A city civil court has ordered issue of summons to a private bank on a suit filed by a real estate development company seeking a whopping ₹101.77 crore as damages with 36% interest per year from the bank for causing loss to a project because of illegal suspension of disbursement of sanctioned loan amount and forcing the company to borrow money at an exorbitant rate of interest from private lenders suggested by the bank’s senior officials.
The 10th Additional City Civil and Sessions Court, Bengaluru, on August 14, passed an order on the suit filed by Lotus Shopping Centre Pvt Ltd., a developer of malls, seeking damages from the Axis Bank Ltd. and three of its senior executives.
It was pointed out in the suit that the company prepared a project to construct a mall in Mangaluru city at an estimated cost of ₹300 crore by investing around ₹104 crore through its investors.
And the Axis Bank, in April 2012, came forward to provide a loan of ₹150 crore with an assurance to sanction loan within two months.
However, the company alleged in the suit that the bank’s senior officials delayed sanctioning the loan for several months in violation of guidelines of the Reserve Bank of India (RBI) and this had resulted in escalation of the cost.
After releasing ₹100 crore, the bank suspended disbursal seeking various additional securities, documentations, among others, without responding to the companies plea of enhancing the loan amount and disbursal of the sanctioned loan of ₹150 core.
Keeping the disbursal suspended, an economic duress situation was created and banks’ senior officials forced the company to borrow several crores of money from two private financial firms at an exorbitant rate of interest, it has been alleged in the suit.
The bank officials secured certain documents from the company by adopting blackmail tactics and made an attempt to force the company to sell the project as “a distress sale” by creating such a scenario by their dubious methods.
Pointing out that the bank violated several RBI guidelines and failed to adopt transparency in the process of granting loan, the company has sought declaration from the court that the conduct of the bank and its officials as fraudulent, illegal, and contrary to RBI’s circulars/guideline.
