CITIBANK N A Vs. STANDARD CHARTERED BANK

JUDGEMENT

(1.) This Judgement shall dispose of civil appeal no. 7426 of 1996 arising in suit no. 24 of 1994 (filed by Standard Chartered Bank against Citibank) decided on 12th/13th March, 1996 and civil appeal no. 9063 of 1996 arising in suit no. 1 of 1995 (filed by Citibank against Canbank Financial Services Ltd.), decided on 22/23/26th April, 1996. Civil appeal no. 9138 of 1996 has been filed by Citibank against Canbank Financial Services Ltd. arising from the same suit i.e. suit no. 1 of 1995. Suits were tried by the special judge appointed under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992, hereinafter referred to as 'the Act'.

(2.) In the year 1991-92, Reserve 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 mal-practices 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.