Delhi High Court
Citibank, N.A. vs Deepak Kumar on 14 October, 2009
Author: Hima Kohli
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 238/1997
Date of decision : 14.10.2009
IN THE MATTER OF :
CITIBANK, N.A.. ..... Appellant
Through: Mr. Prabhat Kumar, Advocate
versus
DEEPAK KUMAR ..... Respondent
Through: Nemo
CORAM
* HON'BLE MS.JUSTICE HIMA KOHLI
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
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
