Legal Question in Banking Law in India

Banking Law against loans - Is this legal ???
A loan amount of 1 crore 20 lakhs was sanctioned for a new hotel 'A' by bank 'B1'. Due to shortage of funds, hotel 'A' has asked for an excess loan amount of 1 crore. we submitted two proposals to the bank, one proposal worth 25lakhs for a sister concern firm for machinery, the other proposal was for the first hotel 'A' worth Rs 1 crore. After submitting both the proposals, bank has sactioned both the proposals for 25lakhs & 80 lakhs(although it was submitted for 1 crore), along with these proposals the bank has requested for 10 blank cheques. Though the approved loan amount was for 80 lakhs bank has transfered only 25 lakhs in our account, the statement showed that the bank has transfered the remaining 55 lakhs against individual loans which were on the director, individual housing loans, & other loans on old firms, not concerning the hotel 'A'.This was a big shock causing the demise of the company director & a total bankruptcy. On checking the bank statement, we came to know that though the bank has approved the loan for machinery for 25 lakhs they transfered it to the first loan for 1 crore 20 lakhs on hotel 'A' without our consent & we also not aware of the mode of transfer, due to which our business was in a complete loss

Asked on 7/28/06, 11:37 am

Raja Selvam Selvam & Selvam, Advocates & Consultants

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Re: Banking Law against loans - Is this legal ???

Sir,

the bank has no rights to do so.

So you can file a case against the bank for deficiency of service.

regards

Answered on 8/01/06, 2:43 am

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