Indian Bank vs Abs Marine Products Pvt. Ltd

2. The first respondent (also referred to as the 'borrower' or 'company') approached the appellant-Bank (for short 'the Bank') for certain credit facilities. By Sanction Advices dated 12.7.1991 and 6.12.1991, the Bank sanctioned ad hoc packing credit facilities to a limit of Rs.20 lakhs and Rs.5 lakhs respectively. According to the Bank, the company utilized the said credit facilities, but committed default in repaying the amounts advanced. Therefore, the Bank filed O.A. No.170/1995 on 21.8.1995 before the Debt Recovery Tribunal (for short 'the Tribunal') under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'Debt Recovery Act') seeking a certificate to recover Rs.30,67,820/04 with interest from the company and its four guarantors (Directors), jointly and severally. The said application is pending and trial therein is yet to commence.

3. On 19.12.1991, the Bank sanctioned a Middle Term Loan of Rs.90 lakhs and certain other credit facilities to the company. The sanctioned loans were not released. The company filed C.S. No.7/1995 against the Bank in the Calcutta High Court in January, 1995, for recovery of Rs.25,38,58,000/- as damages (for non-disbursal of the loans) with interest. By the end of 2000, recording of evidence in the suit was completed and the suit was ripe for arguments.

(ii) packing credit loan facilities to a limit of Rs.50 lacs; (iii) bridge loan of Rs.15 lacs; and (iv) guarantee facility to an extent of Rs.85.42 lacs. The Bank also agreed to absorb the ad hoc packing credit facilities of Rs.25 lacs already sanctioned within the fresh limits sanctioned. The borrower alleged that it proceeded to a arrange its affairs and activities on the assumption that the Bank will be releasing the loans; and that the Bank failed to release the credit facilities, thereby putting it (the borrower) to huge losses, apart from denying the profits from the business. Consequently, it filed C.S. No.7/1995 for recovery of Rs. 25,38,58,000/- made up of Rs. 11,33,22,000/- towards loss of profits, Rs.10 crores as compensation for loss of goodwill and reputation, Rs.3.50 croress as damages on account of the impact of inflation and difference in foreign exchange rates, Rs.31,36,000/- towards expenditure which became infructuous on account of the Bank's failure to release the loans, and Rs.24 lacs towards interest up to the date of the suit. The cause of action for the borrower's suit is the alleged breach by the Bank, in not releasing the sanctioned loans.

Re : Question No. (iii) :

In short the decision in Abhijit is distinguishable both on facts and law.

23. One word before parting. Many a time, after declaring the law, this Court in the operative part of the judgment, gives some directions which may either relax the application of law or exempt the case on hand from the rigour of the law in view of the peculiar facts or in view of the uncertainty of law till then, to do complete justice. While doing so, normally it is not stated that such direction/order is in exercise of power under Article 142. It is not uncommon to find that courts have followed not the law declared, but the exemption/relaxation made while moulding the relief in exercise of power under Article 142. When the High Courts repeatedly follow a direction issued under Article 142, by treating it as the law declared by this Court, incongruously the exemption/relaxation granted under Article 142 becomes the law, though at variance with the law declared by this Court. The courts should therefore be careful to ascertain and follow the ratio decidendi, and not the relief given on the special facts, exercising power under Art. 142. One solution to avoid such a situation is for this Court to clarify that a particular direction or portion of the order is in exercise of power under Art. 142. Be that as it may.

Conclusion

24. In view of the above, we find that the order of the High Court does call for any interference. These appeals are accordingly dismissed. Parties to bear their respective costs.