CITIBANK, N.A. v. DEEPAK KUMAR

1. Whether Reporters of Local papers may be allowed to see the Judgment? NO. 2. To be referred to the Reporter or not? NO. 3. Whether the judgment should be reported in the Digest? No. HIMA KOHLI, J. (ORAL)

1. In the present appeal, the appellant Bank has assailed the impugned judgment and decree dated 20.9.1996 passed by the learned Additional District Judge, by which the suit instituted by the appellant Bank against the respondent for recovery of a sum of Rs.2,17,841/- was dismissed ex-parte on the ground that the appellant Bank had failed to 2009:DHC:4282 prove that the loan documents and other related documents executed by the respondent were accepted on behalf of the appellant Bank.

2. Briefly stated, the facts of the case as set out in the plaint instituted by the appellant Bank, are that the appellant Bank introduced a scheme known as “CITIMOBILE FINANCE SCHEME” so as to finance buying of motor vehicles by persons fulfilling certain conditions as laid down in the scheme. The respondent approached the appellant Bank under the said Scheme, with a request to grant him a loan to purchase a car on the terms and conditions as prescribed by the appellant Bank. The appellant Bank agreed to advance a sum of Rs.1,68,000/- to the respondent. In consideration of securing the aforesaid loan, the respondent executed a Loan-cum-Hypothecation Agreement dated 26.6.1992, an irrevocable Power of Attorney dated 26.6.1992 and a Promissory Note in favour of the appellant Bank.

3. It was averred by the appellant Bank that the respondent undertook to clear the principal amount of the loan and interest thereon in 36 equal monthly instalments of Rs.6,418/- each. The respondent also agreed to pay interest @ 1.25% p.a. above the citibank prime rates prevailing from time to time, subject to a minimum of 16% p.a. calculated at quarterly rests. Thereafter, the respondent in accordance with the terms and conditions of the Agreement, signed 36 post dated cheques of Rs.6,418/- each towards the principal as well as interest amount and delivered the same to the appellant Bank. The appellant Bank presented the cheques for encashment, but none of them were honoured. Rather, they were returned with the remarks, “funds not sufficient”. As the respondent defaulted in repaying the loan to the appellant Bank, a legal notice was served on him. As he did not come forward to repay the loan, the appellant Bank instituted a suit for recovery of Rs.2,17,841/-, along with interest against the respondent.

4. The aforesaid suit was instituted by the appellant Bank on 30.3.1993. Summons in the suit were directed to be served on the respondent. However, despite service he did not enter appearance and hence was proceeded against ex-parte vide order dated 22.1.1996. Thereafter, the appellant Bank led ex-parte evidence by way of an affidavit and placed on record all the original documents. An affidavit by way of evidence was filed by Mr.Surender Kumar, Assistant Vice President of the appellant Bank. Along with his affidavit, the original documents relied upon by the appellant Bank, were placed on the Trial Court record. The said documents included the application form and agreement executed by the respondent, marked as Ex.PW-1/2 collectively, the promissory note for Rs.1,68,000/-, marked as Ex.PW-1/4, the Auto Loan History, marked as Ex.PW-1/3, the Statement of Account maintained in respect of the respondent, marked as Ex.PW-1/5 and the Balance Confirmation Certificate, marked as Ex.PW-1/6.

5. After hearing the arguments and perusing the pleadings and documents placed on record, the Trial Court observed that the application form (Ex.PW-1/2,) on which the respondent applied for the loan, though signed by the respondent, was not accepted by anybody on behalf of the appellant Bank. Same is the observation with regard to the Loan-cum- Hypothecation Agreement dated 26.6.1992, also marked as Ex.PW-1/2. In respect of promissory note (Ex.PW-1/4), it was observed that the same was not dated and hence could not be taken into consideration. Thus the Trial Court concluded that as the witness who appeared on behalf of the appellant Bank had failed to prove that the documents filed with the plaint were accepted by the appellant Bank, its suit was dismissed.

6. Counsel for the appellant Bank submits that the aforesaid findings in the impugned judgment are erroneous for the reason that the Trial Court overlooked the fact that the appellant Bank had placed on record documents to establish that it had actually disbursed the loan amount in favour of the respondent, who had purchased a car bearing registration No.DL 2 CC 6495 (Maruti 800 AC Model) from the loan amount, details of which were provided by the respondent himself to the appellant Bank, while executing the Loan-cum-Hypothecation Agreement dated 26.6.1992. It is further stated that during the pendency of the Trial Court proceedings, the appellant Bank had also recovered the hypothecated vehicle, upon a receiver being appointed by the Trial Court, vide an order dated 11.5.1993. He submits that the Trial Court also failed to consider the other additional documents brought on record by the appellant Bank, which established the liability of the respondent. He submits that mere non-signing of the documents by the authorized representative of the appellant Bank could not be treated as conclusive in proving that the loan amount was not extended by the appellant Bank to the respondent, particularly when the respondent had himself issued 36 post dated cheques in favour of the appellant Bank to liquidate the loan amount.

7. A perusal of the documents placed on the Trial Court record shows that even if it is assumed that a competent officer on behalf of the appellant Bank did not affix his signatures in confirmation of the loan extended to the respondent, fact remains that the respondent affixed his signatures on the application form and the Agreement in question and submitted it to the appellant Bank. The moment the respondent did so, the contract between the parties had concluded against the respondent, being the proposer, in terms of the provisions of Section 4 of the Indian Contract Act, 1872 and as a consequence, the respondent was bound by the terms and conditions thereof. Further, in token of acceptance of the aforesaid contract and the loan amount disbursed by the appellant Bank, the respondent is stated to have executed 36 post dated cheques in favour of the appellant Bank. On presentation of the said cheques, the same were stated to have been dishonoured. Counsel for the appellant Bank states that the matter may be remanded back to the Trial Court to enable the appellant Bank, to place on record the aforesaid documents, including the post dated cheques, the memos received from the bankers of the respondent, returning the cheques on presentation with the remarks, “insufficient funds”.

8. Having regard to the fact that the respondent did not enter appearance after being served with the summons in the suit and considering the fact that the appellant Bank had filed the documents executed by the respondent and other relevant documents on the Trial Court record, which remained unrebutted and also keeping in view the fact that the respondent had duly executed an agreement dated 26.6.1992, hypothecating the motor vehicle in question in favour of the appellant Bank, which was subsequently recovered by the receiver appointed by the Trial Court, this Court is satisfied that the appellant has made out a satisfactory case for interference in the impugned judgment. It is therefore deemed appropriate to allow the appeal and set aside the impugned judgment and decree dated 20.9.1996, and remand the case back to the Trial Court with leave granted to the appellant Bank to file an appropriate application for placing on record additional documents in its power and possession in a time bound manner, to establish the loan transaction in question and to adduce additional evidence in support thereof.

9. The appellant is directed to appear before the District Judge on 16.11.2009, for the matter to be directed to be placed before the appropriate court, for further proceedings. Considering the fact that the suit instituted by the appellant is of the year 1993, the Trial Court is requested to dispose of the same as expeditiously as possible. The appeal is disposed of. The Registry is directed to release the Trial Court record forthwith for being transmitted to the Trial Court. As the counsel for the appellant Bank states that during the pendency of the Trial Court proceedings, the vehicle in question was taken over by a receiver appointed by the Trial Court, the fate of the said vehicle shall be governed by the orders that may be passed by the Trial Court. (HIMA KOHLI) OCTOBER 14, 2009 JUDGE mk