Law:

Section:

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, (XV of 1997)-------Ss. 10 & 21---Suit for recovery of loan---Leave to defend suit---Total sanctioned loan was not disbursed and the Bank unilaterally reduced the finance of Rs.19.900 million to 5.99 million ---Un disbursed amount was recalled---Bank invited quotations for supply and manufacture of machinery, the quotation of one party was accepted by the Bank and the amount was directly disbursed to the manufacturer---Contentions of the borrowers carried weight that the relationship of the lender and borrower was governed by financing agreement and the mark-up etc., could only be claimed when there was actual sale and purchase---Nothing was available on record to prove as to who was responsible for non-delivery of the machinery---Banking Court, while passing the impugned decree had failed to attend to questions as to whether delay caused in mare facture of the machinery, was attributable to the Bank's non-disbursement, or the borrower's neglect and whether any actual transaction took place between the parties---Commitment charges could be claimed only when a party failed to honour its commitment under a contract---Borrowers, in the present case, were willing to avail the finance and perform their contractual obligations but the Bank recalled its undisbursed finance---Partial disbursement to manufacturer who had not delivered the machinery to the borrowers, could not make the borrowers liable to pay, unless it was proved that the borrowers were responsible, due to their non-performance of contractual obligation, for non-delivery of machinery---Such questions were sufficient for the grant of leave to defend the suit, as the controversy between the parties needed to be resolved, after proper trial---Banking Court, while passing the impugned decree, had not discussed all such questions at all---Leave to defend the suit, in circumstances, had to be granted to the borrowers---High Court allowed the appeal and set aside the decree of 'the Banking Court and granted leave to defend the suit subject to the condition that a sum of Rs.8,00,000, already deposited by the borrowers, shall remain as…

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