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of <h1>Court upholds plaintiff's claim against bank for breach of contract, affirms awarded relief with modified interest</h1> <h3>Allahabad Bank And Anr. Versus Mecon</h3> The court found the suit maintainable despite the defendants' arguments. It held that the plaintiff had a valid cause of action due to the breach of ... - Issues Involved:1. Whether the suit as framed is maintainable.2. Whether the plaintiff has a valid cause of action for the suit.3. Whether the plaintiff is entitled to a decree as prayed for.4. To what other relief or reliefs the plaintiff is entitled to.Issue-wise Detailed Analysis:1. Maintainability of the Suit:The defendants argued that the suit was not maintainable and barred by principles of waiver, estoppel, and limitation. However, the court found the suit maintainable. The defendants' ornamental defenses were insufficient to dismiss the suit at the threshold.2. Valid Cause of Action:The court determined that the plaintiff had a valid cause of action. The plaintiff's case was based on a series of correspondences and agreements with the defendant bank, which led to the issuance of bank guarantees without commission. The defendants' subsequent unilateral decision to charge commission constituted a breach of the agreed terms, giving rise to a cause of action.3. Entitlement to Decree:The court found in favor of the plaintiff, establishing that there was a concluded contract between the parties. The key points were:- The defendant bank agreed to issue bank guarantees without charging commission based on the plaintiff's assurances to keep trade surplus and route transactions through the bank.- The plaintiff deposited 10% margin money and opened a current account, fulfilling its part of the agreement.- The bank's subsequent demand for commission and withholding of FDRs was unjustified and against the agreed terms.- The court held that the defendants had no right to claim any amount towards bank commission for establishing the bank guarantee on behalf of the plaintiff and were not entitled to withhold the payment of matured fixed deposits.4. Reliefs and Other Entitlements:The court awarded the plaintiff a sum of Rs. 87,23,609 with interest at the rate of 21.75% per annum at quarterly rests from the date of release of FDRs till the billing of the suit, pendente lite, and future till the date of realization. However, the appellate court modified this interest rate, allowing it at the rate applicable to FDRs at the time of maturity without quarterly rests.Additional Issues Framed by Appellate Court:i. Concluded Contract:The appellate court confirmed that there was a concluded contract between the parties, as evidenced by the series of correspondences and the bank's issuance of guarantees without commission.ii. Terms and Consideration:The court found that the terms stipulated by the plaintiff, including the deposit of 10% margin money and routing transactions through the bank, constituted valid consideration for the contract.iii. Waiver of Commission:The plaintiff successfully established that the bank had waived the commission on the bank guarantees, as evidenced by the sanction letter and subsequent actions of the bank.iv. Justification of Interest Award:The appellate court modified the interest awarded by the trial court, reducing it from 21.75% with quarterly rests to the rate applicable to FDRs at the time of maturity without quarterly rests, while maintaining other terms.Conclusion:The appellate court upheld the trial court's judgment with a modification in the interest rate. The defendants' appeal was dismissed, and the plaintiff was entitled to the reliefs granted by the trial court, with the modified interest rate.
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