Fulfillment of banking norms and conditions precedent for loan disbursement is crucial, and unfounded claims for damages due to breach of contract will not be upheld.

Mungeshwar Sahoo, J.

1. The defendants have filed this First Appeal against the impugned judgment and decree dated 20th October, 2001 passed by Sri Nakul Chand Gupta, the learned 9th Subordinate Judge, Patna in Money Suit No.18 of 1998 decreeing the plaintiff-respondent no. 1s Money Suit for a sum of Rs.2,06,63,600/-.

2. The plaintiffs filed the aforesaid Money Suit alleging that the appellant was in legal obligation to provide working capital to the plaintiff and for non-providing the same, the appellant is liable to pay damages suffered by plaintiff to the extent of Rs.2,06,63,600/-.

3. The plaintiffs case in short is that M/S Singhania Roller Flour Mills Pvt. Ltd. is a company registered under Indian Companies Act. For financial assistance, the plaintiff approached Bihar State Financial Corporation after being registered as small scale industries. Bihar State Financial Corporation (hereinafter referred to as B.S.F.C.) sanctioned Rs.38 lacs on 21.05.1988 with condition that working capital finance should be assured by banking institutions on need based basis. Therefore, the plaintiff approached the appellant, State Bank of India for financing of working capital. The State Bank of India issued an assurance letter dated 16.05.1989 promising to grant working capital finance on need based basis. Thereafter, B.S.F.C. started disbursing the term loan amount of Rs.38 lacs after execution of necessary documents and disbursed Rs.23,04,000/- upto 31.03.1991 in installment. The plaintiff utilized the same in construction of the building and machinery etc. The plaintiff was informing about the progress to the Bank and when B.S.F.C. asked the defendant to procure sanction letter from the Bank, the plaintiff approached Bank for sanction of working capital. On 28.03.1992, the Bank issued a letter stating that because of subsequent event, the industries for which the plaintiff set off the flour Mills is not viable and the working capital in favour of plaintiff became obsolete. The Bank issued this letter because plaintiff has not fulfilled illegal demand of gratification of Bank Authorities. Because of this act of Bank, B.S.F.C. stopped disbursement of further installment. Thereafter, B.S.F.C. wrote letter to the Bank and requested to fulfill the commitment. The plaintiff also asked the Bank to reconsider the matter. Ultimately, the matter was referred to Bihar Industrial Technical Consultancy Organization, Patna and thereafter, the Bank sanctioned Rs.17 lacs as cash credit 3 facility on 01.03.1993 against the security and hypothecation of the raw materials and demanded collateral security etc. Because of this delayed action of the Bank, the plaintiff was compelled to revise his project raising the term loan amount of Rs.38 lacs to Rs.60 lacs and presented before B.S.F.C. Sanction letter of term loan was issued on 24.03.1995 mentioning that Rs.23.4 lacs was outstanding of the previous loan Account No.1, Rs.20.23 lacs was in Account No.2 and Rs.16.73 lacs was adjusted towards interest accrued upto 28.02.1995. If the defendant, first party, appellant had sanctioned working capital as agreed upon project would have been completed within the period and there would have no increase in project cost and unnecessary burden of heavy interest upon the plaintiff. In 1995, the project was completed and came in trial production. Thereafter, the defendant Bank was asked to provide working capital as promised and agreed earlier but the defendant, first party, appellant Bank asked the plaintiff to regularize other loan account of Director, Managing Director of the company before providing working capital to the company. The plaintiff has separate legal identity and is not liable for the individual act of the Director and Managing Director. The further case is that the State Bank of India with intention to get illegal gratification did not provide working capital on illegal grounds and also wrote letters to other Nationalized Bank for not to provid