1. This petition under Articles 226 and 227 of the Constitution of India challenges the impugned judgment dated 19.11.2007 of the Debt Recovery Appellate Tribunal (DRAT) whereby the DRAT dismissed the appeal of the petitioner against the judgment of the the Debt Recovery Tribunal (DRT) dated 12.7.2004. By the judgments, both the DRT and DRAT, have allowed the claim of the respondent bank herein and have granted a decree for the amount of Rs.21,20,466/- plus interest @ 13.5% per annum from 31.12.1995 to 6.3.1998 and pendente lite and future interest @ 11% per annum.

2. The case, the issue and the conclusion in the present case as urged by the counsel for the petitioner and which we accept, is that there was no reason for the petitioner to take a loan in the form of an over draft in the current account maintained with the respondent bank when the respondent bank had in fact fixed deposits of the petitioner lying with it and which amounts should have been credited to the current account for clearing of the refund orders issued by the petitioner company and which action the respondent bank ought to have taken in terms of the Agreement between the parties.

3. The facts of the case are that the petitioner company came out with a public issue in 1994 and the issue was over-subscribed. The petitioner, therefore, requested the respondent bank to act as a banker for refund of the amount of the over-subscription to the unsuccessful applicants of the shares. For this purpose, two documents were executed between the parties being the Agreement dated 7.3.1995 entered into between the parties and the letter dated 17.2.1995 addressed by the respondent bank to the petitioner and which also incorporated the agreed terms. Before proceeding further, it is necessary to reproduce certain important terms between the parties in the aforesaid two documents and which are as under:

“Para 3 of letter dated 17.2.1995

3. That at least before 10 days prior to issue of the Refund Orders, the total amount to be refunded should be remitted to us which will be utilized by us as under:-

a. A sum equivalent to the amount to be refunded by the branches of Union Bank of India will be paid well in advance to Union Bank of India and no interest will be payable on the same.

b. After appropriating the amount as above, the sum will be kept in FDR’s for shortest maturities. The bank will have the discretion to transfer the amounts of FDR by making before matuarity payment of such FDRs to meet the payment of refund orders and to keep minimum balance in Current A/C. Interest will be paid on such FDRs as per RBI guidelines. You will be availing 100% overdraft against these FDRs which will be utilized for honoring the refund orders only. The rate of interest recoverable on over draft will be 13.5%.”

“Articles 3 & 7 of Agreement dated 7.3.1995

Article 3

That the company shall not be liable to pay any cost, interest service charges to the Banker Union Bank of India for services as mentioned in the Article 2, which will be operating and getting charges from the Bank of Rajasthan Ltd. as per their agreed terms and conditions.

Article 7

That the Banker will have the desecretion to transfer the refund amount in one term deposits of any value or of any maturity out of the total refund amount transfer to it by the Company without seeking any instructions from the company.”

4. Admitted facts are that the petitioner company deposited the entire amount required for clearance of the refund orders issued to the unsuccessful applicants of the shares in the public issue and this amount was kept in a fixed deposit by the respondent bank with itself. Certain amount, however, was not to be kept in a fixed deposit out of the amount paid by the petitioner to the respondent bank and this amount was to be credited to the current account of the petitioner as per para 3(b) of the letter dated 17.2.1995 reproduced above. The refund orders when presented to the respondent b