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TMI Blog2008 (3) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... ode of Civil Procedure, 1908. 2. The NTPC filed the said application praying for rejection of the plaint in the suit, being Suit No. 904/2002, instituted by the respondent No. 1-IDBI against Spectrum Power Generation Co. Limited (SPGL for short), Jaya Food Industries Limited (JFIL for short), Mr.M.Krishna Rao (defendant No. 3), National Thermal Power Corporation (for short NTPC) and Spectrum Technologies USA (STUSA for short). The aforesaid suit was filed by the IDBI in its capacity as lead institution representing a consortium of financial institutions, namely, IFCI, LIC, UTI, IIBI, GIC, NIC, NIA, OIC and UII, collectively called as 'the Lenders'. In the said suit, challenge was made to the legality and validity of the compromis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or create any charge on its assets or give any guarantees without the prior approval of the Lead Institution. This provision shall not apply to normal trade guarantees or temporary loans and advances granted to staff or contractors or suppliers in the ordinary course of business or to raising of unsecured loans, overdrafts, cash credit or other facilities from banks in the ordinary course of business. 5. It is also necessary to mention at this stage that the promoters of the SPGL, namely, STUSA, Jaya Food Industries and NTPC, entered into a promoters agreement dated 29th June, 1993 to develop and set up a 208 MW combined cycle gas power project. However, in respect of the aforesaid agreement disputes arose amongst the parties and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Institutions, the same shall be decided on its own merits without being influenced by the fact that the terms of the compromise agreement are taken on record and/or that undertakings are given to and accepted by the Supreme Court. 7. There was another suit filed by STUSA which was registered as Suit No. 765/2001, for restraining SPGL from making any payment to NTPC pursuant to the compromise agreement, wherein the learned Single Judge passed an order dated 21st September, 2001 on the application filed by IDBI seeking to intervene, holding that IDBI has no right to intervene. The said order passed by the learned Single Judge was challenged by filing FAO(OS) No. 518/2001. The Division Bench passed an order dated 22nd March, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Order VII Rule 11 CPC was filed which was rejected by the learned Single Judge holding that there is cause of action for filing the suit. Accordingly the said application was dismissed as against which the present appeal is filed on which we have heard the learned Counsel appearing for the parties and also looked into the records. 9. It was submitted by the counsel for the appellant that so far as the compromise agreement is concerned the Lenders/Financial Institutions have no connection and/or interest as that is a compromise agreement arrived at in a pending suit wherein the Financial Institutions were not even parties. It was also contended that the IDBI has no cause of action against the NTPC, as there is no privity of contract w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties that as a consequence of the aforesaid payment made by the SPGL to the NTPC, the debt equity ratio has reached 84:16 and, Therefore, respondent No. 1-IDBI has become vitally interested in the activities of the SPGL in carrying on their financial activities. It cannot be denied that the respondent No. 1-IDBI on behalf of the consortium of Banks/Financial Institutions now has a vital stake in the SPGL as on the date of the filing of the suit. Investment of different stake holders was in the vicinity of about 700 crores. The contention raised in the suit is also that the payment of the said amount by SPGL to NTPC for non-issuance of 77.7 lac equity shares to NTPC is barred in law as the payment of the said amount by SPGL would ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owners and Parties, Vessel M.V. Fortune Express reported in AIR2006SC1828 ]. 14. It was also held by the Supreme Court in the case of Liverpool and London S.P. I.ASSN. Ltd v. M.V. Sea Success I and Anr. reported in (2004)9SCC512 , that it may be true that order VII Rule 11(a) although authorises the court to reject a plaint on failure on the part of the plaintiff to disclose a cause of action, but the same would not mean that the averments made therein or a document upon which the reliance has been placed although discloses a cause of action, the plaint would be rejected on the ground that such averments are not sufficient to prove the facts stated therein for the purpose of obtaining relief claimed in the suit. By the statute the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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