Arindam Mukherjee, J. - (1.) The appeal is at the instance of the writ petitioners. The appellant No.1/writ petitioner No.1 is a company and the appellant No.2/writ petitioner No.2 is its Vice-President - Legal. The appellants/writ petitioners have assailed the judgment and order dated May 1, 2018 by which the learned Single Judge was pleased to dismiss the writ petition being WP No.1040 of 2016 (M/s. SPPL Hotels Private Limited & Anr. Vs. Allahabad Bank & Ors.). The respondent No.1 is a nationalised bank, the respondent No.2 and 3 are respectively the Assistant General Manager and the Chairman-cum-Managing Director of the respondent No.1 (Bank).
(2.) The case of the appellants/writ petitioners is briefly as follows:- i)By a sanction letter dated 11th January, 2013 (hereinafter referred to as first sanction letter), the respondent No.1, bank sanctioned a term loan in favour of the appellant/writ petitioner No.1 for a sum of Rs.175 crores repayable as per the schedule incorporated therein. The interest rate agreed to be charged was base rate (BR) + 2% per annum. The said loan was sanctioned for a hotel project at Rajarhat, Kolkata by the NOVOTEL. ii) The said first sanction letter provide for "details terms and conditions" under serial no.7 thereof. It also contains Special terms and conditions, 23 Pre-disbursement conditions and 17 Post disbursement conditions. iii) For the purpose of the issues raised by the appellants/writ petitioners, the relevant clauses are set out hereunder:- Details terms and conditions 4. "Rate of Interest - BR+2% p.a. with 1st reset on COD and annually thereafter. 5. Period - 9 years 7 months (Door-to-Door Tenor). 6. Repayment - To be paid in 32 progressive quarterly instalments as under after moratorium of 18 months from the date of 1st disbursement". "COD" is the abbreviation for Commercial Operation Date. Post disbursement conditions 11. "The Bank shall have right to recover in part or in full or withdraw/stop financial assistance, at any stage, without any notice or giving any reason at the discretion of the bank, if the company fails to comply with the terms & conditions or guidelines/policy of the Bank. 12. The account shall be reviewed within one year or earlier at the discretion of the Bank. 16. Non-compliance of any of the terms & conditions shall attract penal interest. The Borrower shall pay penal interest at the rate of 1.00% p.a. on the total outstanding in the event of any defaults in payment of interest, principal, upfront fee or any other monies due on their respective due dates during the currency of the facility for the relevant period. 17. Prepayment charges shall be applicable as per circular. The Company shall have the option at the time of reset on 90 days advance notice to prepay the lenders in part or in full, the loan together with all interests and other charges and monies due and payable to the Lenders upto the date of such prepayment, on nil prepayment penalty". iv) The said first sanction letter also provided for Event of Default wherein the next due date was fixed on 27th December, 2013. v) On review of the accounts, the term loan was renewed by a letter dated 3rd March, 2015. This is referred to by the appellants/writ petitioners as the second sanction letter. The said second sanction letter contains a clause termed as "interest rate reset clause". The clauses relevant for our purpose in the second sanction letter are set out hereunder:- The Detailed Terms and Conditions "Interest rate reset clause: Interest Reset, if any: On annual review". Terms and conditions 5. "Review of account will be done after one year from the date of present review or earlier at the discretion of the bank. 6. All usual terms and conditions and other existing terms and conditions will be followed". vi) Records also reveal that prior to issuance of the second sanction letter, the bank issued a letter dated 17th February, 2015 with the caption "review & term loan" being similar to the caption of second sanction letter. On a comparative study of the two, it, however, appears that terms and conditions on both the letters are identical. vii) Prior to issuance of the two letters respectively dated 17th February, 2015 and 3rd March, 2015, the hotel "NOVOTEL, Kolkata" commenced its commercial operation on 1st September, 2014. The said date is the "COD" as described under the sanction letters. viii) The appellants'/writ petitioners' case is that, on a conjoint reading of the two sanction letters, the COD should be the first reset date and the subsequent reset dates will be annually thereafter unless the same is changed by the bank at its discretion as provided in the sanction letters. Thus, according to the appellants/writ petitioners, 1st September, 2014 will be the first reset date and thereafter annually i.e. on expiry of 30th August of each year. According to the appellants/writ petitioners the interest rate as per the "interest rate reset clause" provided in the second sanction letter is on annual review, however, the Bank had the discretion to review the account earlier. ix) It is the case of the appellants/writ petitioners that after availing the term loan, they regularly discharged their obligations in terms of the agreement between the parties arrived at on the issuance and acceptance of the sanction letters. However, in finding that the interest rate to be uncomfortable, the appellants/writ petitioners made a request to the Bank for revision of the rate of interest on the term loan by a letter dated 5th June, 2015. In the said letters, the appellants/writ petitioners stated that 0.7% over the base rate was comfortable to them and further cited the example of the State Bank of India charging interest in the range of 10.50% to 10.75%. This letter was followed by another letter dated 27th July, 2015 wherein the appellants/writ petitioners for the first time informed the Bank that they have decided to close the credit facilities with their own funds without, however, indicating the exact date of closure. The reason was, being unable to afford the high rate of interest. x) By a letter dated 14th August, 2015 issued as a reminder to the two earlier letters respectively dated 5th June, 2015 and 27th July, 2015, the appellants/writ petitioners for the first time requested the Bank to provide them with the amount approximately due as on date with break up of details of the amounts, the appellant No.1/writ petitioner No.1, was required to pay for the closure of the term loan account. This letter also does not specify any particular date of closure. xi) The Bank in response to the letter of the appellants/writ petitioners dated 14th August, 2015, by a letter dated 21st August, 2015 clearly stated that to foreclose the account, pre-payment charges at the rate of 2.05% of the outstanding loan amount shall be realised. xii) The appellants/writ petitioners alleging to have not received the Bank's letter dated 21st August, 2015 issued a further letter to the Bank on 2nd September, 2015 referring to their earlier letters dated 5th June, 2015, 27th July, 2015 and 14th August, 2015. In the said letter, the appellants/writ petitioners have contended that they have an option to close the account at the time of the reset or annually thereafter without any pre-payment penalty as per the sanction letters and they wanted to exercise the said option to close the account. The appellants/writ petitioners, therefore, sought for the details of the amount payable with detailed break up of interest so that they could make necessary arrangements to close the account. This letter, however, is clearly beyond the second reset date i.e. 1st September, 2015. xiii) The Bank issued another letter on 10th September, 2015 by which it communicated to the appellants/writ petitioners that they have decided to reduce the rate of interest on the term loan from the existing rate being base rate plus 2.00% per annum to base rate plus 0.75% per annum. xiv) By a subsequent letter dated 21st September, 2015, the appellants/writ petitioners stated as follows:- "Please refer to our earlier letters dtd. 05.06.2015, 27.07.2015, 14.08.2015 and 02.09.2015 wherein we had stated that we would like to close the above account from our own sources. We would now like to exercise the option of closure of the account at the time of reset which is September 2015, by remitting the entire outstanding balance in the term loan account with up to date interest and we will also be providing 100% margin for the liability under nonfund based facility. Once the funds are received by you, we request you to kindly appropriate the same to the outstanding balance in the Term Loan account and close the same". xv) By a letter dated 22nd September, 2015, the appellants/writ petitioners informed the Bank that they have provided sufficient funds in their current account and requested the Bank to appropriate the same against the outstanding balance in the term loan account along with up to date interest applicable and to close the account. xvi) On receiving such request, the Bank foreclosed the term loan account of the appellant No.1/writ petitioner No.1 by appropriating its dues from the money standing in the current account of the appellant No.1/writ petitioner No.1 which included the pre-payment charges.
(3.) The appellants/writ petitioners refer to the account's statement issued by the Bank and submit that on 22nd September, 2015, the Bank had realised a sum of Rs.3,28,20,240/- under the head "DEBIT - PENAL CHG PRE CLS OF TL". It is the case of the appellants/writ petitioners that the Bank illegally, unlawful and in an unauthorised manner has realised the said sum of Rs.3,28,20,240/- when the appellants/writ petitioners were not liable to pay any pre-payment charges having paid the entire term loan with up to date interest on a reset date in terms of the agreement. The appellants/writ petitioners also submit that "pre-payment charges" and pre-payment penalty provided in clause 17 of the Post disbursement conditions in the first sanction letter has to be construed as the same in the context of the agreement. "Nil pre-payment penalty" should mean no pre-payment charges are leviable on the foreclosure of the term loan on the reset date.;