SATHYA FOUNDATION PRIVATE Vs. INDBANK HOUSING LIMITED

JUDGEMENT

(1.) The first petitioner company is a builder and with a view to develop a housing project in the lands measuring about 78 cents at S. No. 166/3B3, Kovilambakkam Panchayat, Tambaram Taluk, Chennai, the petitioners have approached the first respondent Bank and obtained a project loan of Rs. 40 lakhs on 12.8.1995 for the construction and as security for the loan, the land owners S. Lakshmanan and S. Ramachandran have deposited the title deeds of the property with the first respondent Bank. The project site has been named as 'Sathya Gardens' and the cost of the total project was Rs. 1.50 crores, even though it was shown as Rs. 88.34 lakhs in the loan proposal submitted to the first respondent Bank. Thereafter, as per the petitioners, since the Tamil Nadu Slum Clearance Board sought to acquire the lands immediately abutting the land which was being developed by them, the proposed purchasers panicked and stopped making the payment towards the purchase of flats and hence the project came to a standstill. Since the petitioners failed to repay the loan amount, the first respondent Bank instituted a suit in C.S. No. 230 of 1998 on the original side of this Court, seeking recovery of Rs. 46,47,264/= with further interest and costs. During the pendency of the said suit, the petitioners were desirous of settling the issue amicably and hence a tripartite agreement was entered into on 29.2.2000 between the first petitioner, the first respondent Bank and Sathya Gardens Flat Purchasers Association, as per which, the first petitioner proposed to complete the construction of the apartments and out of the total sale consideration of Rs. 66,55,590/= to be received by the first petitioner from the purchasers of 22 flats, who have already booked, the first petitioner agreed to deposit the loan amount in an Escrow Account opened in Indian Bank, Nandanam Branch, Chennai in the name of Sathya Gardens Flat Purchasers Association, but no money was deposited by the purchasers so as to finish the project and hence the stalemate with respect to the project continued.

(2.) In the meantime, the first respondent Bank had agreed for a one time settlement, on 13.6.2005, agreeing to receive a sum of Rs. 65 lakhs as full and final settlement of the project loan. As per the terms of the said one time settlement, the petitioners were required to pay the above amount within six months from the date of the first respondent's approval and the petitioners were required to make payment of Rs. 16.25 lakhs being 25 % of the settlement amount as upfront money within 30 days from the date of the above settlement and it was also agreed that a consent decree may be passed in C.S. No. 230 of 1998. But, subsequently, the petitioners addressed a letter to the first respondent Bank that payment of 25% as upfront money is not possible since the project has not been completed and offered to pay 10% as upfront money and sought for ten months time to pay the entire amount as accepted, since it would not be possible to complete all the 32 flats within a period of five months, for which there was no reply from the first respondent Bank.

(3.) Thereafter, a notice was issued by the first respondent Bank in 'Dinamalar' on 11.9.2005, intimating to the public that the project promoted by the first petitioner is the subject matter of mortgage and hence the public was cautioned not to deal with the property. According to the petitioners, the first respondent had projected a false picture in public as if the entire extent of 78 cents of land including plot Nos. 13 to 15 situated at Survey No. 166/3B3 in PMD Nagar Layout is the subject matter of security offered to the first respondent, even though only Plot Nos. 16 to 23 measuring about 18,349 sq.ft. were alone offered as collateral security and not the entire 78 cents as alleged by the first respondent Bank. After the said advertisement, a letter was addressed to the first respondent by the petitioners on 19.9.2005, alleging falsity in the advertisement, for which a reply was received from the first respondent denying the contentions of the petitioners and thereafter, the petitioners again sent a legal notice on 19.1.2006 calling upon the first respondent to issue a corrigendum so as to undo the loss caused to them, for which a reply was received from the first respondent reiterating their earlier stand. In these circumstances, the petitioners 1 to 3 have filed a suit in C.S. No. 850 of 2006 on the original side of this Court against the first respondent Bank, claiming damages of Rs. 20 lakhs.