Delhi District Court
Swar Sangam Marketing Private Limited vs Deutsche Bank Ag on 8 January, 2026
IN THE COURT OF PULASTYA PRAMACHALA,
DISTRICT JUDGE (COMMERCIAL COURT-01),
PATIALA HOUSE COURTS, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1 Memo of Parties 2
2 Description of Case 2
3 Brief facts of the case 3-5
4 Plea of Defendant 5-7
5 Issues 7
6 Plaintiff's Evidence 7-8
7 Defendant's Evidence 8-9
8 Issue No.3 9-10
9 Issue No.1 10-19
10 Issue No.2 19-20
11 Relief 20
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2026.01.08
18:02:30
+0530
CS (COMM.) No. 787/2022 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 20 Patiala House Court, New Delhi
CS (COMM) 787/2022
In the matter of: -
M/s Swar Sangam Marketing Private Limited
a company, having its registered office at
House No. WZ-5, Plot No. 17,
Raja Garden, New Delhi-110015.
...Plaintiff
Versus
Deutsche Bank AG
A banking company incorporated and
existing under the law of Federal Republic
of Germany and having its registered office
at Taunusanlage, 12, D-60325, Frankfurt,
Germany and having its Corporate Office
in India at Deutsche Bank House, HAZARIMAL
Somani Marg, Fort, Mumbai-400001 and one of its
branches amongst others at Hindustan Time House,
14th Floor, 18-20, Kasturba Gandhi Marg,
New Delhi-110001, acting through its
Branch Manager.
...Defendant
Date of institution : 16.09.2022
Date of reserving judgment : 23.12.2025
Date of pronouncement : 08.01.2026
Decision: Suit for recovery is decreed in favour of Plaintiff and
against defendant.
JUDGMENT
DESCRIPTION OF THE CASE
1. This is a suit for recovery of Rs.52,30,260/- (Rupees Fifty Two Lakhs Thirty Thousand Two Hundred Sixty only) along with pendente-lite and future interest, filed under the provisions of the Commercial Courts Act, 2015.
CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.2 of 20 Patiala House Court, New Delhi DESCRIPTION OF CASE
2. Briefly stated, facts of the case are that plaintiff is a company incorporated under the provisions of the Indian Companies Act, 1956 and was engaged in the business of distribution of electronic goods and home appliances of reputed brands. Defendant is a banking company carrying on banking business. It is averred that the marketing officials of defendant approached Plaintiff and induced it to close its existing working capital account with Canara Bank and shift its banking operations to defendant bank. Pursuant thereto, defendant sanctioned a working capital limit of Rs.3 Crore vide sanction letter dated 27.09.2012. Subsequently, defendant also sanctioned a term loan of Rs.2 Crore in Loan Account No. 300015258460019 on the basis of a loan agreement dated 26.11.2012 read with disbursement letter dated 30.11.2012.
3. The aforesaid credit facilities were secured by hypothecation of Plaintiff's stock of electronic goods. Additionally, defendant stipulated the condition of mortgage of property bearing H. No. WZ-5, measuring 272 square yards, Plot No. 17, Raja Garden, New Delhi-15, standing in the name of one of the Directors of plaintiff, namely Sh. Rajinder Arora. It is further pleaded that upon yearly renewals and successive enhancements, defendant ultimately renewed and enhanced the working capital limit to Rs.6,65,00,000/- vide sanction letter dated 21.02.2017. It is averred that due to health issues of one of the Directors of plaintiff during July-August, 2017, plaintiff repeatedly requested defendant to convert the existing working capital facility; however, defendant declined the said request. Thereafter, CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 20 Patiala House Court, New Delhi defendant issued a letter dated 10.09.2018, allegedly with an intention to classify plaintiff's account as a Non-Performing Asset. Plaintiff approached defendant for settlement of the account and, by disposing of the hypothecated stock and realising amounts from trade debtors, repaid the entire working capital facility of Rs.6,65,00,000/- as well as the outstanding amount under the loan against property facility of Rs.2 Crore, along with up-to-date floating interest. Consequently, according to plaintiff, all loan and credit facilities stood fully repaid.
4. It is the case of plaintiff that despite complete repayment of the principal amounts and interest, defendant, vide e-mail dated 21.08.2018, illegally demanded foreclosure charges of Rs. 13,30,000/- and Rs.2,39,400/-, which, according to plaintiff, were contrary to the terms and conditions of the loan documents. Even after repayment of all dues, defendant allegedly refused to release the original title deeds of the mortgaged property unless plaintiff paid pre-payment penalty in respect of the cash credit working capital facility and overdraft facility. Plaintiff alleges that such conduct amounted to unfair and unethical banking practice. It is further averred that defendant issued tax invoices in respect of the said foreclosure charges amounting to Rs.15,69,400/- and Rs.3,59,138.82/- respectively, and levied a total pre-payment penalty of Rs.19,28,539/- without any contractual authority. Plaintiff claims that the said amount was paid under compelling circumstances solely to secure the release of the mortgaged property. Plaintiff has relied upon the guidelines issued by the Reserve Bank of India, contending that banks are not permitted to levy foreclosure or pre-payment CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 20 Patiala House Court, New Delhi charges.
5. Despite repeated requests and demands, defendant allegedly failed to refund the said amount. Consequently, Plaintiff served a legal notice dated 27.05.2019 upon defendant. Defendant replied vide communications dated 04.06.2019 and 17.07.2019, wherein it offered to refund only a sum of Rs.6,65,000/- out of the total amount of Rs.19,28,539/-. Being aggrieved thereby, Plaintiff has instituted the present suit seeking recovery of Rs.52,30,260/-, comprising Rs.19,28,539/- towards foreclosure charges, Rs.13,01,730/- as interest @18% per annum from 01.09.2018 to 30.06.2022, and Rs.20,00,000/- towards damages for harassment and allied claims, along with pendente lite and future interest @18% per annum till realisation.
6. It is pleaded that this Court has territorial jurisdiction to entertain and adjudicate the present suit as defendant's concerned branch is situated at Kasturba Gandhi Marg, New Delhi, which falls within the territorial jurisdiction of this Court.
7. Before filing of the suit, plaintiff approached New Delhi DLSA for Pre-Litigation Mediation on 18.12.2019, but defendant did not appear despite notice. Non-starter report dated 20.01.2020 was filed by plaintiff along with the plaint.
PLEA OF DEFENDANT
8. Upon service of summons, defendant entered appearance and filed its written statement raising certain preliminary objections. It is contended that the present suit is not maintainable, as the prepayment/foreclosure charges paid by Plaintiff in the year 2018 were levied strictly in accordance with the terms and conditions CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 20 Patiala House Court, New Delhi mutually agreed between the parties.
9. It is pleaded that Plaintiff had availed two distinct credit facilities from defendant, namely, a Loan Against Property and a Trade Working Capital Facility. The initial loan agreement dated 26.11.2012 governed the terms of the said facilities. Reliance has been placed upon Clause 2.12 of the said loan agreement dealing with prepayment. Further, in the Schedule to the loan agreement, at Serial No. 16 under the heading "Prepayment Charges", it is specifically mentioned that the charges would be "as per the Bank's published Schedule of Charges", available at the branches of defendant bank or on its official website.
10. It is defendant's case that the levy of foreclosure charges was thus, expressly contemplated in the loan agreement itself, and therefore, Plaintiff cannot dispute the same. It is further averred that at the time of closure of the loan accounts, Plaintiff sought waiver of foreclosure charges. Defendant, vide e-mail dated 14.09.2018, reiterated and clarified its policy to Plaintiff, stating that in case of Loan Against Property, where foreclosure is effected from the borrower's own sources, a reduction of 50% in foreclosure charges could be considered, whereas no such waiver or reduction would be available where foreclosure is effected through borrowed funds. Consequently, no reduction in foreclosure charges was permissible under the applicable policy, and Plaintiff was fully aware of its liability to pay the prepayment charges at the time of closure of the loan facilities. On the aforesaid grounds, defendant has prayed for dismissal of the present suit.
CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 20 Patiala House Court, New Delhi
11. Replication was also filed by Plaintiff to the written statement of defendant, controverting the preliminary objections as not sustainable and further denying and controverting the averments of the written statement on its merits. Plaintiff reiterated the averments made in the plaint.
ISSUES
12. Vide order dated 24.02.2023 following issues were framed: -
i) Whether Plaintiff is entitled to recovery of the suit amount, as claimed? OPP
ii) Whether Plaintiff is entitled to interest, if so, at what rate and for what period ? OPP
iii) Whether the suit of Plaintiff is barred by time ? OPD
iv) Relief
13. After framing of issues, case management hearing was conducted and dates were fixed for plaintiff's evidence, defendant's evidence and final arguments.
PLAINTIFF'S EVIDENCE
14. In his evidence before Local Commissioner, plaintiff examined PW-1 Sh. Rajender Arora, Director of plaintiff company. PW-1 tendered his evidence by way of affidavit Ex. PW1/A dated 28.03.2023. PW-1 referred and proved following documents: -
i. Board Resolution dated 10.10.2019 as Ex. PW1/1, ii. Original agreement as well as sanction letter dated 27.09.2012 as Ex. PW1/2 (colly), iii. Sanction letter for renewal facility dated 21.02.2017 as Ex.
PW1/3, iv. True copies of various mails, letters and communications CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 20 Patiala House Court, New Delhi between the parties as Ex. PW1/4 (colly); v. Original Letter dated 10.09.2018 as Ex. PW1/5, vi. Photocopy of hospital records of PW-1 marked as Mark MW1/1 (colly), vii. True copies of mails exchanged between the parties as Ex.
PW1/7 (colly), viii. True copies of tax invoices along with documents as Ex. PW1/8 (colly), ix. Sanction Letters as Ex. PW1/9 (colly), x. Legal Notice dated 27.05.2019 and postal receipts as Ex.
PW1/10 (colly), xi. Original replies dated 04.06.2019 and 17.07.2019 as Ex. PW1/11 (colly), xii. Circular of Reserve Bank of India dated 07.05.2014 as Ex.
PW1/12 and;
xiii. Non-starter report as Ex. PW1/13.
15. PW-1 was crossed examined by Ld. Counsel for defendant.
Thereafter, on 29.03.2023, plaintiff closed its evidence.
DEFENDANT EVIDENCE
16. In his defense evidence before LC, defendant examined one witness. DW-1 Sh. Puneet Sachdeva, Vice President and AR of defendant bank. DW-1 tendered his affidavit in evidence as Ex. DW-1/1 and referred to and proved following documents: -
i. Power of Attorney, Ex. DW1/A, ii. Facility Agreements signed between plaintiff and defendant for working capital finance dated 28.09.2012, 30.09.2015 and 20.10.2015 exhibited as Ex. DW1/B to Ex. DW1/D. CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 20 Patiala House Court, New Delhi
17. DW-1 was cross-examined by Ld. Counsel for plaintiff and vide order dated 03.05.2023, defendant closed its evidence.
18. I heard the arguments made by Ld. Counsels and have carefully perused the record.
19. My issue wise findings in the present matter are as under: -
ISSUE NO.3 Whether the suit of Plaintiff is barred by time ? OPD
20. The onus to prove this issue was upon defendant. Plaintiff, in paragraph 26 of the plaint, has specifically pleaded the cause of action for filing the present suit. In response, defendant has denied the said averments and contended that the cause of action, if any, arose in the year 2018 and, therefore, the present suit instituted in the year 2022 is barred by limitation.
21. A perusal of the record reveals that the present suit was instituted on 16.09.2022. Even if the contention of defendant is accepted for the sake of argument that the cause of action arose in October 2018, when Plaintiff paid the alleged foreclosure charges and defendant issued tax invoices (Ex. PW-1/8 colly), the suit would still be within limitation as during the intervening period, there was a Covid period. Taking suo-moto cognizance of the situation created due to Covid pandemic and lockdown, Hon'ble Supreme Court of India in Suo Motu Writ Petition (C) No. 3 of 2020 In Re: Cognizance for extension of limitation, (2022) 3 SCC 117 held that the period from 15.03.2020 till 28.02.2022 shall be excluded for the purposes of computing the period of limitation. Hence, considering the above, the suit filed by Plaintiff is within the period of limitation. Thus, defendant is unable to discharge CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 20 Patiala House Court, New Delhi the burden to prove this issue and accordingly, this issue is decided against defendant.
Issue No.1 Whether Plaintiff is entitled to recovery of the suit amount, as claimed ? OPP
22. The burden of proving this issue was upon Plaintiff. To substantiate his claim, plaintiff examined PW-1, Sh. Rajender Arora, who deposed in line with the pleadings and proved various documents, which were exhibited on record. A description of those documents have already been given herein- above.
23. Learned counsel for Plaintiff argued that there was no clause in the sanction letters or loan documents authorising defendant to levy pre-payment or foreclosure charges in respect of the working capital facilities. It was argued that due to the health condition of the principal person of Plaintiff company, the credit facilities could not be renewed, and defendant sought to unjustly impose foreclosure/pre-payment penalties on that ground. It was further submitted that Plaintiff never agreed to, nor executed, any document consenting to payment of pre-payment charges for non-renewal of cash credit limits or any other loan facilities. It was further argued that in terms of the Reserve Bank of India Circular dated 01.07.2015 on the Fair Practices Code for Lenders and the RBI Master Circular on Customer Service in Banks, all banks were mandatorily required to clearly disclose all applicable fees, penalties, and charges in the sanction letter and the loan agreement. RBI Circular dated 03.08.2018 on Transparency in CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 20 Patiala House Court, New Delhi Loan Pricing and Charges, categorically provides that any charge not disclosed upfront in the sanction letter or agreement cannot be subsequently imposed upon the borrower. Ld. counsel for plaintiff further mentioned that the last renewal of the working capital facility was effected on 21.02.2017, which was valid up to 20.02.2018. Plaintiff did not seek renewal thereafter and, vide e- mail dated 13.08.2018, clearly informed defendant of its intention not to renew the said facilities. It was contended that defendant's plea that the cash credit facility stood renewed by conduct is demonstrably false and stands contradicted by defendant's own letter dated 10.09.2018, wherein it is expressly stated that there was "non-renewal of limits for more than 180 days".
24. Per contra, learned counsel for defendant argued that the levy of pre-payment charges was strictly in accordance with the terms and conditions contained in the sanction letters and loan agreements executed between the parties. It was submitted that the relevant documents permitted the bank to charge pre-payment charges at the rate of 2% of the outstanding loan amount. It was further contended that there is no prohibition under any Reserve Bank of India guideline restraining the bank from levying such charges. It was also argued that sanction letters were issued on each occasion when the working capital facility was amended or renewed, and each such sanction letter clearly stipulated that on closure of the facility, pre-payment charges would be applicable depending upon the period of the facility. It was further submitted that each subsequent sanction letter formed an integral part of the earlier sanction letters. Learned counsel for defendant CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 20 Patiala House Court, New Delhi further pleaded that Plaintiff had availed two distinct facilities, namely, a cash credit limit and a loan against property. It was contended that Clause 2.12 of the loan agreement governing the loan against property specifically provided for levy of pre- payment charges, and therefore, defendant was well within its contractual rights to charge the same.
25. The principal question for consideration is whether the foreclosure/pre-payment charges were legally levied and recovered by defendant. It is an admitted position that defendant initially sanctioned a working capital facility of Rs. 3 crore to Plaintiff vide sanction letter dated 27.09.2012 (Ex.PW-1/2). Subsequently, a Loan Against Property agreement dated 26.11.2012 (Ex.PW-1/2) was executed between the parties, wherein Clause 2.12, relied upon by defendant, deals with pre- payment of the loan. The said clause provides that: -
"Prepayment- At any time after a period of six (6) months from the date of disbursement, the borrower shall be entitled to prepay the loan, either partly or fully, as per the rules of the bank, including as to payment of prepayment charges, for the time being in force. Partial prepayment of the loan shall be subject to the outstanding amount of the loan remaining after such prepayment being equal to or greater than EMIs (as specified in the Schedule) due for the next twelve (12) months. In case the remaining tenure of loan is less than twelve (12) months, partial prepayment will not be allowed and the borrower may prepay the entire outstanding loan together with interest, fees and charges including prepayment charges. In case of partial prepayment, the bank may, notwithstanding any instruction that the borrower may give to the contrary, allocate and apply the amount received in the following manner:
a. Any taxes, expenses, costs required to be reimbursed or paid by the borrower under the agreement; CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 20 Patiala House Court, New Delhi b. fees and charges including prepayment charges accrued or applicable on the loan;
c. default interest and interest, in that order; and d. finally, towards principal amount outstanding against the loan."
26. It has been contended on behalf of Plaintiff that none of the operative sanction letters contain any clause authorising levy of pre-payment or foreclosure charges. A perusal of the sanction letters dated 27.09.2012, 12.02.2014 and the final renewal sanction letter dated 21.02.2017 (Ex.PW-1/9 colly) shows that there is no reference therein to any foreclosure or pre-payment charges. However, the sanction letters dated 24.09.2015 and 16.10.2015 contain a clause in the pricing schedule providing closure fees, which states as: -
"In the event the borrower closes the facility/ies within 12 months of the first disbursal of the said facility/ies, the borrower shall pay the bank closure fees at the rate of 2% of the limit/s sanctioned. In the event the borrower closes the facility/ies after 12 months of the first disbursal of the said facility/ies, the borrower shall pay the bank closure fees at the rate of 1% of the limit/s sanctioned."
27. Thus, it is evident that while certain interim sanction letters contained a clause relating to pre-payment charges, the original sanction letter dated 27.09.2012, the sanction letter dated 12.02.2014, as well as the final renewal sanction letter dated 21.02.2017, did not incorporate any such clause.
28. Ld. Counsel for defendant relied upon the final renewal sanction letter dated 21.02.2017 (Ex.PW-1/3), which makes a reference to the earlier sanction letters, to contend that the terms and conditions of all previous sanction letters, including those CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 20 Patiala House Court, New Delhi providing for pre-payment charges, stood incorporated therein. The relevant portion of the renewal sanction letter stipulates as: -
"we refer to our facility/sanction letter dated 27.09.2012, 12.02.2014 & 24.09.2015 and 16.10.2015 for account number 0000015258460019 (the "facility/letter/sanction letter") wherein the working capital facility ('Facility') for INR 6,65,00,000/- was sanctioned to you. Conditions precedent for Renewal facility:-
The renewal of this facility shall be subject to receipt by the Bank of the following documents, along with such other conditions as may be specified in the Sanction letter dated 27.09.2012, 12.02.2014, 24.09.2015 & 16.10.201 for account number 000015258460019 and this Renewal sanction letter.
Tenor of the facility:-
The bank states that the tenure of this facility is for 12 months from the date of issuance of this Renewal Sanction letter and after the expiry of this Tenure the Borrower on the request to the Bank can renew this facility subject to terms and conditions laid down by the bank This renewal Sanction letter shall form an integral part of the Sanction letter/facility letter and this Renewal Sanction letter shall be read in conjunction with the terms and conditions of the Sanction letter facility letter and be enforced as if the provisions of this renewal sanction letter were incorporated therein by way of addition"
29. According to defendant, since the renewal sanction letter referred to the earlier sanction letters, the clauses relating to pre-payment charges contained in the sanction letters dated 24.09.2015 and 16.10.2015 would continue to apply and form part of the final sanction letter dated 21.02.2017.
30. From a plain reading of the renewal sanction letter dated 21.02.2017, it is evident that the tenure of the facility was limited CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 20 Patiala House Court, New Delhi to 12 months and was valid up to 20.02.2018. Plaintiff has categorically stated that it did not seek renewal of the facility thereafter. The record reflects that Plaintiff, vide e-mail dated 13.08.2018 (Ex. PW-1/4 colly), expressly informed defendant of its intention not to renew the cash credit limit.
31. Thereafter, defendant, vide e-mail dated 21.08.2018, called upon Plaintiff to deposit the outstanding principal along with foreclosure charges. This was followed by a letter dated 10.09.2018 (Ex.PW-1/5), wherein defendant threatened classification of Plaintiff's account as a Non-Performing Asset in case the outstanding amount was not cleared. Plaintiff, in turn, vide letter dated 04.10.2018, objected to the levy of foreclosure charges.
32. A cumulative perusal of the correspondence exchanged between the parties unequivocally establishes that the facility was not renewed after expiry of its sanctioned tenure. As per the express terms of the renewal sanction letter dated 21.02.2017, renewal of the working capital facility was neither automatic nor unconditional, but was contingent upon a specific request being made by the borrower, coupled with compliance of the conditions stipulated by the bank. Defendant has failed to place on record any written request, application, consent, or acknowledgment to demonstrate that Plaintiff sought renewal of the facility after 20.02.2018. The plea raised by defendant that the facility stood renewed by conduct, merely on account of continued operation of the cash credit account, is devoid of merit and cannot be sustained. In the absence of any contractual provision providing for automatic renewal or renewal by CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 20 Patiala House Court, New Delhi conduct, such an inference cannot be drawn unilaterally by the bank. Renewal of a credit facility entails fresh contractual obligations and must be founded upon clear consent and mutual agreement between the parties. A bank cannot presume renewal solely on the basis of usage of the account, particularly when the borrower has, in clear terms, communicated its intention not to renew the facility. Acceptance of such a contention would amount to permitting the bank to impose contractual liabilities unilaterally, which is impermissible in law.
33. Furthermore, as per RBI guidelines on (Pre-payment charges on floating rate term loans) Directions, 2025 vide dated 02.07.2025 held that: -
"2. A reference is invited toPart B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014 proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect."
34. In view of the foregoing discussion, I find that since Plaintiff did not renew the cash credit facility after expiry of the stipulated tenure and there was no subsisting contractual provision authorising levy of pre-payment or foreclosure charges post non- renewal, defendant could not have arbitrarily demanded or recovered such charges. There was no foreclosure of this facility by plaintiff, rather the facility stood lapsed by efflux of time and completion of tenor of the facility. Defendant could not have coerced plaintiff to continue with the facility. The conduct of CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 20 Patiala House Court, New Delhi defendant, shows that it was bent upon twisting the arms of plaintiff's Director, who was also a co borrower in the term loan, in order to extract all illegal charges under threat of declaring his account NPA, thereby affecting credibility of the plaintiff. Such conduct of defendant reminds me of infamous character of English Literature "Shylock", but in our democratic system based on principles of equity and fairness, such characters cannot have any place.
35. As far as Term Loan against property, is concerned, the loan agreement itself shows that apart from Plaintiff company, Mr. Rajender Arora and Ms. Nisha Arora were also co borrowers in this loan. So, this loan being given to three entities including two individual natural persons, cannot be taken out from the ambit of guidelines issued by RBI. Any beneficial provision cannot be given restricted meaning. The undisputed guidelines issued by RBI were applicable to term loan and to individual borrower. Ld. Counsel for defendant argued that this loan was not given to individual borrower, but, in view of above-mentioned observations, that argument cannot be accepted. Therefore, even if complete term of this loan was not over, by virtue of guidelines issued by RBI, defendant could not have denied benefit of the same to individual co borrowers.
36. In the case of Devendra Surana v. Bank of Baroda, W.P.5521/2017 decided on 12.12.2018, Hon'ble Calcutta High Court, dealt with almost similar situation and held as under: -
"In the facts of the present case, the petitioner having foreclosed the credit facilities enjoyed by the petitioner from the respondent no. 1 in October 2016, such CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 20 Patiala House Court, New Delhi foreclosure is governed by the circular dated May 7, 2014 issued by Reserve Bank of India. With effect from May 7, 2014 therefore, the respondent no. 1 is not entitled to charge any foreclosure charges/prepayment penalties on floating rate term loan sanctioned to individual borrower such as the petitioner. The foreclosure happening subsequent to the circular dated May 7, 2014, the demand of the respondent no. 1 for foreclosure charges/prepayment penalties, is contrary to such circular, and therefore is without any basis."
37. For the reasons mentioned herein-above, I find that charging foreclosure fee in respect of term loan against property also, was not legal. Moreover, I also find that defendant charged much more than 2%, though it was claimed during arguments that only 1% pre-payment chrges were levied. Consequently, I find that Plaintiff has successfully proved its entitlement to recovere the amounts illegally deducted by defendant, namely Rs.3,59,138/- (including GST) vide tax invoice dated 10.09.2018 pertaining to Account No. 300015258460019 and Rs. 15,69,400/- (including GST) vide tax invoice dated 26.09.2018 pertaining to Account No. 000015258460019, as reflected in Ex. PW-1/8 (colly), aggregating to Rs.19,28,539/-.
38. Plaintiff has also claimed damages of Rs.20 lacs, on account of mental agony. It can be well understood that there cannot be any fixed parameters to assess mental agony and the damages being sustained by a person on account of mental agony. It is very difficult to assess such damages in monitory terms. Mental agony or mental stress is now treated even in medical science to be a kind of slow poison for a person, giving rise to various complications. Therefore, it cannot be said that while undergoing mental agony, a person does not suffer any loss at all. In the CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 20 Patiala House Court, New Delhi present case, Director of plaintiff company was compelled to pay extra charges by the defendant bank, under threat of declaring his account as NPA, thereby adversely affecting his credibility. Unlike a typical loan defaulter, plaintiff's director gave importance to his credibility, in order to satisfy such illegal demand, though he had been vehemently opposing levying of such charges. He took plea of having bad health and medical issues, but defendant bank was more inspired by characters like Shylock, which did not show any empathy or a professional approach, so as to present an honest account of due amounts. Thus, plaintiff's director had to suffer the mental agony for such illegal treatment meted out to him. Therefore, I do find plaintiff to be entitled for monetary compensation for being made to undergo mental agony and stress on account of illegal approach of the defendant bank. Since, there is no hard and fast formula to quantify such damages, the court has to act on the basis of presumptions and guess work. Given the quantum of amount illegally obtained by the defendant bank, I find plaintiff to be entitled for damages in the sum of Rs.5 lacs.
Accordingly, Issue No. 1 is decided in favour of Plaintiff and against defendant.
ISSUE NO. 2Whether Plaintiff is entitled for interest, on the suit amount and if so, at what rate and for what period? OPP.
39. Plaintiff has also prayed for interest @ 18% per annum. Keeping in view the provisions of Section 34 CPC and the prevalent rate of interest in the banks and trade in business, 18% interest is too CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 20 Patiala House Court, New Delhi excessive. Considering the facts and circumstances of the case, it is deemed just and proper in the interest of justice to allow interest @ 12 % per annum from 09.10.2018 till realization of the decretal amount.
40. Plaintiff has also claimed the cost of the suit. In reference to Section 35 and 35A of CPC, it has been proved that defendant failed to pay the amount due despite service of legal notice. Defendant is responsible for burdening Plaintiff with this litigation and therefore, he is liable to bear the cost as per rules. Plaintiff is therefore, entitled for the cost of litigation quantified at Rs.1 lac including of lawyer's fee.
Issue no. 2 is accordingly decided in favour of plaintiff and against defendant.
RELIEF:
41. In view of the above observations, discussion and findings, the suit for recovery is decreed in favour of Plaintiff and against defendant for Rs.19,28,539/- + Rs.5 lacs (Rupees Forty one lakhs Fifty Thousand only + Rupees five lacs), along with interest @12% per annum with effect from 09.10.2018 till the date of realization of the decretal amount. Cost of Rs.1 lac is also awarded in favour of Plaintiff and against defendant. Decree sheet be prepared accordingly.
42. File be consigned to the record room after due compliance.
Digitally signed by PULASTYA PULASTYA PRAMACHALA PRAMACHALA Date: 2026.01.08 18:02:46 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, th
08 Day of January, 2026 Patiala House Court, New Delhi.
CS (COMM.) No. 787/2022 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.20 of 20 Patiala House Court, New Delhi