ORDER
C.M. Nayar, Chairman
1. This application is filed under Section 12-B of the Monopolies and Restrictive Trade Practices Act, 1969 for award of compensation of Rs. 5 lakhs and for refund/adjustment of the excess amount which is alleged to be deposited by the applicant. The main grievance of the applicant is with regard to the rate of interest and subsequent increase in the same as charged by the respondent. The relevant facts are incorporated in paragraphs 8, 9 and 10 of the application which may be referred to as below :
“8. That while approving and sanctioning the term loan the respondents issued letter of intent/letter of sanction on 2.8.1991. The copy of the said letters are hereby annexed as Annexure-V. The said letter of sanction sanctioning the financial assistance as term loan for Rs. 77.00 lacs and the details of which was retained on the same which has already been annexed in Annexure-V.
9. That letter of sanction date 2nd August, 1991 granting a term loan of Rs. 77.00 lacs on the condition of investing huge amount of money by the petitioner contemplate certain special terms and conditions and the said Clause 2 of the special terms and conditions which reads as under :
‘That the interest on term loan shall be charged @ 12.5% per annum during implementation (construction) period, i.e. the implementation period as given in the appraisal document or a period of two years from the date of signing the loan agreement (including bridge loan agreement, if any) between the corporation and GCPL whichever is earlier subject to refinance from SIDBI @ 9.5% per annum. The interest on term loan for remaining period, i.e. other than implementation period SHALL be charged @ 13.5% per annum subject to refinance from SIDBI @ 10.5%. If any amount of interest and/or principal, if any, instalment is not paid by GCPL on its due date liquidated damages @ 5% per annum shall be charged over and above the normal term lending rate on the amount in default for the period default continues.
and furthermore as per Clause 7 of the special terms and conditions which read as under :
‘The company shall bring in 100% of its promoter’s contribution for the proposed project prior to seeking any disbursement of term loan from Corporation.’
That from the aforesaid special term and conditions envisaged in the letter of sanction/letter of intent clearly manifests that the interest on the term loan shali be charged @ 12.5% per annum during implementation period and thereafter 13.5% per annum. The petitioner being assured by the said special term and conditions of the letter of intent/letter of sanction further invested huge amount of money as a perquisite for the same and till 2nd August, 1997 petitioner had already spent a sum of Rs. 10.47 lacs details of which are annexed as Annexure-VI.
10. That immediately after the sanction of the term loan at considerable moderate rate of interest, the petitioner further invested huge amount as per schedule of completion of establishment as required by the respondents amounting to Rs. 41.91 lacs upto 19.12.1991. The said schedule has already been reflected in page 17 of the appraisal note.”
2. The learned Counsel for the respondent has argued that the interest has been charged on the basis of Loan Agreement dated 20th December, 1991 entered into between the parties and Clause 3.2 of which may be referred to as below :
“3.2. Interest
The borrower shall pay to the lender interest as under :
(i) Until the date of availability of refinance from the Industrial Development Bank of India (IDBI)/ Small Industries Development Bank of India (SIDBI) as the case may be the borrower shall pay to the lender on the principal amount of the loan outstanding from time-to-time at the rate arrived at after adding 2% to the normal interest rate for usual term loan/term loan under equipment refinance scheme prevailing on the date of signing of the agreement but with a minimum of 21% per annum quarterly in each year on the 15th January, 15th April, 15th July and 15th October.
(ii) From the date of availability of refinance from Industrial Development Bank of India (IDBI)/ Small Industries Development Bank of India (SIDBI) till the date of repayment of the last instalment by the borrower company to the lender or by the lender to IDBI whichever is later in respect of the captioned loan, the interest shall be charged at the rate of 18.75% per annum quarterly in each year on the 15th January, 15th April, 15th July and 15th October.
Notwithstanding the foregoing in the event of any upward revision of interest rate or levy of any extra charges or any upward revision of interest rates by IDBI, the borrower company hereby agrees and undertakes to pay to the lender interest at such other rate(s) as shall from time-to-time be fixed by the lender and intimated to the borrower company :
Provided that in the event of increase in the rate(s) of interest:
(a) the borrower shall have an option to prepay to the lenders forthwith on receipt of such intimation the entire outstanding of the loan together with all outstanding interest, additional interest, costs, charges, expenses and other monies payable by the borrower company to the lender without being required to pay any premium for such prepayment in terms of Article 3.10 hereof, and
(b) in the alternative, the borrower company shall have an option to make such prepayment together with interest, at the increased rate(s) as intimated till payment at any time during a period of 2 (two years) after receipt of such intimation.
Provided that all interest, which shall, during the continuance of this agreement accrue due on the loan or any part thereof and for the time being remaining unpaid and all other monies, which have become payable under this agreement shall, in case the same be not paid on the days on which they accrued due, carry further interest at 5% per annum as and by way of liquidated damages over and above the rate of interest aforementioned computed from the respective days of such interest or monies accruing due and all such interest and further interest which have become payable upon the footing of compound interest with rests, taken or made quarterly as hereinbefore provided and all such compound intt. shall stand secured under the security created in terms of Article IV hereof charged at a rate of 3.5% above the Industrial Development Bank of India’s rate of interest on refinance but with a minimum of ….% p.a.
Provided that all interest, which shall, during the continuance of this Agreement accrue due on the loan or any part thereof and for the time being remaining unpaid and all other monies, which have become payable under this Agreement shall, in case the same be not paid on the days on which they accrued due, carry further interest at 7.5% per annum as and by way of liquidated damages over and above the rate of interest aforementioned computed from the respective days of such interest or monies accruing due and all such interest and further interest, which have become payable upon the footing of compound interest, with rests taken or made quarterly as hereinbefore provided and all such compound interest shall stand secured under the security created in terms of Article IV hereof.”
3. A copy of the letter of intent annexed to the complaint, which contains special terms and conditions in paragraphs 2, 5, 7 and 17 may be referred to as under :
“2. That the interest on term loan shall be charged @ 12.5% per annum during implemention (construction) period, i.e. the implementation period as given in the appraisal document or a period of two years from the date of signing the loan agreement (including bridge loan agreement, if any) between the Corporation and GCPL whichever is earlier subject to refinance from SIDBI @ 9.5% per annum. The interest on term loan for remaining period, i.e. other than implementation period shall be charged @ 13.5% per annum subject to refinance from SIDBI @ 10.5%. If any amount of interest and/or principal, if any, instalment is not paid by GCPL on its due date liquidated damages @ 5% per annum shall be charged over and above the normal term lending rate on the amount in default for the period default continues.
5. No funds shall be disbursed till the refinance is sanctioned from SIDBI.
7. The company shall bring in 100% of its promoter’s contribution for the proposed project prior to seeking any disbursement of term loan from Corporation.
17. The terms and conditions as stipulated by the IDBI while sanctioning refinance against this sanction shall also be applied from the part of this Letter of Intent.”
4. The parties have executed an agreement and have bound themselves to the terms and conditions therein. The High Court of Judicature for Rajasthan has also disposed of a similar matter in Civil Writ Petition No. 7076 of 1993, M/s. Gunjan Cement Pvt. Ltd. v. Rajasthan State Industrial Development & Investment Cor. Ltd., decided on 2nd February, 1995, wherein it has been held as follows :
“Regarding the first point, it may be stated that as per the term loan agreement between the petitioner and the respondent, the rate of interest was dependent upon the rate at which refinance for the term loan was available from Small Industries Development Bank of India (SIDBI) plus 3 1/2% thereon. The petitioner knowing fully well the legal implications of the contract, has signed the Deed of Modification’. It was not a case of an illiterate person signing the deed without understanding the contents thereof. The theory of coercion and duress submitted by the petitioner is not acceptable and the submission so made is hereby rejected.
The term loan agreement did not envisage a fixed rate of interest during the entire period of the term loan. The rate of interest payable on the term loan was variable and depended on the rate of interest of the refinance provided by the Industrial Development Bank of India/Small Industries Development Bank of India to the Rajasthan State Industrial Development and Investment Corporation Ltd. subject to a minimum of 12 1/2% during the period of implementation and 13 1/2% subsequent thereto.
Parties are bound by the terms and conditions of the ‘Agreement for Loan’ and ‘Deed of Modification’. The respondent could enhance the rate of interest unilaterally with reference to the ‘Deed of Modification.’
Knowing fully well the terms and conditions of the loan the petitioner was motivated to set up an industry in the State of Rajasthan to earn profit and no assurance or promise was ever made by the respondent that enhanced rate of interest would not be charged. The respondent merely informed the petitioner that in terms of the ‘Deed of Modification’ and ‘Loan Agreement’ between the parties, the rate of interest was enhanced to 18.75% with effect from 1.10.1991 and 18% till 1st October, 1991. The enhancement of rate of interest amounts to a bilateral act of the parties and it is not open to the petitioner to challenge the same.
The revision in the interest rate structure was brought forth in response to the changing economical and financial conditions and had been uniformly made applicable to all categories of borrowers in the Small Scale Sector. Further, it was in supersession of the existing interest rate structure and in keeping with revision in interest rates announced by the Reserve Bank of India on October 8th, 1991.
Unless the ‘Deed of Modification’ is set aside or cancelled by a Court competent jurisdiction on the ground of duress or coercion, it is binding between the parties as they have signed it with their eyes wide open. Accordingly, the petitioner has failed to make out a case for interference and is not entitled for any direction to the respondents not to demand enhanced rate of interest i.e. 18% and 18.75% from the petitioner.”
In view of the settled position as regard to above, we do not find any ground to grant any relief to the applicant. The application is, therefore, dismissed. There will be no order as to costs.