- (1.) The parties agree that the facts in both the matters are almost identical and an order on one should govern the other. Vikash Metal and Power Ltd., and Sahyogi Distributors Ltd., appear to be sister or associate concerns and there is no dispute regarding such fact. The petitioning-creditor in either case is the Corporation Bank which had agreed to grant credit facilities to the companies. As is often the case in this country, matters are complicated not so much by the facts or law involved therein but by the convoluted approach to the law and facts. So has it been in this case. There are clear, written agreements between the parties that spell out their rights and obligations and the nature of the transaction between them. The statutory notices, which make out a cause of action divorced from the agreements, have prompted the companies to adopt a legal defence. But such defence should not hold good it if is recognised that a statutory notice need only indicate the claim and its basis therefor and the legal nuances therein may be disregarded.
(2.) The nature of the transaction appears from the agreements dated September 21, 2011 and September 20, 2011. As appears to have been accepted even in the affidavits-in-opposition filed by the companies, the arrangement was thus: the companies would deposit cheques issued in their favour by third parties with the bank and the bank would credit the accounts of the companies without waiting for the cheques to be cleared. The bank would render such service against an agreed charge. The amount funded--the primary credit facility--would be on short-term basis and the principal amount would be realised upon the cheques being encashed. Clause 9 of the agreements provides as follows: In the event of any out of funds position for the bank due to return of instruments and/or rectification of a wrong credit if any, the company hereby agrees and undertakes to liquidate the overdraft the following day on which it occurs and in the event of delay in liquidating the same to pay interest at the rates applicable to out of funds position. In any case the bank reserves the right to set off and appropriate the liability, including any unpaid service charges, against or out of any other accounts/funds belonging to the company including the amount of any further instruments which may be deposited by the company with the bank. Further, in the event of repeated instances of returning of instruments at any location the bank will, not withstanding other terms herein, be at liberty to either delay the payments of collections till the information about realisation of the instruments is available or may stop accepting the instruments at any or all the locations to protect the bank's interest.
(3.) It is, thus, evident that notwithstanding the legal obligation of the parties, the companies remained bound by the terms of the agreement executed with the petitioner to reimburse the principal amount covered by the cheques in the event they were dishonoured.;