Law:

Section:

Banker and customer ---.--- ---.--- -Finance facility availed by loanee from Bank to settle its liability with the State Bank ---.--- Bank making payment to State Bank on behalf of the loanee (exporter) ---.--- When no finance directly disbursed to the loanee under the finance agreement, question as to whether the finance agreement was of any legal consequence ---.--- Exporter executed a finance agreement with the respondent-Bank to avail a running finance facility ---.--- To secure the financial facility, exporter pledged its goods, hypothecated its machinery, assigned the proceeds of its life insurance policy, and created an equitable mortgage on subject property ---.--- After the exporter failed to repay the finance facility, respondent-Bank filed a suit for recovery in the Banking Tribunal ---.--- Exporter claimed that after execution of finance facility, no amount was disbursed and all documents executed in such regard were forged ---.--- Banking Court dismissed the suit after holding that no amount was disbursed under the finance agreement ---.--- Exporter filed its own suit claiming damages contending that recoveries made under the finance agreement, when no finance was disbursed, caused a huge loss of business to the exporter since subject property was sold for a meagre amount, and proceeds of insurance policy were appropriated by the respondent-Bank ---.--- Suit for damages filed by exporter was decreed by the Banking Court ---.--- On appeal, the High Court decreed the suit for recovery filed by the respondent-Bank and dismissed the suit for damages filed by exporter ---.--- Validity ---.--- Case record showed that exporter had been availing various financial facilities under the State Bank's Export Refinance Scheme through the respondent Bank ---.--- Export Re-Finance Scheme allowed the exporters to avail finance from State Bank to finance their exports, which was adjustable against export proceeds ---.--- Where no exports were made or there was a shortfall, the State Bank imposed a penalty ---.--- When the exporter failed to meet its export target a penalty was imposed on it by the State Bank ---.--- For purposes of repaying such penalty, financial…

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