JUDGMENT
Usha Mehra, J.
1. Respondent Company obtained a contract on 14th March, 1987 from Mahanagar Telephone Nigam Limited (in short the MTNL) for the purpose of publishing and printing telephone directories for the Metropolitan cities of Delhi and Bombay for the years 1987-1991 (both years inclusive). For the purpose of executing the said contract respondents approached the petitioner Bank for credit facilities. The petitioner Bank granted inland letter of credit limit (hypothecation limit of Rs. One crore). Respondent Company assigned that contract to United Database India Ltd. (in short the UDI). The respondent Company and UDI executed separate guarantee agreements on 9th March, 1988 and 4th July, 1988 respectively in favour of the petitioner Bank. By virtue of those agreements respondent Company undertook to indemnify the Bank all losses and to repay the loan amount with interest at the rate of 8.5% p.a. above the RBI rates subject to minimum of 18.5% p.a. compounded quarterly. UDI in order to secure repayment executed an agreement of hypothecation of book debts in March, 1988. Beside hypothecation of book debts the UDI hypothecated in favour of Bank all the goods consisting of raw material, work in progress and finished goods of paper and printed directories both existing and future beside machinery including computers etc. The respondents were to repay the credit facilities, but they failed to do so. Though the respondent Company and the UDI failed to discharge its obligation even then the petitioner Bank in order to facilitate the respondents to repay the loan allowed letter of credit facility. Thus as on 31st March, 1990 a sum of Rs. 2,59,35,098.02 paise was due against letter of credit facility. Beside an amount of Rs. 1,24,34,243.78 paise on account of cash credit (overdraft facility) became due as on 31st March, 1990. After giving adjustments to all the deposits made under the letter of credit facility including interest by the respondents the amount due from the respondents as on 31st March, 1990 came to Rs. 3,83,69,341.80 paise.
2. On 19th December, 1990 a memorandum of understanding was arrived at between respondent, UDI and petitioner Bank. The respondents vide the said Memo admitted their liability to the Bank. As per the terms of the agreement executed with the Bank, the respondents agreed to create second charge in favour of petitioner Bank. However, neither the respondents took any step for obtaining necessary permission for mortgaging its property by way of second pari-pasu charge nor paid the outstanding amount. The respondent Company and the UDI also failed to publish the telephone directories, they, therefore, appointed M/s. Sterling Computer Limited (in short the Sterling) to publish Delhi-Bombay Directory for the year 1997-98. Consequently an agreement was entered into between the petitioner Bank, respondent Company, UDI and Sterling dated 31st March, 1992. This agreement was in supersession of the agreement dated 21st October, 1991. As per the agreement dated 31st March, 1992 the amount payable by Sterling was quantified at Rs.3,75 crores.On payment of this amount liability of respondent Company and UDI was to stand discharged. As part performance of that contract Sterling paid a sum of Rs. one crore at the time of signing of that agreement. Sterling also issued two post-dated cheques totalling Rs 2.75 crores. It was the term of that agreement that in default of payment as stipulated, the Bank would be entitled to claim the outstanding debt from these respondents. Their liabilities were in addition to the liability of Sterling as if the agreement of 31st March, 1992 had not been entered into and as if the liability due had not been quantified. Since Sterling failed to discharge its liability and the balance amount remained to be paid hence the respondents are indebted to the petitioner Bank. They have failed and defaulted in repaying the outstanding debt.
3. Respondents in their defense took the plea that since the petitioner Bank entered into a fresh agreement with Sterling dated 31 st March, 1992, therefore, cannot claim any amount from the respondents. Moreover, the Bank and the said Sterling having acted on the said agreement, the same became final and binding on these parties. Moreover, the Bank having involved its remedy against the Sterling by filing a suit for recovery in the High Court, of Madras, is estopped from seeking winding up against the respondents. As per Clauses (a) to (c) of the said agreement full amount was to be paid by the Sterling, respondent Company and UDI in view of that agreement of the Bank with Sterling, the respondents stood discharged from their liability. Even otherwise agreement dated 31st March, 1992 gave a new cause of action to the Bank. Since the agreement dated 31st March, 1992 was executed during the pendency of these proceedings hence this petition has become infructuous, this petition is not maintainable. On the dishonoured of the post-dated two cheques issued by Sterling and the petitioner Bank having filed a suit for recovery against the Sterling as well as a petition under Section 138 of the Negotiable Instruments Act cannot for the same amount pursue his remedy against the respondents. Winding up order cannot be sought against the respondents on the same cause of action. UDI had in fact taken loan, the respondent Company was only a guarantor, hence there is no question of commercial insolvency of the respondent Company. The cause of action on the basis of which this petition has been filed does not subsist any longer in view of the agreement dated 31st March, 1992.
4. Heard Mr. Adarsh Dial for petitioner Bank and Mr. Rajinder Dhawan for respondent Company. The facts which are not in dispute can be summed up thus a loan was taken from the petitioner Bank by the respondent Company and the UDI. The respondents in order to discharge their admitted liability involved the Sterling. An agreement was executed by the Bank, respondent Company, UDI and the Sterling. The Sterling agreed to repay the entire loan amount due and payable by the respondents which was quantified to the tune of Rs. 3.75 crores. Parties to the said agreement i.e. petitioner Bank and the Sterling acted upon the same when Sterling paid Rs. one crore at the time of execution of the agreement. Sterling also issued two post-dated cheques of Rs. one crore and one crore seventy five lakhs totalling Rs. 2.75 crores. Petitioner Bank accepted the same. On presentation those cheques got dishonoured. Thus Sterling committed breach of the agreement dated 31st March, 1992. Bank filed suit of recovery and a petition under Section 138 of the Negotiable Instruments Act.
5. The question, therefore, for consideration is : (i) What is the effect of that agreement dated 31st March, 1992 ? (ii) Can it be said that the present petition is barred because petitioner Bank has filed a suit of recovery against the Sterling and prosecution under Section 138 of the Negotiable Instruments Act?
6. In order to answer the above questions reference has to be made to some of the provisions of the said agreement dated 31st March, 1992. Relevant paras of the agreement reads as under :
(1) Sterling agreed and undertook under the aforesaid agreement dated 31st March, 1992 that the two post-dated cheques referred to above would be encashed upon presentation unconditionally and without demur.
(m) On payment of the amount of Rs. 3.75 crores as aforesaid the same would have amounted to full and final discharge of liabilities of Sterling as well as UIP and UDI for all claims of any nature whatsoever which the petitioner had against them in respect of the monies advanced to UDI.
(n) In default of payment in the manner stipulated above, the following consequences were to ensue:
"(a) The Corporation Bank shall be entitled to demand and receive payment from Sterling the balance outstanding out of the quantified amount of Rs. 3.75 crores together with interest at the rate applicable to clean commercial advances from time to time from the date of this agreement till realisation and Sterling shall be liable to pay the same to the Corporation Bank. (b) In addition to the above, the UIP and UDI shall be liable to pay to the Corporation Bank all sums due as shown in the books of the Bank together with interest applicable from time to time as if this agreement has not been entered into and as if the liability due has not been quantified at Rs. 3.75 crores and the Corporation Bank shall be entitled to demand and recover the same from UIP and UDI." (o) Notwithstanding the above agreement all other securities/guarantees held by the petitioner, were continued in full force.
7. Admittedly, those two post-dated cheques were dishonoured and thus payment of the balance amount of Rs. 2.75 crores. Instead of making payment the Sterling repudiated its liability to pay the remaining amount of Rs. 2.75 crores in terms of the agreement dated 31st March, 1992. Therefore, the Bank as per para-I Clause (b) of the agreement as quoted above called upon respondent Company and UDI to make payment of the outstanding amount with interest. Inspite of this reminder no payment was made by Sterling. Thus the Bank in addition to the remedy available against Sterling also approached the respondent Company and UDI for payment as per the term of agreement dated 31st March, 1992. The respondent Company and the UDI’s liability is in addition to the liability of Sterling. Per the books of the Bank as on the date of filing of the petition an amount of Rs. 3,83,69,341.80 paise was due against the respondents. Statutory notice dated 17th July, 1990 was served on the respondent Company as well as UDI. Inspite of the notice Annexure P-l neither respondent Company nor UDI discharged their liability towards the Bank. Since the liability of the respondent Company and UDI is in addition to that of the Sterling hence institution of cases against Sterling will not bar this petition nor the said agreement dated 31.3.1992 exonerate these respondents from their liability. Rather the said agreement as quoted above makes it clear that the liability which the Sterling took was in addition to the liability of the respondent Company and the UDI. It was also made clearv that if Sterling failed to adhere to the terms of that agreement then the Bank would be in a position to recover the due amounts from there spondent Company and the UDI. In that eventuality the respondent Company and the UDI cannot take the plea that due to the execution of that agreement by the Bank with Sterling responsibility of the respondents to discharge their debt came to an end. Per the term of the agreement quoted above in case Sterling commit breach, the liability of the respondents was to be reckon as if the said judgment dated 31st March, 1992 was not existing. As if it had not been entered into at all. Therefore, it would not be right on the part of respondents to contend that the agreement dated 31st March, 1992 discharged their responsibility or that due to the said agreement principle of estoppel will operate against the Bank in pursuing this petition. Even the recourse taken by the petitioner against the Sterling will not operate as an estoppel because the liability of the respondents were to remain till payment. Therefore, I find no merits in the plea of the respondent. Bank has invoked two different remedies available under the agreement. The respondents have admittedly failed to discharge their liability and are still indebted to the petitioner Bank. Accordingly the petition is admitted.
8. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator who will take into custody books of accounts, stock and other assets of the respondents. He will also prepare inventory of the goods. Citation be published in daily Newspapers “The Statesman” (English Edition), “Jansatta” (Hindi Edition) and Delhi Gazette, returnable on 20th April, 1999.