from it the securities and/or the value of the securities. On or about 25th July, 1994 that suit was transferred to the Special Court and renumbered as Suit No. 24 of 1994.11. On 29th December, 1994, Citibank filed a suit in the Special Court, being Suit No. 1 of 1995, inter alia, against the CANFINA. The said suit was in the nature of the third party proceedings as a consequence of the abovementioned suit No. 24 of 1994 filed by the SCB. In Suit No. 1 of 1995 Citibank claimed that if the Citibank was held liable to the SCB in suit No. 24 of 1994, the Citibank was entitled to make a claim as against CANFINA for non performance of their obligation under BR No. 1401 and were entitled to the securities or their face value. Suit No. 1 of 1995 in substance is in the nature of third party proceedings arising from Suit No. 24 of 1994 filed by the SCB against the Citibank.12. SCB took out chamber summons dated 30th December, 1994 being chamber summons 18/94 to join CANFINA as a party in Suit No. 24 of 1994, The said chamber summons was opposed by CANFINA on the ground that SCB could have no claim against it and therefore it was neither a necessary nor a proper party. The learned Special Court by its order dated 7th February, 1995 held that CANFINA was a necessary and proper party to the suit and the question as to whether the SCB could have any claim against CANFINA or not was a question on merits which would be decided at the final hearing of the suit.13. Reversing its stand SCB on 2nd January, 1996 made an application to drop CANFINA as a party defendant in Suit No. 24 of 1994. CANFINA opposed this application as well but the learned Judge by an order dated 22nd January, 1996 allowed SCB to drop CANFINA from the said suit and adjourned the suit for 2nd March, 1996 for final hearing. The learned Judge thus delinked the two suits, although both the suits concerned the same question i.e. whether the Citibank or CANFINA were liable for the outstanding Bankers Receipt No. 1401 of CANFINA.14. On 1st March, 1996, Citibank made an application to the Special Court in Suit No. 1 of 1995 that both the suits, Suit No. 24 of 1994 and Suit No. 1 of 1995 be heard together as common questions of law and facts arise for consideration in both the suits. The Special Court dismissed the application by its order dated 1.3.1996. Citibank, being aggrieved, against the orders dated 22.1.1996 and 15.2.1996 filed two special leave petitions in this court which were withdrawn by Citibank on 15th March, 1996 as the trial of Suit No. 24 of 1994 had commenced by that time.15. It needs to be mentioned that Citibanks Suit No. 1 of 1995 initially was against four defendants namely (1) Hiten P. Dalal (2) Standard Chartered Bank (3) Canbank Financial Services Ltd. and (4) A. K. Menon, the Custodian but later on Citibank got the suit dismissed against defendants Nos. 1, 2 & 4 for non prosecution and allowed the suit to proceed only against CANFINA.16. By judgment dated 12th/13th March, 1996 the Special Court decreed the Suit No. 24 of 1994 filed by SCB and ordered the Citibank to pay to the SCB a sum of Rs. 482,791,096/as and by way of return of consideration and/or on the basis of monies had and received inclusive of accrued interest at the coupon rate of 9%. The learned Jude awarded interest @ 20% per annum equivalent to Rs.e costs of Rs. 15,49,462/were also awarded to SCB being the actual cost. The Citibank therefore paid a total amount of Rs. 899,155,086/to SCB under the said decree. Citibank, being aggrieved, has therefore filed Civil Appeal No. 7426 of 1996 against SCB.17. After conclusion of Suit No. 24 of 1994, the trial of Suit No. 1 of 1995 commenced in the middle of March, 1996. By its order dated 26th April, 1996 the Special Court passed a decree in favour of the Citibank by ordering the CANFINA to deliver to Citibank 9% IRFC Bonds of the face value of Rs. 50 crores within a period of 16 weeks along with the coupon interest @ 9% per annum from 15th July, 1991 till the "bonds were delivered. The learned Judge awarded an interest @ 9% per annum from 30th December, 1991, the date CANFINA received the consideration till the date of repayment. Parties were directed to bear their own costs. CANFINA, being aggrieved, against the aforesaid judgment has filed Civil Appeal No. 9063 of 1996 against Citibank.18. Aggrieved against the findings of the learned Judge to the effect that Suit No. 1 of 1995 was not in the nature of third party proceedings and therefore the Citibank was not entitled to recover the amount ordered by the Court to be paid to the SCB in Suit No. 24 of 1994 and the fact that the learned Judge did not grant the Citibank interest @ 20% per annum as had been granted in Suit No. 24 of 1994 and also that costs were not awarded, the Citibank has filed Civil Appeal No. 9138 of 1996.19. Facts in nutshell around which the controversy revolves are that Citibank held BR No. 1401 of face value of Rs. 50 crores issued by CANFINA in its favour. On 19th February, 1992 Citibank sold to SCB bonds of the face value of Rs. 72.50 crores. Citibank received payment for the same and issued original BR No. 47 dated 19th February, 1992 in favour of SCB in the sum of Rs. 72:50 crores. On 28th February, 1992 CANFINA wrote a letter to the Citibank requesting the Citibank to collect the IRFC Bonds of the face value of Rs. 50 crores from SCB and release their bankers receipt. On March 4, 1992 SCB "discharged" original BR 47 dated 19.2.1992 and took from Citibank the CANFINA BR No. 1401 of the face value of Rs. 50 crores and Citibanks fresh BR No. 47 dated 4th March, 1992 of the face value of Rs. 22.50 crores, Almost after three months of discharge of the original BR 47 and after break up of the scam, SCB by its attorney dated 4.6.1992 made a demand for delivery of bonds from Citibank under BR 1401 while endorsing a copy of letter to CANFINA. Citibank sent a reply to the attorneys letter dated 4.6.1992 through its own attorney on 6.7.1992 denying its liability to deliver any securities or to make payment of any amount to the SCB. Thereafter SCB filed the suit, reference to which has been made in detail in the foregoing paragraphs.20. Case of the SCB in the suit is that having purchased bonds of face value of Rs. 72.50 crores on 19.2.1992 SCB received from Citibank original BR 47 dated 19.2.1992 of the face value of Rs. 72.50 crores. Thereafter on 4th March, 12993 SCB discharged and handed over original BR 47 to Citibank. Against the same Citibank issued to the SCB fresh BR 47 of the face value of Rs. 22.50 crores and delivered CANFINA BR 1401 dated 30.12.1991 of the face value of Rs. 50 crores. It was contended that endorsement and delivery of CANFINA BR to SCB was on the footing that CANFINA would honor the same. At best the delivery of CANFINA BR merely conferred an authority on SCB to receive bonds from CANFINA and it was an implied term of the arrangement between SCB and Citibank, that if for any reason SCB did not receive bonds from CANFINA, Citibanks obligation would continue or would stand revived.

Reasoning:
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.