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2026 Supreme(Online)(Del) 15020
IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, Manmeet Pritam Singh Arora, JJ
M/S SANCHI CEREALS PVT LTD – Appellant
Versus
M/S INDUSIND BANK LTD – Respondent
RFA(COMM) 268/2026 | CM APPL. 27477/2026
For the Appellants/Petitioners: Shyam Kumar, Iqra Khan, Kumari Ruchi, Akanksha Sinha, Aakash
For the Respondents: Surabhi Sinha
Continuing use of a credit facility after the expiration of a sanction letter, in the absence of fresh terms, implies that the contractual relationship remains governed by the terms of the original sanction letter, including clauses related to pre-payment charges.
Headnote:The appellant, an MSME engaged in rice trading, filed a suit for recovery of non-compliance and pre-payment charges from the respondent bank. The Trial Court, exercising powers under Order XIII-A of the Code of Civil Procedure, 1908, partly allowed the respondent's application for summary judgment and dismissed the claim for recovery of Rs. 4,01,200/- towards pre-payment charges, holding that the charges were levied as per the sanction letter dated 13.11.2019. The primary issue was whether the pre-payment clause in a sanction letter remained applicable after the formal expiry of the sanction period. The court reasoned that since the appellant continued to use the credit facility after the expiration date without executing new terms, the relationship remained governed by the original sanction letter. The court held that the terms regarding pre-payment charges were explicit and the appellant had no real prospect of succeeding in the challenge. Accordingly, the present appeal is dismissed.
| Table of Content |
|---|
| 1. background of the recovery suit and the appellant's challenge against the summary dismissal of pre-payment charge claims. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. continuing use of a credit facility after sanction expiry binds the borrower to the original terms. (Para 9 , 10 , 11 , 12) |
| 3. rejection of unsubstantiated claims regarding rbi circulars and the independence of separate claims in a suit. (Para 13 , 14) |
| 4. the legal standard for granting summary judgment under order xiii-a cpc in commercial disputes. (Para 15) |
MANMEET PRITAM SINGH ARORA, J.
(ORAL)
1. The Appellant has filed the present Regular First Appeal (Commercial) against the order dated 16.12.2025 [‘impugned order’] passed by the learned District Judge, Commercial Court-07, Central District, Tis Hazari Courts, Delhi in CS(Comm) No. 1083 of 2023 [‘Trial Court’].
2. The Appellant has filed a suit inter-alia for seeking recovery of the following payments made to the Respondent:
(i) Rs. 3,67,775.32/- towards non-compliance charges (non-compliance charges);
(ii) Rs. 4,01,200/- (Rs. 3,40,000/- towards processing fee/pre-payment charges; and Rs. 61,200/- towards GST).
(iii) Rs 5,00,000/- towards loss and damages; and
(iv) Rs 1,00,000/- towards cost of litigation
3. By the impugned order, the learned Trial Court has partly allowed the Respondent’s application under Order XIII-A of the Code of Civil Procedure, 1908 [‘CPC’] and consequently dismissed the Appellant’s suit to the extent of its claim for recovery of Rs. 4,01,200/- paid towards pre-payment charges.
Factual matrix
4. The Appellant, M/s Sanchi Cereals Pvt Ltd., is a Medium Enterprise registered as an MSME, Micro, Small and Medium Enterprise, engaged in the business of rice trading and has been operating in the said field for around 13 years.
5. The Respondent, IndusInd Bank Limited, is a banking company engaged in providing banking and financial services, including the sanction and disbursement of credit facilities.
6. Learned counsel for the Appellant states that the Appellant availed a credit facility from the Respondent Bank vide a sanction letter dated 13.11.2019, which sanction was valid for one year, i.e., until 13.11.2020.
6.1. He states that the Respondent secured the credit facility by accepting primary security, collateral security, guarantee, and additionally a fixed deposit of Rs. 8,50,000/-.
6.2. He emphasizes that no renewal letter, agreement or written extension was executed between the parties after expiry of the original sanction period on 13.11.2020, though the Appellant continued to use the credit facility.
6.3. He states that after the sanction of the credit facility, the Respondent Bank unilaterally imposed higher interest rates and debited various charges without justification.
6.4. He states that on 01.03.2021, the Appellant expressed its intention to shift the credit facility to another bank. He states that in response on 02.03.2021, the Respondent informed the Appellant that its collateral securities would be released only upon payment of the non-compliance charges and premature closure charges.
6.5. He states that the Appellant disputed its liability to pay the said charges and submitted its request for closure of the credit facility. He states that despite the Appellant’s objection to the charges, the Respondent debited a total amount of Rs. 7,68,975/- from the Appellant’s account in the following manner:
(i) Rs. 3,67,775.32p towards non-compliance charges;
(ii)Rs. 4,01,200/- (Rs. 3,40,000/- towards processing fee/pre-payment charges; and Rs. 61,200/- towards GST).
6.6. He states that the Appellant on 19.03.2021, requested the Respondent to reverse the wrongful charges and return the collateral securities; however, despite debiting the amount, the Respondent failed to release the collateral documents and securities.
6.7. He states that, in these circumstances, the Appellant was coerced to issue a full and final settlement letter on 01.06.2022 in the format pr
