Full Text
HIGH COURT OF DELHI
Date of Decision: 08.07.2026
M/S SANCHI CEREALS PVT LTD .....APPELLANT
Through: Mr. Shyam Kumar, Mr. Iqra Khan, Ms. Kumari Ruchi, Ms. Akanksha Sinha and Mr. Aakash, Advocates
Through: Ms. Surabhi Sinha, Advocate
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
MANMEET PRITAM SINGH ARORA, J. (ORAL)
JUDGMENT
1. The Appellant has filed the present Regular First Appeal (Commercial) against the order dated 16.12.2025 [‘impugned order’] passed by the learned District Judge, Commercial Court-07, Central District, Tis Hazari Courts, Delhi in CS(Comm) No. 1083 of 2023 [‘Trial Court’].
2. The Appellant has filed a suit inter-alia for seeking recovery of the following payments made to the Respondent:
(i) Rs. 3,67,775.32/- towards non-compliance charges (noncompliance charges);
(ii) Rs. 4,01,200/- (Rs. 3,40,000/- towards processing fee/prepayment charges; and Rs. 61,200/- towards GST). SHARMA 17:52
(iii) Rs 5,00,000/- towards loss and damages; and
(iv) Rs 1,00,000/- towards cost of litigation
3. By the impugned order, the learned Trial Court has partly allowed the Respondent’s application under Order XIII-A of the Code of Civil Procedure, 1908 [‘CPC’] and consequently dismissed the Appellant’s suit to the extent of its claim for recovery of Rs. 4,01,200/- paid towards prepayment charges. Factual matrix
4. The Appellant, M/s Sanchi Cereals Pvt Ltd., is a Medium Enterprise registered as an MSME[1], engaged in the business of rice trading and has been operating in the said field for around 13 years.
5. The Respondent, IndusInd Bank Limited, is a banking company engaged in providing banking and financial services, including the sanction and disbursement of credit facilities.
6. Learned counsel for the Appellant states that the Appellant availed a credit facility from the Respondent Bank vide a sanction letter dated 13.11.2019, which sanction was valid for one year, i.e., until 13.11.2020.
6.1. He states that the Respondent secured the credit facility by accepting primary security, collateral security, guarantee, and additionally a fixed deposit of Rs. 8,50,000/-.
6.2. He emphasizes that no renewal letter, agreement or written extension was executed between the parties after expiry of the original sanction period on 13.11.2020, though the Appellant continued to use the credit facility. Micro, Small and Medium Enterprise SHARMA 17:52
6.3. He states that after the sanction of the credit facility, the Respondent Bank unilaterally imposed higher interest rates and debited various charges without justification.
6.4. He states that on 01.03.2021, the Appellant expressed its intention to shift the credit facility to another bank. He states that in response on 02.03.2021, the Respondent informed the Appellant that its collateral securities would be released only upon payment of the non-compliance charges and premature closure charges.
6.5. He states that the Appellant disputed its liability to pay the said charges and submitted its request for closure of the credit facility. He states that despite the Appellant’s objection to the charges, the Respondent debited a total amount of Rs. 7,68,975/- from the Appellant’s account in the following manner:
(i) Rs. 3,67,775.32p towards non-compliance charges;
6.6. He states that the Appellant on 19.03.2021, requested the Respondent to reverse the wrongful charges and return the collateral securities; however, despite debiting the amount, the Respondent failed to release the collateral documents and securities.
6.7. He states that, in these circumstances, the Appellant was coerced to issue a full and final settlement letter on 01.06.2022 in the format provided by the Respondent as a condition for the release of collateral documents and securities. He states that the Appellant vide its letter dated 01.06.2022, SHARMA 17:52 recorded the coercion of the Respondent in compelling the Appellant to sign the purported full and final settlement letter.
6.8. He states that thereafter, the Appellant issued a legal notice dated 29.09.2022 calling upon the Respondent to refund the illegally deducted amount/charges along with the interest. He states that as the Respondent neither replied nor refunded the amount. Hence, the Appellant initiated preinstitution mediation, which resulted in a non-starter report due to the Respondent’s non-appearance.
6.9. He states that thereafter, the Appellant instituted CS(COMM) NO. 1083 of 2023 and sought refund of wrongfully collected charges of Rs. 7,68,975/-, damages of Rs. 5,00,000/- and litigation costs of Rs. 1,00,000/-.
6.10. The Respondent filed an application under Order XIII-A CPC read with Commercial Courts Act, 2015 on the same ground as that of its application under Order VII Rule 11 CPC and sought to pass a summary judgment against the Appellant.
6.11. Vide the impugned order dated 16.12.2025, the learned Trial Court partly allowed the Respondent’s application under Order XIII-A CPC and dismissed the Appellant’s claim to the extent of Rs. 4,01,200/- towards alleged pre-payment charges including GST, holding that the Respondent Bank was entitled to levy the same as per terms of sanction letter dated 13.11.2019.
6.12. He contends that the learned Trial Court misapplied the test under Order XIII-A CPC by holding that the Appellant had no real prospect of SHARMA 17:52 succeeding in respect of the claim for recovery of pre-payment charges of Rs. 4,01,200/-.
6.13. He contends that the issues relating to the validity of renewal, applicability of the pre-payment clause in an expired sanction letter dated 13.11.2019, coercion in obtaining the full and final settlement letter and computation of charges are all triable issues.
6.14. He contends that once the learned Trial Court recorded that continuation of transaction/renewal of the contract and non-compliance charges are triable issues, it could not have summarily decided the issue of pre-payment charges.
6.15. No other plea was raised during arguments.
7. In reply, learned counsel for the Respondent states that the levy of pre-payment charge is strictly in accordance with the expressed stipulation in the sanction letter dated 13.11.2019, which continued to govern the parties.
8. We have heard the learned counsel for the parties and perused the record.
9. The impugned order has been passed by the learned Trial Court while adjudicating the application filed by the Respondent under Order XIII-A CPC. The learned Trial Court has partly allowed the application and concluded that the Appellant’s prayer in the suit for recovery of Rs. 4,01,200 towards the levy of a pre-payment charges including GST is not likely to succeed. The relevant portion of the judgment which records the findings of the learned Trial Court on its aforesaid determination are as under: SHARMA 17:52 “12. … In so far as the legality of levying the prepayment charge is concerned, the plaintiff has, admittedly, entered into a contract with the defendants and has availed cash credit facility from the defendant bank vide sanction letter dated 13.11.2019 which, as per the renewal/review clause, is subjected to annual renewal at the discretion of the defendant bank. Although, neither party has demonstrated renewal of the said cash credit facility by the defendant bank at this stage, yet it is evident that the defendants. have continued to disburse the sanctioned amount of Rs. 1,70,00,000/- into the plaintiff's account and have charged interest accordingly. Concurrently, the plaintiff has continued to avail the benefits of the said facility. The conduct of the parties, prima facie, establishes that the contractual relationship between them has subsisted notwithstanding the expiration of the sanction on 13.11.2020, until the plaintiff, vide email dated 01.03.2021, communicated its intention to transfer the aforesaid credit facility to HDFC Bank. In response to such transfer, the defendants, by way of the email dated 02.03.2021, have apprised the plaintiff of the obligation to pay non-compliance/pre-closure amounting to Rs. 6,51,674/- besides applicable GST, which has been strongly contested by the plaintiff on the basis that, in the absence of any subsisting contract between the parties, the defendants cannot levy the prepayment charges from the plaintiff's account. This contention of the plaintiff is devoid of merit as a pen1sal of the Prepayment Charges clause in the aforementioned sanction letter discloses that in the event the facility limit is taken over by any other bank or financial institution, prepayment charges of 4%, together with applicable service tax on the facility limit sanctioned, shall be payable by the borrower. Having expressly consented to this provision upon execution of the sanction letter dated 13.11.2019 with open eyes, the plaintiff is precluded from evading the imposition of prepayment charges levied by the defendant bank. Reliance is placed on Balaji Dal Mills Vs. State Bank of India & Ors. 2025 SCC OnLine MP 288.
13. In view of the aforesaid, the plaintiff has no real prospect of succeeding on the claim as the defendants have rightfully levied prepayment charges in terms of the said sanction letter. Further, no oral evidence would be required to adjudicate the upon the legality of SHARMA 17:52 levying the prepayment charges by the defendants. Although, the said stipulates prepayment charges of 4% alongwith applicable service tax, the parties have negotiated and mutually agreed to levying of prepayment charges at the rate of 2o/o besides applicable service tax and as such, the defendant bank is lawfully entitled to levy a prepayment charge of Rs. 4,01,200/- from the plaintiffs account, arising from the takeover of the facility limit HDFC bank.”
10. Having perused the sanctioned letter dated 13.11.2019, we find that it contains a specific clause on levy of prepayment charges, which reads as under: “Prepayment Charges: The facility shall attract prepayment charge on the facility limits granted to the borrower in the event of: • Repayment by the borrower to the bank of any amount ahead of previously agreed repayment schedule or tenor or terms of dates of repayment or renewal as contained in the sanction letter; or • The borrower's is not availing of the facility or any part thereof within 60 (sixty) days from the date of its grant. The prepayment charges would be 2% plus applicable service tax on the facility limit granted in case of payment through own resources and 4% plus applicable service tax on the facility limit granted in case of takeover of facility limit by any other bank/ financial institution.”
11. There is no contest that the amount of prepayment charges recovered are in accordance with the said clause.
12. The Appellant has solely contended that since the sanctioned letter dated 13.11.2019 was valid until 13.11.2020, the said clause would be inapplicable thereafter. We are, however, unable to accept this contention of the Appellant, since it is admitted that the Appellant continued to use the credit facility after 13.11.2020 and until fresh terms were settled between the parties, the continuing use of the credit facility would be governed by the SHARMA 17:52 terms of the sanction letter. This is also the finding of the learned Trial Court, and we find no infirmity in the said finding. The terms of the sanction letter vis-à-vis the levy of pre-payment charges are explicit and clear; therefore, we agree with the findings of the learned Trial Court that the Appellant has no prospect of succeeding in its challenge to the said levy by the Respondent.
13. In the grounds of appeal, the Appellant has contended that the levy of pre-payment charges is contrary to RBI circulars and MSME-related government notifications. No circular or notification has been filed on record. Learned counsel for the Appellant also fairly conceded that he is not relying upon any circular or notification to substantiate the said challenge. Therefore, the said ground is also unsubstantiated.
14. The Appellant has lastly contended that since the Trial Court has set down the matter for trial qua the dispute over the non-compliance charges of Rs. 3.67 lakhs and the claim of damages, and thus, its claim for recovery of pre-payment charge also ought to have been set down for trial. We are unable to accept this submission. The claim of the Appellant qua recovery of the pre-payment charges is separate and distinct from its claim for recovery of non-compliance charges and damages. The learned Trial Court is well within its jurisdiction to dismiss the suit qua the pre-payment charges since it is an independent claim.
15. At this juncture, we find it apposite to refer to the judgment of the Supreme Court in Reliance Eminent Trading and Commercial Private SHARMA 17:52 Limited v Delhi Development Authority[2], wherein the Court has observed that Order XIII-A CPC constitutes as an exceptional yet effective procedural mechanism for the expeditious disposal of commercial disputes where a fullfledged trial would serve no useful purpose. The Court held that summary judgment may be granted where the claim or defence lacks a real prospect of success and is merely fanciful, speculative or illusory. It held that while exercising such jurisdiction, the Court must examine the pleadings, documents and material on record, as well as the evidence reasonably expected to be available at trial, without conducting a mini-trial; the mere existence of a disputed fact does not, by itself, necessitate a trial unless such fact is relevant and capable of affecting the relief claimed. Thus, where the controversy turns on admitted or undisputed facts, including a clear question of law requiring no further factual enquiry, the Court ought to decide the matter summarily rather than prolong the proceedings by directing an unnecessary trial.
16. Accordingly, the present appeal is dismissed. Pending applications are disposed of.
MANMEET PRITAM SINGH ARORA, J
V. KAMESWAR RAO, J