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of <h1>Supreme Court Discharges Citibank's Obligations in BR Dispute</h1> <h3>Citibank NA Versus Standard Chartered Bank</h3> Citibank NA Versus Standard Chartered Bank - [2004] 53 SCL 518 (SC) Issues Involved:1. Maintainability of the suit for non-joinder of Canbank Financial Services.2. Whether the discharge of the original Bankers Receipt (BR) No. 47 was unconditional.3. Established market practice regarding Bankers Receipts.4. Estoppel against Standard Chartered Bank (SCB) from denying Citibank's discharge of obligations.5. SCB's remedy being exclusively against CANFINA.6. Entitlement to relief and the nature of such relief.Issue-wise Detailed Analysis:1. Maintainability of the Suit for Non-joinder of Canbank Financial Services:The Special Court held that the suit was maintainable and not liable to be dismissed for non-joinder of CANFINA. The court decided that CANFINA was not a necessary party for the determination of the issues between SCB and Citibank.2. Whether the Discharge of the Original Bankers Receipt (BR) No. 47 was Unconditional:The court found that the discharge of the original BR No. 47 was indeed unconditional. SCB had returned the BR No. 47 to Citibank with an endorsement of due discharge without any qualifications. The Special Court's reliance on section 41 of the Indian Contract Act was deemed erroneous. Instead, section 63 was applicable, which allows a promisee to accept any satisfaction it deems fit. SCB's acceptance of CANFINA's BR 1401 and Citibank's fresh BR 47 was voluntary and unconditional, thus discharging Citibank of its obligations under the original BR.3. Established Market Practice Regarding Bankers Receipts:The Special Court held that there was no established and accepted market practice to deliver and accept Bankers Receipts in effective discharge of obligations to deliver physical securities. This issue was not proved by Citibank.4. Estoppel Against SCB from Denying Citibank's Discharge of Obligations:The court held that SCB was estopped from denying that Citibank had discharged its obligations. SCB's actions, including the unconditional discharge of the original BR and acceptance of CANFINA's BR, indicated that Citibank's obligations were fulfilled.5. SCB's Remedy Being Exclusively Against CANFINA:The Special Court found that SCB's remedy was not exclusively against CANFINA. However, the Supreme Court overturned this finding, establishing that SCB had no privity of contract with CANFINA and thus could not enforce any claim against it. SCB's acceptance of CANFINA's BR was voluntary and unconditional, discharging Citibank of its obligations.6. Entitlement to Relief and the Nature of Such Relief:The Special Court had initially awarded SCB a sum of Rs. 482,791,096, along with interest and costs. However, the Supreme Court reversed this decision, dismissing SCB's suit and ordering restitution to Citibank of the total amount paid to SCB, with interest. Consequently, the decree against CANFINA in Suit No. 1 of 1995 was also set aside, and CANFINA was entitled to restitution from Citibank.Conclusion:The Supreme Court set aside the Special Court's judgments, concluding that Citibank was discharged of its obligations under the original BR No. 47 upon SCB's voluntary and unconditional acceptance of CANFINA's BR 1401. Consequently, SCB's suit against Citibank was dismissed, and Citibank's contingent suit against CANFINA was also dismissed. The restitution was ordered for both Citibank and CANFINA, with specified interest rates and costs.
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