A bank cannot unilaterally revise credit facility terms without a breach by the borrower; any appropriation of funds without valid terms is unlawful.

JUDGMENT :

PRAYER: Plaint filed under Order IV Rule 1 of the Original Side Rules Read with Order VII Rule 1 of the Code of Civil Procedure and Section 2(1)(c)(i) & Section 7 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and prayed for the following judgment and decree against the defendant:

(a) Direct the defendant to refund the plaintiff the sum of Rs.46,29,810/- along with interest @ 18% per annum on Rs.32,71,412/- from the date of plaint till realisation;

(b) Direct the defendant to compensate the plaintiff by way of damages in a sum of Rs.1,00,00,000/- towards loss caused due to unreasonable withholding of monies and securities, funds, locked capital and for the mental trauma caused due to the defendant's illegal conduct;

(c) Direct the defendant to pay the costs to the suit;

The suit was filed for recovery of a sum of Rs.46,29,810/- along with interest at 18% per annum on Rs.32,71,412/- from the date of plaint till realisation. The plaintiff also claimed damages of Rs.1 crore towards loss caused due to unreasonable withholding of monies, securities, funds, locked capital and for the mental trauma caused due to the defendant's illegal conduct.

2. In the plaint, the plaintiff asserts that it is engaged in the business of construction of commercial and residential buildings. In course of business, the plaintiff further states that it applied to the defendant for increase of credit facilities and that credit facilities were enhanced by letter dated 04.04.2018. Upon review, it is stated that such facilities were renewed and extended by letter dated 27.05.2019. The plaintiff further states that it informed the defendant, by letter dated 13.11.2019, that it has decided to change its bank to ICICI Bank Limited. Shortly thereafter, the plaintiff states that a letter dated 12.07.2019 was hand delivered to the plaintiff on 21.11.2019. After receiving such letter, the plaintiff states that a further letter dated 02.12.2019 was received from the defendant regarding the withdrawal of concessions and calling upon the plaintiff to refund amounts received by way of concessions during the last 12 months. The said letter was replied to on 03.12.2019 by stating that such concessions cannot be refunded because such refund was not agreed to when the sanction letter was issued on 27.05.2019.

3. The plaintiff further states that the defendant refused to release the property documents held as collateral security unless the plaintiff provided a fixed deposit receipt with a lien mark in favour of the defendant. By invoking such lien, the plaintiff states that the defendant unlawfully appropriated a sum of Rs.32,71,412/- from the maturity proceeds of the fixed deposit. The plaintiff further states that such appropriation was done during the period when the plaintiff's business was affected by COVID 19 pandemic. Hence, the plaintiff asserts that it is entitled to the relief claimed.

4. In the written statement, the defendant states that it is entitled to change the terms and conditions of which credit facilities are extended. As regards the condition that concessions extended over the previous 12 months would be withdrawn if the plaintiff avails of credit facilities from other banks, the defendant stated that this was communicated to the plaintiff by letter dated 12.07.2019, which was hand delivered on the same date. Since the renewed credit facilities were made available under sanction letter dated 27.05.2019, the defendant stated that the concessions granted thereunder would be liable to be refunded if the plaintiff availed of credit facilities from any other bank within 12 months from the said date, i.e. between 27.05.2019 and 26.05.2020. Because the plaintiff communicated the decision to change its bank from the defendant to ICICI bank on 13.11.2019 which was within the 12 month period, the defendant asserts that it was entitled to appropriate amounts equivalent to the concessional rate of intere