Law:

Section:

(a) Banker and customer--------- Mark-up price" and "loan agreement"---Distinction---"Financing agreement" postulates sale/purchase of goods and the same is distinct from a "loan agreement" ---Recalling of facility extended to plaintiff by defendant-Bank at a premature stage---Effect---Where the financing agency (Bank) fails to make full payment of the entire sale price, the agreement collapses and recovery of only the actual amount advanced remains possible without any additional amount either by way of interest or by way of mark-up. (b) Contract Act (IX of 1872)--- ----S. 55---Banker and customer---Suit for recovery of damages---Plaintiff obtained financing facility from the defendant-Bank, to set up textile weaving unit---Plaintiff was to raise the construction and the defendant was to provide machinery---Condition of pre-shipment inspection of the machinery was imposed by the defendant and a schedule for completion of the construction was also given by the defendant to the plaintiff---Financing facility was withdrawn by defendant on the allegation of non-fulfilment of contractual obligation by the plaintiff---Validity---Pre-shipment inspection had to be undertaken by defendants at the request of the plaintiff and the same was prescribed as a condition by the defendants themselves which they failed to perform---Non-delivery of machinery could be attributed solely to the default committed by defendants---Defendants, therefore, could not take advantage of inaction or wrong on their own part--­Conduct of the parties showed that time schedule was never considered sacrosanct or of essence, consequently the contract between the parties upon application of principle containin-S-65 of Contract Act, 1872, did not become voidable merely due to non-fulfilment of time schedule by the two parties---Only right which could be pressed by the parties in such circumstances was compensation for the loss, if any, occasioned on account of failure to abide by the time schedule---Agreement between the parties did not permit recall of the financing facility ---Demand by the defendant for repayment was contrary to and in breach of the terms of the financing agreement and amounted to…

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