AI Overview...
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Cash Credit Open Loan Facility - A type of short-term borrowing arrangement where a bank extends a line of credit to a borrower, secured against hypothecated goods or assets, allowing the borrower to withdraw funds up to a specified limit as needed. This facility is often utilized by firms against their stock-in-trade or movable properties. Mayank N. Shah VS State of Gujarat - Supreme Court, SHANTILAL MAGANLAL PANDYA VS STATE OF GUJARAT - Gujarat, Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Dishonour Of Cheque, Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Bombay, Central Bank of India VS V. Guruviah Naidu and Sons (Leather) Private Limited and Others - Madras, MAHADEO PRASAD JAISWAL VS CANARA BANK - Allahabad, Mahadeo Prasad Jaiswal VS Canara Bank - Dishonour Of Cheque, RAJAN M N vs CANARA BANK LTD - Kerala
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Main Points & Insights:
- Banks extend Cash Credit Open Loan facilities based on hypothecation of goods or movable assets, providing flexible credit limits for business needs. Mayank N. Shah VS State of Gujarat - Supreme Court, SHANTILAL MAGANLAL PANDYA VS STATE OF GUJARAT - Gujarat, Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Dishonour Of Cheque
- Borrowers often execute promissory notes and related documents to formalize these credit arrangements. Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Dishonour Of Cheque, Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Bombay
- The facility can be secured against stock-in-trade, factory goods, or other movable properties, and sometimes involves complex agreements like demand cash credit agreements. Central Bank of India VS V. Guruviah Naidu and Sons (Leather) Private Limited and Others - Madras, INDIAN BANK VS NARINDER KUMAR GUPTA - Himachal Pradesh
- Cases of fraudulent presentation of documents, such as forged transport receipts, have been associated with misuse of the facility. SHANTILAL MAGANLAL PANDYA VS STATE OF GUJARAT - Gujarat
- Legal disputes often involve recovery actions, liability of guarantors, and the interpretation of whether the facility was for a term loan or open credit. Courts have upheld the enforceability of these facilities and the liability of guarantors. MAHADEO PRASAD JAISWAL VS CANARA BANK - Allahabad, Mahadeo Prasad Jaiswal VS Canara Bank - Dishonour Of Cheque
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Courts have also permitted settlement in installments under the SARFAESI Act, balancing the recovery of dues with debtor's repayment capacity. RAJAN M N vs CANARA BANK LTD - Kerala
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Analysis and Conclusion:
- The Cash Credit Open Loan Facility is a flexible, asset-backed credit line primarily used by businesses for working capital needs. Its security typically involves hypothecated goods, and the facility is formalized through promissory notes and agreements.
- While beneficial for operational liquidity, misuse or fraudulent documentation can lead to legal disputes. Courts generally favor recovery of dues but may allow installment payments to facilitate settlement.
- Proper documentation, transparency, and adherence to legal procedures are crucial for the effective functioning and enforcement of such facilities. Mayank N. Shah VS State of Gujarat - Supreme Court, SHANTILAL MAGANLAL PANDYA VS STATE OF GUJARAT - Gujarat, Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Dishonour Of Cheque, Central Bank of India VS Tarseema Compress Wood Manufacturing Co. and others - Bombay, Central Bank of India VS V. Guruviah Naidu and Sons (Leather) Private Limited and Others - Madras, MAHADEO PRASAD JAISWAL VS CANARA BANK - Allahabad, Mahadeo Prasad Jaiswal VS Canara Bank - Dishonour Of Cheque, RAJAN M N vs CANARA BANK LTD - Kerala
Search Results for "Cash Credit Open Loan Facility"
2019 0 Supreme(SC) 1399 • India - Supreme Court
N.V.RAMANA, R.SUBHASH REDDY, B.R.GAVAI
Accordingly, various facilities such as Term Loan facility, Cash Credit Open Loan facility, Usance Bills facility, Clean Endorsed Out-stationed Third Parties Cheques Discounting facility etc. were extended from time to time at the instance of accused no.1. ... On such presentation, bank used to grant credit facility by forwarding the bills with necessary documents to the out-stationed bankers name....
2008 0 Supreme(Guj) 340 • India - Gujarat
M.D.SHAH
bills - Complainant accused and presented to said bank bills for total amount during the period from in this manner - Firm availed credit ... facility from said bank against these bills by presenting fake transport receipts occasions forged receipts were produced with Out-stationed ... Under the Cash Credit Open Loan facility the said firm obtained different advances by hypothecating their goods lying in their factory. ... It is further the case of the complainant tha....
• India - Dishonour Of Cheque
R.G.VAIDYANATHA
It is stated that the first defendant-firm obtained two loans from the plaintiff-bank in 1970 which are cash credit (open loan) facility upto a limit of Rs. 15,000/- and cash credit (key loan) facility upto a limit of Rs. 15,000/- and executed a promissory note and other documents. ... Then it is stated that on 15th June, 1978 the defendants availed cash credit facility upto a li....
1996 0 Supreme(Bom) 709 • India - Bombay
R.G.VAIDYANATHA
It is stated that the first defendant-firm obtained two loans from the plaintiff-bank in 1970 which are cash credit (open loan) facility upto a limit of Rs. 15,000/- and cash credit (key loan) facility upto a limit of Rs. 15,000/- and executed a promissory note and other documents. ... Then it is stated that on 15th June, 1978 the defendants availed cash credit facility upto a li....
1983 0 Supreme(HP) 21 • India - Himachal Pradesh
V.D.MISRA
The defendant had also executed an agreement for Demand Cash Credit on the hypothecation of movable property (timber stored at Dharampur ... Of course, the defendant has his own story to tell about the circumstances in which he was granted the Open Cash Credit Loan facility. According to the defendant he was persuaded by an employee of the Bank to attend auction at Poanta Sahib for purchasing one forest. ... On 21st September, 1978 the defendant asked for being sancti....
1991 0 Supreme(Mad) 572 • India - Madras
ARUMUGHAM
The plaintiff, a banking institution, sought to recover a loan amount from the defendants. ... Compromise - Recovery of Loan - Indian Contract Act, Section 62, Section 63 - Accord and Satisfaction Fact of the Case:It may be noted that the open loan cash facility and packing credit facility availed of by the defendants, followed by the execution of promissory notes then and there on several occasions, by hypothecating stock-in-trade, detailed in the ....
2008 0 Supreme(All) 2057 • India - Allahabad
J.M.MALIK
Guarantor - Recovery of Loan - Indian Contract Act, 1872, Section 133 - The court discussed the liability of the guarantor, the ... Final Decision: The appeal was dismissed, and the court upheld the liability of the guarantor for the loan. ... Fact of the Case: The respondent-bank was found entitled to the recovery of a loan from the appellants, including Smt ... Counsel for the appellant argued that the said appellant is liable only for "term loan facility (i.e., for the fixed period) and not for O....
• India - Dishonour Of Cheque
J.M.MALIK
Counsel for the appellant argued that the said appellant is liable only for “Term Loan Facility (i.e. for the fixed period) and not for OCC (Open Cash Credit facility). ... and Open Cash Credit facility and pendente lite and future interest @ 18.75% per annum, with quarterly rest in respect of temporary overdraft facility on and from 16.7.2001 till full realization is made from the appellants/defe....
2001 0 Supreme(AP) 1045 • India - Andhra Pradesh
BILAL NAZKI, ELIPE DHARMA RAO
defendant or handed to a witness merely to refresh his memory - Since document was produced by when his statement was recorded it was open ... transaction that loan transaction had never been proved although defendants in their written statement have stated that they have ... possession as defendant is his father and defendant is his wife and he had given these documents to Bank in relation to a prior loan ... ... ( 2 ) THE suit was based by the Bank on the fact that the defendants approached the Bank for open #HL_START....
2013 Supreme(Online)(KER) 21574 • India - High Court of Kerala
ANTONY DOMINIC, J
Loan - Recovery - SARFAESI Act - Section 13(2) - The court allowed the petitioners to settle their dues in instalments, balancing ... Issues: Whether the court should allow the petitioners to pay the outstanding loan amounts in instalments despite ongoing ... Firm availed of a term loan of Rs.7,42,500/- and an Open Cash Credit facility of Rs.32.5 Lakhs and an Adhoc limit of Rs.6 Lakhs. The first two facilities were availed of in November, 2010 and the third #HL_START....
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