I did take a term loan from a state financial institution in the year 1997 and Loan agreement and agreement for hypothecation were executed by both of us before availing loan. i started to repay the interest and instalments towards principal in time. Later on, in the year 2002, it was dicovered that the financial intitution is not complying with the term and conditions of the agreements since beginning, i.e., from 1997 onwards. One of the term and contions printed in the hypothecation agreement is " Borrower are entitled for a rebate @ 4 % in rate of interest if they punctually pay quarterly interest, instalment of principal, etc. in time". Though I had been paying the quarterly interest, instalments towards principal in time on or before due dates, the SFC did not allow rebate as promised by them. When we approached them to rectify the above mistake, they proceeded to take over our SSI unit u/s. 29 of SFC ACT, 1951. We challenged their action in local Civil Court and prayed for declaring the accounts maintained by them as illegal and not as per terms and conditions of the agreements in the year 2002. We also prayed for interim injuction to take over the unit, which the appellate court allowed subject to deposit of Rs. 14.50 lacs. The High Court modified the amount to R. 6 lacs , which we deposited with SFC a per direction of the Hon'ble High Court.The local Civil Court, in its judgement and final decree in the year 2009, declared their accounts illegal and erraneous and not as per terms and condition of the agreements. The local Court also declared the action taken by the SFC u/s. 29 of SFC ACT as illegal. The SFC has appealed against the judgement of the local Civil Court in District Judge Court and we have filed cross-objection aginst the same.
Now, I will seek your guidelines in respect of the following:
1. Under S. 51 & 54 of Indian Contract Act, the reciprocal promisor need not fulfil their promise unless the reciprocal promior fulfill his promise. As the SFC has not fulfilled their promise of allowing rebate @ 4% in rate of interest although we paid the first quarterly interest on 30.9.97 in time and punctually. As per my lawyer, we need not have paid any quarterly interest after that date, as the SFC has failed to perform their reciprocal promise of allowing the rebate in rate of interest on that date, i.e. on 30.9.97 and all the payments made by u after that date are recoverable u/s. 72 of the Indian Contract Act, 1872.
2. Under S. 51 & 54 of Indian Contract Act, the reciprocal promisor need not fulfil their promise unless the reciprocal promior fulfill his promise. As the SFC has not fulfilled their promise of allowing rebate @ 4% in rate of interest although we paid the first instalment towards principal before the first due date of 27.8.1998.As per my lawyer, we need not have paid any instalment towards principal after that date, as the SFC has failed to perform their reciprocal promise of allowing the rebate in rate of interest on that date, i.e. on 27.8.98 and all the payments made by u after that date are recoverable u/s. 72 of the Indian Contract Act, 1872.
3. During the pendency of the suit in local Civil Court, the FC encashed some of our collateral securities without informing the local Court though their acoounts had been challanged in the uit and subsequently declared illegal. As per our lawyer, the amount so encashed by the SFC is also recoverable u/s. 72 of the Indian Contract Act.
4. Under doctrine of unjust enrichment, are we not entitled to recive interest on the above amounts, as the SFC is in the business of providing finance and earning interest.
5. Are we not entitled to receive quarterly interest compunded quarterly on the above amounts under law of equity on equitable grounds a the SFC is also charging interest compounded quarterly as per terms of their agreements from all its borrowers.
6. Already more than eight years have since expired from the date of filing of suit in 2002 and god knows how much more time will be taken to settle this legal battle a the SFC is fighting this legal battle out of public funds and i am to spend everything from my pocket and this unit was the only source of income for self and family and I am finding it difficult and had to sell some of my immovable properties, encash most of my long terms avings in the form of NSCs, FDs and shares during the past 8 years. Am I not entitled to receive compenation u/s. 73 of the Indian Contract Act, 1872
7. During the pendency of suit, the SFC published a sale notice in a local newspaper for sale of our unit, which defamed u in the market and our credit-worthines wa adversely affected. Are we entitled to get compensation for the same.
More details can be provided, if so required.
Please guide us with relavant case laws.
I will be immensely grateful for all the help provided in this respect.
Thanks
