Written Contract Prevails Over Oral Assurance: Delhi High Court Holds Processing Fee Non-Refundable Despite Borrower's Failure to Meet Conditions Precedent

1. Case Snapshot

Case Name: Standard Chartered Bank vs Chitra Utsav Video Private Limited

Citation: RFA 293/2020

High Court: High Court of Delhi

Bench: Hon'ble Ms. Justice Neena Bansal Krishna

Date of Judgment: 29th June, 2026

Area of Law: Banking Law, Contract Law, Evidence Law, Civil Procedure Code

2. Judgment in Brief

The Delhi High Court allowed an appeal filed by Standard Chartered Bank, setting aside the Trial Court's judgment and decree which had ordered the Bank to refund Rs. 16,50,000/- to the borrower. The borrower had approached the Bank for a Lease Rental Discounting facility of Rs. 27 crores and paid a processing fee of Rs. 13.50 lakhs. The Bank issued a Facility Letter sanctioning Rs. 25.5 crores, with a clause making the processing fee non-refundable. The borrower accepted the Facility Letter after Board Resolution but failed to comply with conditions precedent (obtaining letters from its existing banker) and later sought refund. The High Court held that the accepted Facility Letter constituted the binding contract between the parties, and oral assurances or antecedent communications could not override its express terms. The Court also held that the borrower, having failed to comply with conditions precedent, could not claim the benefit of its own default. The Reserve Bank of India circulars relied upon were distinguished as they applied to cases of non-acceptance or non-disclosure, neither of which was established.

3. Relevant Facts

Loan Application and Payment

• The plaintiff/respondent (Chitra Utsav Video Pvt. Ltd.) approached Standard Chartered Bank for a Lease Rental Discounting facility of Rs. 27 crores against its commercial property.

• On 23.05.2012, the Bank issued an Indicative Term Sheet offering to process the proposal.

• On the same date, the borrower handed over a cheque for Rs. 13,50,000/- with a covering letter describing the payment as a "Mobilisation Fee" adjustable against the facility amount and refundable if the transaction was not approved (subject to deduction of actual expenses).

• The cheque was encashed by the Bank.

Facility Letter and Acceptance

• On 20.07.2012, the Bank issued a Facility Letter sanctioning Rs. 25.5 crores.

• Clause 5 of the Facility Letter stipulated that the Processing Fee of 1% (Rs. 25,50,000/- plus service tax) was to be paid upfront and was non-refundable.

• The borrower, through its Board Resolution dated 07.08.2012, accepted the Facility Letter on 08.08.2012.

• The borrower had raised concerns about the Debt Service Reserve Account requirement and other terms via emails dated 26.07.2012 and 31.07.2012, but still accepted the Facility Letter.

Failure to Meet Conditions Precedent

• The Facility Letter required the borrower to obtain three letters from its existing banker (Syndicate Bank): confirmation of outstanding balance, confirmation th

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