An Arbitration case details are furnished hereunder. Kindly confirm whether my views are correct:
The claimant filed a statement of claim for certain value and for the interest thereon, under “delayed payment receivable” by an SSI Unit. In the statement of claim, they have indicated totally six Invoices raised against six lots of supplies effected on different dates to the respondent company. But out of six (6) invoices, supplies were made against L/C established by the respondent for the partial supplies and three (3) invoices were raised separately. After supplies the claimant negotiated the above said (3) three invoices and received payment through Bank against the L/C terms.
The business relations/transactions between the claimant and the respondent were spread over a period of 4 financial years. The respondent did not pay against certain invoices/supplies as the material supplied by the claimant were defective. Keeping aside the settlement of dispute on defective material value and the resultant loss, the respondent was buying material from the claimant and was releasing payment by means of cheques/DDs/L.C. At times the cheques issued by the respondent were bounced and were made good by issuing fresh cheuqes / DDs in lieu of bounced cheques.
Now when the arbitration proceedings are on, the claimant says that he has adjusted the payments received on first in first out basis viz., against the Invoices which were raised against supplies under L/C terms of payment to those which were payable by the respondent under direct credit basis. Further the claimant in his claim statement showing those invoices which he received payment against L/C as due and claiming interest also.
My view is as per the accounting practice, unless there is an understanding oral/in writing between the claimant/respondent (creditor & debtor), the claimant can not adjust the amounts received against those bills which he raised against specific L/C with those of other Bills which he raised for supplies under direct credit basis. Please guide me. Regards.