AI Overview...
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Long Term Loan Facility - Definition and Purpose:
Long-term loan facilities are financial arrangements intended for industrial, agricultural, infrastructure development, or residential construction projects in India. They typically involve loans or advances with extended repayment terms, often linked to specific purposes such as housing or business expansion. These facilities are often secured by collateral, such as property mortgages, and are subject to approval conditions, including written consent from investors or financial institutions. WEIZMANN HOMES LIMITED VS CENTRAL BOARD OF DIRECT TAXES - Karnataka, Shakti Nath VS Alpha Tiger Cyprus Investment No. 3 Ltd. - Delhi -
Legal and Regulatory Aspects:
The legal framework governing long-term loans includes provisions under the Consumer Protection Act and specific banking regulations. For example, loans obtained for livelihood or self-employment are recognized, but the purpose must be specified. Disputes may arise regarding the validity of loan agreements, interest rates, and the enforceability of guarantees. Courts have examined issues like joint liability of co-borrowers, the validity of guarantees, and the conditions attached to sanctioning long-term loans. Standard Chartered Bank VS Naresh Garg - Consumer, B. G. VASANTHA VS CORPORATION BANK, MANGALORE - Supreme Court, BRIJARAJSINH HEMANTSINH JADEJA VS STATE OF GUJARAT - Gujarat, HOTEL DEEPTI VS ROURKELA STEEL PLANT - Orissa -
Loan Approval and Disbursement Challenges:
Financial institutions often face delays in sanctioning and disbursing long-term loans, sometimes taking years to approve modest amounts. This can impact borrowers' projects and necessitate legal remedies such as mandamus to compel banks to accept settlement proposals or approve loans. The process involves adherence to internal policies, including obtaining written approval for certain loan conditions. Ram Ganga Valley Chemicals & Fertilizers Ltd. through its Director, Smt. Rita Devi VS State Bank Of India through its chairman-cum-Managing Director, Mumbai - Patna -
Collateral Security and Mortgage:
Mortgage of properties is a common requirement for securing long-term loans, especially term loans and cash credit facilities. Borrowers seek permission to mortgage properties to secure the necessary funds, and banks insist on collateral security as a prerequisite for loan approval. The liability of co-borrowers and guarantors is joint and several, with interest rates often linked to reference rates, and legal disputes may concern the enforceability of guarantees and the interest payable. Hotel Deepti VS Rourkela Steel Plant - Orissa, B. G. VASANTHA VS CORPORATION BANK, MANGALORE - Supreme Court, SHAKTI NATH VS ALPHA TIGER CYPRUS INVESTMENTS NO. 3 LTD. - Delhi -
Interest Rates and Repayment Terms:
Interest on long-term loans varies, with examples including floating rates linked to specific benchmarks (e.g., Reference Rate of the Financial Creditor). The repayment terms are governed by the sanction letter and contractual clauses, with courts sometimes intervening to determine the enforceability of interest and liability of guarantors. Continuing guarantees and limitation periods also influence legal outcomes. B. G. VASANTHA VS CORPORATION BANK, MANGALORE - Supreme Court, SHAKTI NATH VS ALPHA TIGER CYPRUS INVESTMENTS NO. 3 LTD. - Delhi
Analysis and Conclusion:
Long-term loan facilities are crucial for development projects and business expansion, secured primarily through collateral and governed by detailed contractual and legal provisions. Challenges include delays in sanctioning, complex collateral arrangements, and disputes over interest rates and guarantees. Legal cases highlight the importance of clear documentation, adherence to approval processes, and understanding the liabilities of co-borrowers and guarantors. Overall, the effective management of long-term loans requires careful compliance with contractual terms and legal regulations to mitigate risks and ensure smooth disbursement and repayment.
Search Results for "Long Term Loan Facility"
2012 0 Supreme(Guj) 420 • India - Gujarat
P.B.MAJMUDAR, MOHINDER PAL
loan facilities and those who are dealing in long-term loan facilities, formula is yet to be arrived at. ... loan facility is concerned, as on today, no decision is taken in this behalf and only decision is taken regarding co-operative bank ... Directors and therefore, cannot challenge such decision which is accepted by the Bank - Appeal - Held, co-operative bank dealing in long-term ... After considering the aforesaid background, in our view, so far....
• India - Consumer
SANGITA DHINGRA SEHGAL, PINKI
except statement in facility letter indicating “long term working capital” – Order passed by District Consumer Redressal Commission ... Consumer Protection Act, 1986 – Section 2(d)(i), Explanation (i) – Banking Services – Loan obtained by respondent ... obtained solely for the purpose of earning a livelihood through self-employment – Respondent did not specify any purpose for the loan ... Reviewing the records of the present case, it is evident that the respondent did not specify any purpose for the #HL....
2013 0 Supreme(Pat) 61 • India - Patna
JAYANANDAN SINGH
loan and cash credit accounts under SBI OTS SME 2010 Scheme. ... Limited Company, sought mandamus to direct the respondent State Bank of India to accept its proposal for one time settlement of its term ... But, it took two long years to the respondent-Bank to sanction an amount of Rs.15 lacs only towards term loan and cash credit facility of Rs.20 lacs only, vide its letter of sanction dated 31.05.2001. ... Shorn of other details mentioned in the counter affidavit in respect of the tra....
2006 0 Supreme(Ori) 317 • India - Orissa
L.MOHAPATRA, I.MAHANTY
Fact of the Case: ( 1 ) THIS writ application has been filed for a direction to the opposite parties to grant permission to the petitioner for mortgaging the properties mentioned in the petition to the flanks or other financial institutions for availing various loan
2006 0 Supreme(Ori) 310 • India - Orissa
L.MOHAPATRA, I.MAHANTY
The financial institutions insist upon mortgage of the property as collateral security for advancement of the loan. The petition¬er therefore applied to the opposite parties in the prescribed form for grant of permission to mortgage the properties for securing Term Loan and cash credit facility. ... The petitioner being in great necessity of working capital for construction of the required building as per approved plan approached various banks and other financial institutions to obtain loan and also #HL....
2003 0 Supreme(Kar) 910 • India - Karnataka
term finance for industrial or agricultural development or development of infrastructure facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long term finance for construction or purchase of houses in India for residential ... shall have the meaning assigned to it in clause (23g) of section10; (e) long-term finance means any loan or advance where the terms under which moneys are loaned o....
2017 0 Supreme(Del) 477 • India - Delhi
S.MURALIDHAR
on the breach of the agreements by the Petitioners - Award of interest appears to be in consonance with the RSHA and the Act - Long ... In terms of Clauses 4.1 and 4.2 of the RSHA, the Promoters i.e., Petitioner Nos. 1 to 4 acknowledged and agreed that they were under an obligation to arrange for a Term Loan Facility of at least Rs. 113.50 crores (‘Term Loan Facility’) for Respondent No. 3 from any of the nationalized banks or other ... It is pointed out that the gran....
2024 Supreme(Online)(NCLAT) 809 • India - National Company Law Appellate Tribunal
Barun Mitra, Member (Technical)
liabilities - The liability of a co-borrower is joint and several with that of the principal borrower, asserting that obligations for loan ... director appealed against a corporate insolvency process initiated due to the default of payments by the Corporate Debtor, where the loan ... In the instant case, the Sanction Letter clearly provides that 15% p.a. floating interest linked to Long Term Reference Rate of the Financial Creditor was applicable. ... Further, since the loan had not been disbursed to th....
2004 0 Supreme(SC) 690 • India - Supreme Court
S.N.VARIAVA, ARIJIT PASAYAT
loan facility and 14% p.a. in respect of cash credit facility- High Court erred in granting decree against the guarantor and principal ... @ 15.5% p.a- The High Court rightly held that suit was not barred by limitation-The guarantee being a continuing guarantee, so long ... but also for interest thereon-Regarding principal debtor the liability to pay interest would be @ 13.5% p.a. in respect of the term ... However, we find that so far as the principal debtor is concerned, the liability to pay interest ....
2017 0 Supreme(Del) 4905 • India - Delhi
S.RAVINDRA BHAT, YOGESH KHANNA
which included provision for the term loan facility. ... The terms and conditions of the Term Loan Facility were to be subject to the written approval of the Investors. ... Under the RSHA (Clauses 4.1 and 4.2) the promoters agreed to be bound to arrange for a Term Loan Facility of at least Rs. 113.50 crores (“Term Loan Facility”) for the third respondent from any of the nationali....
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