ICICI BANK LTD. Vs. SUNDARAM MULTI PAP LTD.

JUDGEMENT

(1.) THIS is a petition for winding up of the respondent -company for alleged non -payment of a sum of Rs. 2,94,60,698 with further interest at the rate of 18 per cent, per annum.

(2.) THE petitioner -bank claims the aforesaid amount as due under a credit arrangement letter (CAL) and an internal swaps and derivative association master agreement dated October 18, 2007, together with its schedule collectively referred to as 'ISDA Agreement'. Apparently, the company entered into the aforesaid agreement with the petitioner with a view to protect itself from the losses arising out of adverse fluctuations in the rate of exchange in import export transactions. Broadly, the salient features of the two agreements are as follows: The company would enter into derivative transactions. If as a result it makes any gains, the petitioner -bank would credit the amount to their account. If there are losses, the petitioner would debit their account. The derivative limits were to be Rs. 15.2 million. The agreements would cover both forward and options contract. The company would deposit such moneys and execute such security documents by way of margin with the bank as may be demanded by it. The agreement was liable to be cancelled upon certain termination events specified in the contract such as defaults, etc.

(3.) APPARENTLY , on November 23, 2007, the petitioner credited the company's account with an amount of Rs. 14,18,760. On December 12, 2007, the cheque issued by the company for Rs. 1.52 crores was dishonoured. The bank terminated the contract by letter dated December 27, 2007. On December 18, 2007, the petitioner issued the statutory notice which was replied to on December 31, 2007, inter alia, contending that the transactions referred to in the statutory notice are already the subject -matter of High Court Suit No. 3398 of 2007 filed on December 10, 2007 and claiming that the company was fully capable of honouring the cheque, but the amount has been withheld because the petitioner deposited the cheque in spite of knowledge of the suit. There is further correspondence between the parties in which the company has claimed that they had issued a blank cheque and that they are fully solvent with a networth of Rs. 80.57 crores.