1 / 50 COS No.02 OF 2016
PRINCIPAL SPECIAL COURT IN THE CADRE OF DISTRICT JUDGE
FOR TRIAL AND DISPOSAL OF COMMERCIAL DISPUTES AT HYDERABAD
*** PRESENT: G. UDAY KUMAR,
JUDGE, PRINCIPAL SPECIAL COURT IN THE CADRE OF DISTRICT JUDGE
FOR TRIAL AND DISPOSAL OF COMMERCIAL DISPUTES AT HYDERABAD
MONDAY THIS THE 27th DAY OF APRIL 2026 COS No 02 OF 2016
BETWEEN:
1M/s. TEJASSARNIKA HYDRO ENERGIES PVT. LTD. a company registered under the Indian Company Act, 1956 and having its Regd. Office: Plot No. 1367, Road No. 45. Jubilee Hills, Hyderabad-500033, Rep. by its authorized signatory, Shri C.Purushotham, S/o. Shri C.Satyanarayana aged 62 years, R/o. H.No. 1-3-183/40/21/46/1, P & T Colony, Gandhi Nagar, Hyderabad-500080.
2M/s. Greenko Budhil Hydro Power Pvt. Ltd. (Formerly known as LANCO Budhil Hydro Power Pvt. Ltd.) a company registered under the Indian Company Act, 1956 and having its Regd. Office at 8-2-293/82/A/1131A, Road No.36, Jubilee Hills, Hyderabad – 500033. Rep. By its authorized Signatory, Shri C.Purushotham, S/o. Shri C.Satyanarayana, age : 62 years, R/o. H.No. 1-3-183/40/21/46/1, P & T Colony, Gandhi Nagar, Hyderabad.
...Plaintiffs
AND
1IDBI Trusteeship Services Ltd., Asian Building, Ground Floor, 17, R Kamni Marg, Ballard Estates, Mumbai - 400001. Rep by its authorized person 2 / 50 COS No.02 OF 2016 2ICICI Bank Ltd., ICICI Tower, Bandra-Kurla Complex, Mumbai- 400051, Rep by its Chief Manager.
3India Infrastructure Finance Company Ltd. (IIFCL) 8th Floor, Hindustan Times Building, 18 & 20, Kasturba Gandhi Marg, New Delhi-110001 Rep., by its authorized person 4Punjab National Bank, Large Corporate Branch, Royala Towers, # 781-785, III Floor, Anna Salai, Chennai - 600002. Rep., by its Deputy General Manager.
5Housing and Urban Development Limited, a company registered under the Companies Act, 2013, having its registered office at "HUDCO Bhawan", India Habitat Centre, Lodhi Road, New Delhi-110003 and having its Regional Office at S.C.O. 132- 133, 1st & 2nd Floor, Sector 34-A, Chandigarh 160022 Rep., by its authorized person
...Defendants
This suit is coming on this day before me for hearing in the presence of Sri S.Malla Rao, Counsel for the Plaintiff and of Sri Sudarshan Reddy, counsel for defendants No.1 and 5 and defendants No.2 to 4 remained exparate and having stood till this day, this court delivered the following:
: J U D G M E N T :
The present suit is filed by plaintiffs against defendants seeking to pass decree in favour of plaintiff by declaring the impugned notice
dated 16.8.2016 which claims that a sum of Rs. 13,15,90,652/- is due
and payable by the Plaintiffs and threatens the sale of the schedule properties, is illegal, malafide, fraudulent, opposed to public policy, collusive, void ab initio, non est, and not binding on the Plaintiffs.
3 / 50 COS No.02 OF 2016
Further seeks injunction restraining Defendants 1 and 5, their agents or any person claiming through or under them, from selling, encumbering, dealing with, or exercising any rights of any nature, including any alleged right of lien, in respect of the schedule properties in any manner.
CASE OF THE PLAINTIFF IN BRIEF:
2.The Plaintiffs No.1 and 2 company’s are registered under the Indian Companies Act, 1956. Originally the plaintiff No.2 was incorporated as LANCO Buddhil Hydro Power Pvt. Ltd., whose name was subsequently changed. Defendant No. 1 is a company registered under the Companies Act, 1956 and is a wholly owned Government of
India enterprise. Defendant Nos. 3 and 5 extended financial assistance for infrastructure and developmental activities, and Defendant Nos. 1, 2, and 4 are banking institutions that provided financial facilities.
2.1It is contended that the Plaintiff No.2 was awarded a contract for the construction of a hydroelectric power project at
Bharmour in the Chamba District of Himachal Pradesh.
2.2.The Plaintiff No.2 states that it approached Defendants 1 to 4 for financial assistance of Rs. 335 crores for implementation of the hydro power project, which was sanctioned at an interest rate of 4 / 50 COS No.02 OF 2016 12.89% per annum, wherein Defendant No. 2 acted as the lead banker.
A Common Agreement dated 13.03.2006 was executed between the
Plaintiff No.2 and Defendants 1 to 4 and the said agreement was novated and amended by a Novation and Amendment Agreement
dated 26.03.2008 and Defendant No. 5 was added as a new lender and
Defendant No. 5 who sanctioned a loan of Rs. 80 crores, out of which the Plaintiff No.2 availed Rs. 68.75 crores by 02.02.2010 and did not draw any further amount.
2.3.It is further contended that Plaintiff No.1 on 01.2.2014 entered into share purchase agreement with erstwhile Lanco Budhil
Hydro Power Pvt. Ltd for takeover of the company for valid consideration and accordingly on 13.3.2006 as per the terms of the share purchase agreement and also security Trustee Agreement, plaintiff No.1 name was mentioned as Pledger of the securities (shares) of plaintiff No.2 amounting to Rs.9,21,55,041/-. Plaintiff No.2 has fully discharged all dues payable to Defendants 1 to 4 and thereafter, the
Plaintiff addressed letters dated 28.07.2014 and 31.07.2014 to all
Defendants intimating foreclosure of the loans availed by plaintiff No.2, particularly as Defendant No. 5 was not agreeable to extending change on the project securities for additional term loans. But upon receiving the notice, as there was no response, the Plaintiff No.2 issued a another letter dated 03.09.2014 to Defendant No. 5 informing that it had cleared the dues of Defendants 1 to 4 and remitted a sum of Rs.
5 / 50 COS No.02 OF 2016 47,56,94,108/- as per its computation to the defendant No.5, and requested waiver of foreclosure charges in line with the lead bank and issuance of a no-dues certificate.
2.4.It is further contended that Defendant No. 5, by letter
dated 23.09.2014, stated that the amount remitted had been credited
subject to appropriation and recalculation of interest as per the agreement upon receipt of information regarding the applicable interest rate from Defendant No. 2. The Plaintiff contends that the remittance was made strictly in accordance with the agreed rate of interest and that Defendant No. 5 failed to disclose the amount due as per its own calculations as on the date of remittance and the claim of interest is illegal, arbitrary, excessive, and contrary to the terms of the agreement. Further contended that inspite of full discharge of its liability, Defendant No. 5 had refused to issue a no-dues certificate.
2.5.It is submitted that correspondence exchanged between
Lanco Budhil Hydro Power Private Limited and Defendant No. 5 regarding takeover of the company and the rate of interest at 14.65% from 31.03.2009 was informed by Lanco Budhil Hydro Power Private
Limited to defendant No.5, is denied as incorrect and not binding on the Plaintiff No.2, as the said company lacks authority to make such representations without the Plaintiff’s consent.
6 / 50 COS No.02 OF 2016 2.6.It is further contended that that Defendant No. 5 got issued notices dated 12.06.2015, 16.10.2015, and 31.05.2016 alleging that there was due of Rs. 10,95,52,012/- as on 31.12.2015 and Rs.
86,58,000/- towards prepayment charges. Defendant No.5 disputed the payment of Rs. 47,56,94,018/- remitted by the Plaintiff towards full and final settlement. Plaintiff No.2 contend that the Plaintiff No.2 never offered to settle the dues at 14.65% rate of interest per annum.
2.7.it is further submitted that the Plaintiff No. 2 has discharged all dues of the Defendants, therefore the defendants have no rights over the securities held by Defendant No. 1 (IDBI Bank), and are not entitled to retain them as the Plaintiffs are lawfully entitled to their return. Defendants 1 to 4 do not claim any outstanding dues.
The actions of Defendants 1 and 5 are alleged to be malafide, baseless, and contrary to their duties. Despite repeated requests, Defendant No.
1 has failed to return the securities without cause, compelling Plaintiff
No. 2 to file Suit O.S. Sr. No. 20 of 2016 before the 24th Additional Chief
Judge (Commercial Court), City Civil Court, Hyderabad on 09-08-2016
for return of documents and injunction.
2.8.It is further contended that Defendant No. 1 issued a notice dated 16-08-2016 under Section 176 of the Contract Act demanding Rs. 12,29,32,652/- towards loan dues and Rs. 86,58,000/- towards prepayment charges, and threatening sale of the Plaintiffs’ 7 / 50 COS No.02 OF 2016 shares. The Plaintiffs contend that the demand of Rs. 13,15,90,652/- is illegal, malafide, void, and not binding, as all dues of Defendant No. 1 have been fully discharged and no rights survive under the agreements
dated 13-03-2008 and 26-03-2006. The notice is alleged to have been
issued without authority and in collusion with Defendant No. 5 to enforce its disputed claims, which Defendant No. 1 has no right to assert in the absence of subrogation, particularly when such claims are sub-judice. It is further contended that Section 176 has been wrongly invoked, as no lien or pledge subsists, no default has occurred, and the alleged default is fabricated. The continued retention of the Plaintiffs’ securities is unlawful and aimed at unjust enrichment. Accordingly, the notice is liable to be declared illegal and unenforceable. Hence prayed to declare the impugned notice dated 16.8.2016 as illegal, void ab initio and not binding on the plaintiffs.
2.9.Defendant No.5 filed written statement. In its written statement denied most of allegations of the plaint and contended that the present suit is filed by suppressing the material facts. Outstanding dues under the Recall Notice dated 16.10.2015 remain unpaid, including amounts aggregating to Rs. 12,29,32,652/- as on 31.08.2016 along with prepayment charges of Rs. 86,58,000/- and applicable taxes.
2.10. It is further submitted that this court lacks jurisdiction to entertain the suit in view of the statutory framework under the 8 / 50 COS No.02 OF 2016
Companies Act, 2013, SEBI Act, 1992, Depositories Act, 1996, and SEBI (Depositories and Participants) Regulations, 1996, which bar civil court jurisdiction over matters concerning pledged securities. It is submitted that the loan facilities were secured by pledge of 9,21,55,041 equity shares by Tejassarnika Hydro Energies Pvt. Ltd.(P1) in favour of
Defendant No. 1–Security Trustee, pursuant to agreements dated 14.07.2014, along with a power of attorney and a non-disposal undertaking executed by the borrower and sponsor, whereby the pledged shares were charged towards repayment of the loan. The
Security Trustee was authorised, upon default, to sell the shares and appropriate proceeds towards dues. It is further submitted that the
Plaintiff No.2 committed defaults in repayment, leading to recall of dues under Notice dated 16.10.2015 and issuance of notice under
Section 176 of the Indian Contract Act, 1872 on 16.08.2016 for enforcement of security by sale of pledged shares after due notice. It is stated that in view of admitted default and subsisting outstanding liability, there exist no grounds for the Plaintiff to seek injunctive relief, and the present proceedings are misconceived, not maintainable, and liable to be dismissed.
3.That Defendant submits that the Plaintiff was in fact originally incorporated as Lanco Green Power Private Limited, under which name financial assistance was sanctioned, and the change of name to LANCO Budhil Hydro Power Private Limited was effected later 9 / 50 COS No.02 OF 2016 by Certificate of Incorporation dated 06.08.2010. It is further submitted that upon issuance of the Recall Notice dated 16.10.2015 and receipt of reply dated 07.11.2015, this Defendant became aware of changes in name. Under the financing documents the borrower was required to maintain corporate existence and not alter control or enter into agreements affecting the project without lender approval, and that any transfer of rights or obligations without prior consent of lenders constituted breach, while also clarifying that upon change of control, obligations of the company continue to bind its successors as expressly contemplated under the Common Agreement dated 13.03.2006.
3.1. It is submitted that a loan of Rs. 80 crores was sanctioned under the HUDCO Scheme for the 70 MW Budhil Hydro Electric Project to Greenko Budhil Hydro Power Pvt. Ltd. (formerly LANCO Budhil Hydro
Power Pvt. Ltd.) under a consortium arrangement with ICICI Bank Ltd.
as lead, along with other lenders, and HUDCO was subsequently inducted as a lender through the Novation and Amendment
Agreement dated 26.03.2008, whereby all rights, obligations, and securities stood duly transferred and reaffirmed among parties, including the Security Trustee arrangement, with the borrower agreeing to be bound as originally contemplated under the financing documents and subsequent novation agreements.
10 / 50 COS No.02 OF 2016 3.2. It is further submitted that the applicable rate of interest is governed by the amended loan documents, including the amendment dated 14.06.2011 stipulating that interest shall be the highest rate under HUDCO Government Sector Schemes plus 0.50% of the consortium leader’s rate or as per prevailing HUDCO norms, whichever is higher. It is further submitted that the Plaintiff failed to repay the installments of principal and interest as they fell due and committed defaults under the loan documents, thereby entitling
Defendant No. 5 to issue Recall Notice dated 16.10.2015 demanding Rs.
10,48,72,011/- as on 30.09.2015 along with interest and other dues, including prepayment charges of Rs. 86,58,000/- and applicable taxes, in accordance with the contractual terms.
3.3.It is further submitted that as per the contractual provisions governing prepayment premium, including the definition of “Balance Due Amount” and “Outstanding Due Amount,” the computation is strictly formula-based and required clarification from the lead lender, and accordingly repeated communications were issued to Defendant No. 2 and the Plaintiff on 20.08.2014 and 01.09.2014, calling for details of applicable interest rates.It is clarified that by letters
dated 23.09.2014 and 10.11.2014, the Defendant informed the Plaintiffs
that the remittance was subject to appropriation and final determination of interest and prepayment charges as per agreement, and issuance of No Dues Certificate would be considered only upon 11 / 50 COS No.02 OF 2016 receipt of full outstanding amounts. It is further submitted that under the amended loan terms dated 14.06.2011, the applicable interest rate was the higher of HUDCO Government Scheme rate plus 0.50% or the consortium leader’s rate, and repeated correspondence was exchanged with the lead lender and Plaintiff to ascertain the correct rate, but no conclusive or consistent disclosure was provided, with discrepancies also noted between audited financial statements and representations regarding applicable interest rates.
3.4.That Defendant submits substantial outstanding dues remain payable, with the pledged shares continuing as security. It was clarified that the amount of Rs. 47,56,94,018/- paid by the Plaintiff was only a part prepayment and not full and final settlement, with the outstanding dues of Rs. 10,48,72,011/- as on 30.09.2015 along with prepayment charges and applicable taxes remaining payable. It is submitted that upon continued default by the Plaintiff No.2 in repayment of principal, interest, and other dues, the account was classified as NPA on 30.05.2015, and thereafter the loan was validly recalled vide notice dated 16.10.2015 demanding Rs. 10,48,72,011/- as on 30.09.2015 along with prepayment charges of Rs. 86,58,000/- and applicable taxes, and further interest and penal interest as per agreement. It is further submitted that multiple communications were issued prior to and after recall, including demand notice dated 12.06.2015 and legal notice dated 31.05.2016, and enforcement action 12 / 50 COS No.02 OF 2016 under Section 176 of the Indian Contract Act was initiated on 16.08.2016 for sale of pledged shares due to continued default. It is submitted that the securities were created for all lenders including
Defendant No. 5, and that the Defendant is fully entitled to enforce its security rights under the pledge, power of attorney, and non-disposal undertaking executed on 14.07.2014. It is further submitted that
Defendant No. 1, as Security Trustee, is lawfully entitled to retain and enforce the pledged shares until full discharge of dues. Accordingly, the
Plaintiff’s suit is misconceived, based on false and fabricated averments, and liable to be dismissed with costs.
4.Adoption memo was filed by defendant No.1 to adopt the written statement filed by defendant No.5. Defendant No.2 and 4 remained exparate.
5.The defendant No.3 filed written statement by contending that Plaintiff has instituted the present suit seeking reliefs against
Defendant No. 1.Defendant No. 3 admitted that Plaintiff had prepaid the loan and accordingly Defendant No. 3 issued NOC No. 5200 dated 21.10.2014 confirming full and final settlement of the loan, consequent to which the rights and obligations of Defendant No. 3 against the
Plaintiff in respect of the said loan stand extinguished. It is further submitted that as averred in paragraph H of the plaint, Defendant No.
3 has been arrayed only as a proper and necessary party and no 13 / 50 COS No.02 OF 2016 substantive relief has been sought against it.Accordingly, Defendant
No. 3 submits that the suit, insofar as it relates to it, is liable to be disposed of with appropriate costs in the interest of justice.
6.Basing on the pleadings, the following issues are framed by this court.
1.Whether the plaintiff is entitled for declaration for that notice dated 16.8.2016 void and not binding on the plaintiffs ?
2. Whether the plaintiff is entitled for injunction as prayed for ?
3.To what relief ?
7.PW1 was examined on behalf of plaintiff and got Ex.A1 to
A25 marked . On perusal of the record and docket proceedings, it is found that Ex.A1 to Ex.A23 were actually marked through PW1 and
Ex.A25 was marked through DW1 during cross examination. It is found that number Ex.A24 was not given to any document. It appears that due to oversight learned Advocate Commissioner while recording cross examination of DW1 had given Ex.A25 to the document confronted to the witness instead of marking it as Ex.A24. Thus there is no document under Ex.A24. In other words, it can be said that the plaintiff relied on total 24 documents only in support of his case i.e., Ex.A1 to Ex.A23 and
Ex.A25. DW1 and DW2 were examined on behalf of defendants and got
Ex.B1 to Ex.B65. I have perused all the documents carefully and all the 14 / 50 COS No.02 OF 2016 relevant documents for the purpose of deciding this matter are taken into consideration.
8Heard arguments. Learned counsel for the plaintiff and defendant filed written arguments and citations. Perused the record, written arguments and citations.
Jurisdiction:
9. Since the defendants raised objection on the jurisdiction issue it is relevant here to discuss first the aspect of maintainability of the suit before this court, on the point of jurisdiction.
9.1.The defendant No.1 and 5 argued that the civil court has no jurisdiction to entertain this suit for the reason that it is DRT which is competent to decide the claims of the financial institutions since defendant No.5 lent loan amount to plaintiff No.2 It is further argued that the dispute raised in the suit is not a commercial dispute hence
Commercial Court has no jurisdiction.
9.2.Whereas the argument of the plaintiffs is that the suit is very much maintainable before the civil court since the same is filed by the borrower (plaintiff No.2) and that it would be the financial institution who can file case application before the DRT. The dispute is 15 / 50 COS No.02 OF 2016 very much a commercial dispute between the two commercial entities and that the dispute relates to the agreements relating to commercial loan and rate of interest chargeable, therefore Commercial court is having jurisdiction to decide this suit. It is further argued that the defendants have not raised their objection in the written statement and that for the first time at the time of arguments this objection was raised by the learned counsel for the defendants. The learned counsel for the plaintiff by placing reliance on the judgment Hon’ble Supreme
Court in Bank of Rajasthan v. VCK Shares & Stocks Broking Services
Ltd would argue that the plaintiffs are entitled to file this suit before the civil court. By relying on the judgment of Hon’ble Delhi High court in Mrs.Meena Vohra vs Master Hosts Pvt Ltd & Others ( reported in 2025 Supreme court (online) (Del) 3101), the learned counsel for plaintiff argued that ordinary transaction involving merchants, bankers, financiers and traders relating to mercantile documents are covered under sec.2 (1) (c) (i) of the Court Act. I have gone through the cited judgments.
9.3.As could be seen from the record the plaintiffs are registered companies, whereas the Defendants are financial institutions who lent loan to the plaintiff No.2 company under mercantile agreement. Perusal of the evidence on record and pleadings of the parties make it clear that the dispute raised by the plaintiffs is a commercial dispute therefore this court is competent to try this matter.
16 / 50 COS No.02 OF 2016 9.4.Further the Hon’ble Supreme court in Bank of Rajasthan v.
VCK Shares & Stocks Broking Services Ltd, (2022 SCC On Line SC 1557,
decided on 10.11.2022) while dealing with the issue relating to the legal right of the borrower to initiate proceedings before a Civil Court against the bank or financial institution, which seeks to recover a loan amount against it, has held that the RDB Act does not oust the jurisdiction of civil courts concerning suits filed by borrowers against banks or financial institutions. Specifically, the Hon’ble court affirmed that while banks can initiate debt recovery proceedings exclusively
before the DRT, borrowers retain the right to file independent civil suits
in civil courts. It is further held that, the jurisdiction of a Civil Court to try a suit filed by a borrower against a Bank or Financial Institution is not ousted by virtue of the scheme of the Recovery of Debts due to
Banks and Financial Institutions Act, 1993 (RDB Act) in relation to the proceedings for recovery of debt by a Bank or Financial Institution. It is further held that an independent suit filed by the borrower against the bank or financial institution cannot be transferred to be tried along with application under the RDB Act, as it is a matter of option of the defendant in the claim under the RDB Act. However, the proceedings under the RDB Act will not be impeded in any manner by filing of a separate suit before the Civil Court.
9.5.There is no provision in the RDB Act by which the remedy of a civil suit by a defendant in a claim by the bank is ousted, but it is 17 / 50 COS No.02 OF 2016 the matter of choice of that defendant. Such a defendant may file a counterclaim, or may be desirous of availing of the more strenuous procedure established under the Code. While the RDB Act was amended from time to time, the Legislature did not, at any stage, make any further amendment for excluding the jurisdiction of the Civil
Court in respect of a claim of a defendant in such a proceeding being filed along with the suit.
9.6.In case of such an option exercised by the defendant who filed an independent suit, whatever be the nature of reliefs, the claim petition under the RDB Act would continue to proceed expeditiously in terms of the procedure established therein to come to a conclusion whether a debt is due to a bank and/or financial institution and whether a recovery certificate ought to be issued in that behalf.
9.7.While only banks and financial institutions can initiate original recovery applications (OA) against borrowers before the Debt
Recovery Tribunal under the RDB Act, 1993, borrowers are not totally barred from legal recourse. Borrowers can file a counter-claim, set-off, or appeal to the DRT against Hon’ble Debt Recovery Tribunal decisions, and they retain the right to file independent suits in Civil Courts.
Borrowers cannot file an original case (suit) against a bank in the DRT to recover their own claims.
18 / 50 COS No.02 OF 2016 9.8.In view of the above legal position and discussion the argument of the defendants that this court has no jurisdiction to try this matter and that the suit is not maintainable before the commercial court is not tenable.
Now the issue No.1 may be taken up for discussion as under.
10. Issue no.1:
Whether the plaintiffs are entitled to for declaration that notice dated 16-8-
2016(Ex.B6) is illegal, void and not binding on the plaintiffs ?
The plaintiff states that the Ex.B6 notice is illegal, void and not binding on the plaintiffs. Then it is necessary to examine as to what does the Ex.B6 contain and state.
10.1.Ex.B6 was addressed by the defendant No.1 to the plaintiff
No.1. In this letter, the defendant No.1 informs the Plaintiff No.1 that the borrower/Plaintiff No.2 failed and neglected to pay installments of
principal and interest which fell due on different dates in respect of the
defendant No.5’s loan. There was a due of Rs.12,29,32,652/- out standing as on 31-8-2016 payable with interest at the contractual/agreed rate as per the particulars given in Annexure-II. In addition to the above, prepayment charges of Rs.86,58,000/- along with prevailing services Tax were also payable. Additional interest at the rate of 3% on the over due amount of the loan and other money was asked 19 / 50 COS No.02 OF 2016 to pay. It was further informed in the said letter that the actual amount of dues would be worked out at the time of payment. The copy, providing particulars of the amount defaulted and total payable, supplied by the defendant No.5 was also enclosed to this letter as
Annexure-I. Further the defendant No.1 demanded the Plaintiff No.1 to make payment of the dues with interest at the contractual agreed rate till the payment and redeem the pledge securities within a period 15 days from the date of the notice. Otherwise it is stated that the defendant No.1 would proceed to sell the shares under pledge by the plaintiff No.1.
10.2.According to the plaintiffs, this letter dated 16-8-2016/Ex.B6 is illegal, void and not binding on the plaintiff. The reasons why the above letter is illegal and void is pleaded in Para K of the plaint. Plaintiffs in the plaint state that (1) there were no dues payable to defendant No.1 as entire dues of defendant No.1 was discharged therefore defendant No.1 has no subsisting rights under the agreement dated 13-3-2006 and 26-3-2008 to make the above demand in the above manner. (2) defendant No.1 issued this notice without any right or authority. (3) defendant No.1 has no rights to demand or make such claims for and on behalf of defendant No.5. (4) dues claimed by defendant No.1 on behalf of defendant No.5 were disputed. (5) defendant No.1 misinterpreted and misconstrued the principles, concept and purpose of 176 of ICA and that the defendant 20 / 50 COS No.02 OF 2016
No.1 and defendant No.5 have no right to invoke the provision of 176 of ICA (6) there is no right or lien subsisting or enforceable in favour of defendant No.1 and defendant No.5 and that the defendant No.1 is illegally withholding the properties of the plaintiff No.1.
10.3.After going through the pleadings and evidence of the parties it is understood that the plaintiffs are challenging the legal notice under Ex.B6 on two aspects. First one is that the amounts claimed in the legal notice are baseless, illegal, fabricated to get unjust enrichment at the cost of Plaintiff No.2. The rate of interest being demanded by defendant No.5 is illegal and against the contract. The second aspect is that the defendant No.1 has no right or authority to issue such notice and also to claim the securities under schedule property furnished by the Plaintiff No.1.The defendant No.1 cannot claim rights over the securities on behalf of the defendant No.5. The defendant No.5 has no rights over the securities furnished by the
Plaintiff No.1. Therefore this court is required to examine the issue from the point of view of the above two aspects and has to evaluate the evidence on record.
10.4.The argument of the learned counsel for the plaintiffs is that as per the loan agreement the defendant No.5 can charge interest only at the rate of 12.89 and not 14.65 pa. The Plaintiff No.2 has discharged the entire outstanding payable to Defendant No 5.No loan 21 / 50 COS No.02 OF 2016 document, including the sanction letter (Ex B-12) shows rate of interest
as 14.65%. No document is filed to show that rate of interest was
charged more than 12.89% per annum. It is further argued that even as per Ex. B-15 the rate of interest which Defendant No. 5 is entitled to is less than 12%. He would further argue that exhibits B-52 and Ex. 53 being Xerox copies are inadmissible in evidence. Ex. B52, Ex. B-53 are fabricated documents. It is submitted that even the witnesses examined by Defendant No. 5 failed to prove these documents also.
Exhibit B-52 and Ex. 53 are untrustworthy documents. These are not part of the loan documents. No competent witnesses are examined by
Defendant No. 5 to prove their claim. It is further argued that the defendant No.5 even failed to file a calculation memo in support of the claim of outstanding amount. The submission made by the defendant
No.5 are not supported by evidence. It is further argued that if the defendant No.5 has information in 2011 itself then what was the necessity to address Ex.B36 to 43 to Defendant No.2 to furnish rate of interest. He finally submitted that the defendant No.5 cannot calculate loan dues basing on rate of interest at 14.65%.
10.5.Whereas the argument of the learned counsel for the
Defendant no.5 is that, through its letter dated 23.09.2014/Ex.B47, it informed the Plaintiff No. 2 that the amount remitted was subject to appropriation and application of the interest rate as per the agreement, pending receipt of correct information regarding the rate 22 / 50 COS No.02 OF 2016 charged by the lead lender, ICICI Bank, and further clarified that the final amount due, including prepayment charges, remained payable and that issuance of a No Dues Certificate would be considered only upon full settlement of all dues. Subsequently, by letter dated 10.11.2014/Ex.B48, it is stated that although Plaintiff No. 2 had made a part-payment of Rs. 47,56,94,018/- towards foreclosure, the issue of issuance of NOC for stake sale would arise only after payment of the remaining dues.
10.6.It is further argued by counsel for defendant that, as per the HUDCO Amendment dated 14.06.2011, the applicable rate would be the higher of HUDCO’s Government Sector Scheme rate plus 0.50% or the consortium leader’s rate, subject to prevailing financial norms. It is further argued that multiple communications were made with
Plaintiff No. 2 and ICICI (defendant No.2) Bank to ascertain the correct interest rate, but accurate information was not provided. According to defendant No.5 discrepancies were observed between the rates communicated and those reflected in audited accounts, which indicated higher rates such as 14.65% p.a. and 14.09% p.a. for relevant financial years, with no disclosures for earlier years.
10.7.It is further argued that in the audited accounts of Lanco
Budhil Hydro Power Private Limited for the financial year 2011-2012 received at HUDCO Chandighar office on 28.10.2013/Ex.B52 it was 23 / 50 COS No.02 OF 2016 indicated that Indian Rupee term loan from ICICI Bank limited, Mumbai carries interest at 14.65% P.A. Whereas in the audited account for the financial year 2012-2013 it was indicated that Indian Rupee term loan from banks and financial institutions carries weighted average interest rate as 14.09% P.A. But there was no such disclosure in the audited accounts of borrower with regard to the rate of interest charged by
ICICI Bank for the financial year 2009-2010 and 2010-2011.
10.8It is submitted that the issue of interest rate was consistently raised in consortium meetings and correspondence, emphasizing that if the lead lender’s rate was higher, it would apply retrospectively along with additional components such as compound and penal interest, rendering the plaintiff liable for outstanding dues as per the recall notice. The further argument of the defendant is that
Plaintiff No. 2, by letter dated 09.02.2015/Ex.B53, sought intimation of the differential amount based on an interest rate of 14.65% p.a. from 31.03.2009 for closure of the account, which was approved along with prepayment charges at 2%, and communicated via letter dated 07.04.2015. However, despite reminders, payment was not made, leading to an event of default, upon which Defendant No. 5 recalled the entire loan through notice dated 16.10.2015, making Plaintiff No. 2 liable to pay Rs. 10,48,72,011.00 as on 30.09.2015, along with applicable interest, other charges, service tax, and prepayment charges of Rs. 86,58,000./- 24 / 50 COS No.02 OF 2016 10.9. On a careful examination of the evidence adduced by both parties it could be seen that the dispute between the plaintiffs and defendant No. 5 is with regard to the rate of interest payable by the plaintiff No.2 on the outstanding loan amount. The evidence further reveals that the plaintiff No.2 and the defendant No.5 are referring to different rates of interest to be calculated.
10.10.By senior rupee loan facility amendment agreements
dated 14.05.2007 (Ex.B14) and dated 31.5.2007 Punjab National Bank
and IIFCL (India Infrastructure Finance Company Limited) were novated to the original common agreement dated 13.03.2006 (Ex.B11). The defendant No.2 the earlier and lead lender was replaced with new lender defendant No.5. The new lender i.e., defendant No.5 agreed to extend financial assistance to the borrower/plaintiff No.2 on the same terms and conditions contained in the senior Rupee loan facility agreement dated 13.03.2006/Ex.B11. As per schedule II of Ex.B15 the rate of interest was shown as 11% of floating interest per annum plus applicable interest, tax are other statutory levy if any, or common/highest rate of interest charged by any of the parties which ever is more. It is further mentioned that the rate of interest shall be as per the prevailing financial forms of HUDCO/defendant No.5 at the time of release of funds. As per the amendment to the loan documents
dated 14-6-2011/Ex.B22 the rate of interest for the loan would be
highest rate leviable for HUDCO’s government sector schemes plus 25 / 50 COS No.02 OF 2016 0.50 percent or the rate of interest of the consortium lender (defendant
No.2) whichever is higher. Further the rate of interest shall be as per the prevailing financial norms of HUDCO/defendant No.5 at any point of time. Inter creditor accession and amendment agreement among the defendants No.1 to 4 was entered on 26.3.2008/Ex.B19.
10.11.As could be seen from the evidence,the defendant No.5 has not produced any document issued by the Defendant No.2/ICICI bank from time to time to show the rate of interest being more than the rate of interest chargeable as per the norms of the
HUDCO/Defendant No.5 or to show that the rate of interest being 14.65% per annum. After examining the evidence on record and on hearing both side arguments it becomes clear that the basis for claiming interest at the rate of 14.65% pa by defendant No.5 is that
Ex.B52,53 and Ex.B65. Ex.B52 is a letter said to have been written by
LANCO/Plaintiff No.2 to the Defendant No.5 with enclosed audit reports. Ex.B53 is letter purported to have been addressed by Plaintiff
No.2 to the Defendant No.5 asking to intimate the differential amount payable by Plaintiff No.2 considering the rate of interest 14.65% per annum from 31-3-2009 to settle and close the account. Ex.B65 is statement of account of Plaintiff No.2. All these three documents are disputed and denied by the plaintiff No.2.The argument of the counsel 26 / 50 COS No.02 OF 2016 for the plaintiff is that the audited accounts claimed in Ex.B51 and B52 are manipulated and created by HUDCO in collusion with third party.
10.12.It is necessary to examine these three documents in detail since the defendant No.5 relied heavily on these documents in support of its contention. The Ex.A52 consists of statements of audit reports of
Plaintiff No.2. As per the audited accounts of Plaintiff No.2 for the FY 2011-12 received at defendant No.5’s Chandighar office on 28-10-2013 it is indicated that Indian rupee term loan from ICICI bank Mumbai carries interest at 14.65% per annum. In the audited accounts for the
FY 2012-2013 it was shown that Indian rupee term loan from Banks and financial institutions carries weighted average interest rates as 14.09% pa.
10.13.It is argued that Ex.B52 the letter addressed by defendant
No.5 to Plaintiff No.2 is a copy and Sec.65 B of Evidence Act certificate was not enclosed. This document was not confronted to the PW1. Even as per this document, the defendant No.5 can claim rate of interest asper their norms and not otherwise. But the defendant No.5 has not disclosed their norms of lending nor the rate of interest either in written statement or in their oral evidence. It is argued that the defendant no.5 is neither certain nor aware of the rate of interest. It is further argued that adverse inference has to be drawn against 27 / 50 COS No.02 OF 2016 defendant No.5 for non disclosure and non production of rate of interest. It is further argued that defendant No.5 cannot dispute or question the rate of interest communicated by ICICI bank vide emails
date 7-2-2014/Ex.B50 and 21-5-2014/Ex.B51 wherein it is stated that
pursuant to the interest reset on june1 2012 for Lanco Budhil Hydro
Power project Pvt ltd the applicable lending rate is 12.89% pa in line with the change in aggregate of 1 Bar and 3 years term premia by 1.50% from June 2009 to the corresponding June 2012 period. It is further argued that if the defendant No.5 has information in 2011 itself then what was the necessity to address Ex.B36 to 43 to defendant No.2 asking to furnish rate of interest. Defendant No.5 claimed to have addressed numerous correspondence to ICICI Bank. The information furnished by defendant No.2 shall prevail since it was in terms of the loan documents. The claim of interest at 14.65% is untenable and contrary to the loan documents. The learned counsel for the plaintiff would argue that the defendant No.5 in written statement claimed that they are claiming interest as per the defendant No.2 lending rate or in alternative Defendant No.5 rate of interest. But now the Defendant
No.5 is calculating rate of interest basing on letters under Ex.B52 and
B53 which is not permissible. Both documents are created one. Both letters are purported to be addressed by erstwhile LANCO and not by the plaintiff.
28 / 50 COS No.02 OF 2016 10.14The learned counsel for the plaintiff cited the judgment of
Hon’ble Supreme Court between K.N.Wanchoo J and G.K.Mitter J
(reported in AIR 1967 Supreme court 1058), in support of his argument that Ex.B52 and Ex.B65 are not sufficient to prove the claim of the defendant No.5. I have gone through the cited Judgments wherein the
Hon’ble Supreme Court observed that;
“Entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability”.
“There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them”.
10.15.Coming to Ex.B52,DW2 states that the rate of interest is based on the attached audit report and balance sheet to Ex.B52. He denied the suggestion that the audit report attached to Ex.B52 is not authenticated. Ex.B52 is an email dated 28-10-2013 purported to be 29 / 50 COS No.02 OF 2016 addressed by the then Lanco Budhil to defendant No.5. As per the audited report attached to Ex.B52, accounts of Plaintiff No.2 for the FY 2011-12 received at Defendant No.5’s Chandighar office on 28-10-2013 indicate that Indian rupee term loan from ICICI bank Mumbai carries interest at 14.65% per annum. In the audited accounts for the FY 2012- 2013 received at defendant No.5’s Chandighar office dated 28-10-2013 it was shown that Indian rupee term loan from Banks and financial institutions carries weighted average interest rates as 14.09% pa. This is basis to defendant No.5 to claim rate of interest as 14.65%.
Regarding the Ex.B52, DW1 states that he is not aware whether he has taken permission from Lanco Budhil HPP Ltd. for filing of Ex.B52 before the court. It is a photo copy attested by officials of defendant No.5.
DW1 states that Ex.B52 contains the seal of defendant No.5 office not of the plaintiff No.2. However as could be seen the attested photo copy of Ex.B52 it was marked and there appears no objection from the other side at the time of marking. The contents of Ex.B52 are denied.
Evidently none is examined either from the erstwhile LANCO Budhil company nor from the authorities of defendant No.2 lead lender to prove that they received audit report which shows rate of interest at 14.65%. DW1 states that defendant No.5 issued 14 letters to defendant
No.2 to disclose the method and mode of calculation of interest made by defendant No.2. There appears some force in the argument of the
Plaintiff No.2 that had the enclosure of Ex.B52 was available with defendant No.5, then what was the necessity to defendant No.5 to seek 30 / 50 COS No.02 OF 2016 information from defendant No.2 seeking clarification of the rate of interest. DW2 admits that Ex.B52 is not part of the loan document.
10.16.Ex.B53 is dated 9-2-2015. Ex.B53 is letter addressed by
LANCO Budhil to defendant No.5.DW1 admits that the entire dispute between the defendant No.5 and Plaintiff No.2 pertains to the differential rate of interest and DW1 and DW2 state that their entire claim is based on Ex.B53. The Plaintiff No.2 denied to have addressed this letter/Ex.B53 and disputed this document. DW1 expressed his ignorance as to who signed on Ex.B53. He states that he cannot say the mode of receipt of Ex.B53 and even he does not know the date of
Ex.B53. He states that he does not know who had issued Ex.B53 and the role of such person in Plaintiff No.2 company and his authority to issue such letter. DW1 admits that Ex.B53 was not original and it is a copy. DW1 failed to give answer to the question as to where the original of Ex.B53 was. DW1 admits that Ex.B53 does not contain the address of Plaintiff No.2. Thus the evidence of DW1 and DW2 is not sufficient to prove that Ex.B53 was addressed by either Plaintiff No.2 or its erstwhile LANCO company to defendant No.5.
10.17.Coming to Ex.B65, DW2 admits that Ex.B65 is not certified one. DW2 states that as per Ex.B65 the rate of interest varies between 12% to 14.65% at different dates. DW2 admits that Ex.B65 was rectified later to claim the interest @ 14.65% per annum though the interest was 31 / 50 COS No.02 OF 2016 calculated lesser than that percentage till 01.3.2015. He states that
Ex.B65 was rectified on 28-2-2015. DW2 admits that all corrections, amendments, changes in the accounts of the plaintiff were made by the defendant No.5 in pursuance of Ex.B52 and letter dated 9-2-2015/Ex.B53 subsequent to the payments made by Plaintiff No.2.
Ex.B65 contains the accounts till 30-11-2015 and it was generated in 2020. It is argued that defendant no.5 addressed Ex.B65 letter to erstwhile LANCO company when the same was taken over by the
Plaintiff No.2. There is no answer from the defendant as to why letter was not addressed to Plaintiff No.2. No witness of erstwhile LANCo company is examined to prove Ex.B65. Thus as per the evidence of own witness of defendant No.5 the Ex.B65 statement was rectified and corrected subsequently, therefore no reliance can be placed on the same.
10.18.It is argued that the defendant No.5 can claim only interest at the rate of 12.89% pa and not 14.65%. As could be seen DW1 in his cross examination admits that as per norms and rules they would send demand notice or intimation notice for the amounts due by the customer including the plaintiffs. But coming to the present customer’s case, the DW1 expressed his ignorance about sending of such information to Plaintiff No.2. Ex.B12 is letter of offer and it is part and parcel of the contract between the plaintiff and defendant No.5 and
DW1 states that both parties are bound by the terms and conditions of 32 / 50 COS No.02 OF 2016
Ex.B12. DW1 expressed his ignorance about the lending rate of interest charged by defendant No.5 in this case. He states that to his memory the defendant No.5 charges floating rate of interest of 11.6% to 13%.
DW1 admits that the amended agreement dated 14-6-2011 does not provide the rate of interest as 14.65%. DW2 admits that they are entitled for the interest as per the loan documents and sanction order.
Defendant No.5 did not claim interest chargeable either as per ICICI lending rate or defendant No.5 lending rate which is 11%. Defendant
No.5 is bound to produce evidence as to the rate of interest being paid by the Plaintiff No.2 till discharge. As per Ex.B15 the interest chargeable by defendant No.5 is 11.00% floating P.a. plus applicable interest tax or other statutory levy if any or highest rate of interest chargeable by any parties which is more. Whereas Defendant No.5 rate of interest shall be as per prevailing financing norms of HUDCO at the time of release of funds. As per lead lender of the consortium the rate of interest is 12% only. The amount claimed by Defendant No.5 is not based on the rate of interest provided by loan agreement. The defendant No.5 is claiming rate of interest as 14.65 basing on Ex.B52 and 53. Defendant No.5 has not led any evidence to show as to what was the financial norms of defendant No.5 at any given point of time. There is no evidence on record to show that the consortium has charged or claimed interest at the rate of 14.65% pa. The only document on the basis of which the rate of interest claimed at 14.65% pa is exhibit B53 which could not be relied upon.
33 / 50 COS No.02 OF 2016 10.19.In view of the above discussion this court is of the opinion that the plaintiff could raise doubts on the validity of the claim at the rate of 14.65% interest per annum and could probabilize the contention that the outstanding amount which was calculated basing on the interest @ 14.65% may not be valid, without basis and against the contract.
10.20.Coming to the aspect of the rights and authority of the defendant No.1 to issue notice and to claim rights over the securities furnished by the plaintiff No.1, on perusal of the material on record it is found that the plaintiff No.2 approached the defendant No.1 to defendant No.4 the financial institutions for financial assistance.
Defendant No.1 to defendant No.4 sanctioned loan of Rs.335 crores to the plaintiff No.2 Greenko Budhil Hydro Power private Ltd. for execution of construction of Hydro Electric Power project at Bharmour in Chamba District of HP in the year 2006. In the above financial assistance the defendant No.2/ICICI bank was lead banker. A common agreement between the plaintiff No.2 and defendant no.1 to 4 was entered into on 13-3-2006 which is Ex.A5. This is not in dispute.
Subsequently at the request of the plaintiff No.2, the defendant No.5 in consortium with ICICI/defendant No.2, Punjab National
Bank/defendant No.3, India Infrastructure Finance company Ltd (IIFCL)/defendant No.4 sanctioned loan of Rs.80 crores to the plaintiff
No.2. This could be seen from Ex.B12.Thus defendant No.5 was added 34 / 50 COS No.02 OF 2016 as new lender. The borrower/Plaintiff No.2, defendant No.2 as a senior lender and facility agent, the defendant No.1/ as security trustee, defendant No.3, defendant No.4 and defendant No.5/new lender entered into a common agreement by novation on 26.3.2008. This agreement is marked as Ex.A6. In view of the above agreement dated 26-3-2008, the defendant No.5 released loan of Rs.68.75 crores on 02- 02-2010. Though loan of Rs. 80 crores was sanctioned, the loan was curtailed to the extent of Rs.68.75 crores as per Ex.B25. There is no dispute regarding the factum of availing loan of Rs.68.75 crores by the plaintiff No.2.
10.21.The plaintiff No.2 cleared the loan obtained from defendant No.1 to defendant No.4. This fact also is not in dispute. Then why the defendant No.1 was made as party and what is its role are the questions that creep in mind. To know this, it is relevant here to refer to the novation agreement dated 26-3-2008/Ex.B13, Senior Rupee Loan facility Agreement dated 13-3-2006/Ex.B14, Senior Rupee loan facility amendment agreement dated 26-3-2008/ Ex.B15, Facility Agent
Agreement dated 31-5-2007/ Ex.B16, Facility Agent Amendment
Agreement dated 26-3-2008/Ex.B17, Inter creditor Agreement dated 31-5-2007/Ex.B18, Inter creditor Accession and Amendment Agreement
dated 26-3-2008/ Ex.B19, Security trustee Agreement dated 13-3-2006/
Ex.B20, amendment to the loan documents dated 8-10-2012/Ex.B21,
Amendment to the loan document dated 14-6-2011/Ex.B22. Share 35 / 50 COS No.02 OF 2016 purchase agreement dated 01-4-2014 under Ex.A7 is also another important document. By novation as the defendant No.5 was added as new lender, the above amendments agreements were executed by amending the original agreements.
10.22.It is the argument of the plaintiff that the defendant No.5 has no right over the securities furnished to the defendant No.1 to defendant No.4. The defendants have no right over the securities in possession and custody of defendant No.1 as they are the property of the plaintiffs and the plaintiffs company is lawfully is entitled for return of the same. It is argued that defendant No.5 is demanding the defendant No.1 to part with the securities in their favour. The defendant No.5 has no right to address letters to defendant No.1 to defendant No.4 forcing them to part with the originals of the securities of the plaintiff company. It is argued that the additional rate of interest demanded by the defendant No.5 is illegal and against the terms of the contract. The plaintiff company is requesting and demanding the defendant No.1 for return of its securities. Defendant No.2 to defendant No.4 are made as formal parties and no relief is claimed against them.
10.23Whereas the argument of defendant No.5 is that on taking over the management, the obligations of the company would also get transferred automatically. One of the conditions stipulated in the loan 36 / 50 COS No.02 OF 2016 agreement was that the loan shall be secured by a pledge of shares held in the borrower. The Plaintiff No. 1 entered into Agreement to pledge of the said shares with IDBI Trusteeship. By the said Agreement, the Plaintiff No.1 confirmed that they have deposited the pledge infavour of defendant No.1 for securing the due repayment of the loan together with interest and other monies payable by the borrower to the lenders and charged the shares. It is further argued that plaintiff
No.1 agreed that if the loan or any portion of the loan remained unpaid by the Plaintiff No.2 then defendant No.1 may at any time sell the said shares pledged with them. Even the Plaintiff No.1 executed Power of
Attorney appointing IDBI/Defendant No.1 as security Trusty, its law full attorney to do all the acts, in respect of pledged shares in case of default. It is argued that any settlement proposed by the erstwhile
Lanco Budhil Hidro Power Private Limited, pending the change of name of the said company can be called upon to be cleared by the Plaintiff
No.2 since all the rights, claims, interest and the obligations were transferred to Plaintiff No.2 and also as per Ex.B11 the Lanco Green
Power Private Limited is deemed to include its successor. It is further argued that the Defendant No.5 vide letter under Ex.B57 dated:
05.07.2016 requested the defendant No.1 to immediately enforce all the securities including pledge of shares in terms of security trustee
Agreement since the Plaintiff No.2 became default in repayment of the loan amount.
37 / 50 COS No.02 OF 2016 10.24It is further argued that the securities were furnished for all lenders including Defendant No.5. It is further argued that since the settlement was offered by the Plaintiff No.2 during the pendency of the process for change of the management of Plaintiff No.2 all the correspondence is valid and binding the plaintiffs. It is further argued that defendant No.5 is having right on the securities in possession and custody of defendant No.1 and also having rights to retain the schedule securities which were pledged as security.
10.25.In the light of the above rival contentions of both parties now it is required to examine how far there is truth in the contention of the plaintiffs and how far the plaintiffs could prove their version to entitle to the reliefs prayed in the suit.
10.26.It is an admitted fact that there were no dues payable by the plaintiffs to the defendant No.1 to defendant No.4. No relief is claimed by the plaintiffs against the defendant No.2 to defendant No.4.
Then why the defendant No.1 issued the above notice ?.
10.27.Perusal of the record further reveals that Loan shall be secured. Accordingly the plaintiff No.1 pledged 9,21,55,041/- equity shares in the capital of plaintiff No.2 with the defendant No.1 as a security. Further, the plaintiff No.1 as pledger, Plaintiff No.2 as borrower and defendant No.1 as Security trustee entered into an agreement of 38 / 50 COS No.02 OF 2016 pledge on 14-7-2014/Ex.B3.As per them, Schedule-I of the pledge agreement/Ex.B3, defendant No.2/ICICI Bank, defendant No.3/Punjab
National Bank,defendant No.4/IIFC Limited and defendant
No.5/HUDCO are the lenders to the plaintiff No.2. On perusal of Ex.B3 one can understand that as per the clause 2.5 of the this agreement if the loan and other monies or any portion thereof remained unpaid by the plaintiff No.2 in accordance with the loan agreement then the defendant No.1 may at anytime sell the said shares pledged with them or any of them and apply the proceeds towards the repayment of the loan, interest and other monies recoverable by the lenders from the borrower. This agreement, as per clause 3, shall be a continuing security and shall remain in force and effect until the final settlement date, notwithstanding any intermediate payment or satisfaction of the whole or any part of the obligation by the borrower. The plaintiff No.1 and 2 under clause 5 of the agreement undertook and agreed with the defendant No.1 not to create or attempt, not to grant any interest to any other person over the pledged property through out the continuance of this agreement and till the final settlement date. Not only that, the plaintiff No.1 also executed power of attorney (Ex.B4) appointing IDBI/Defendant No.1 in its capacity as security trustee, as its lawful attorney to take action, to keep the security interest under the pledge agreement in full force and effect, to do all acts, deeds, matters or things subject to the terms of the pledge agreement in respect of the pledged shares upon occurrence of an event of default.
39 / 50 COS No.02 OF 2016
Clause 19 of the Ex.B3 agreement empowers the defendant No.1 to release the collateral from the pledge granted and to take steps to cancel the power of attorney upon the occurrence of the final settlement date of the agreement. Ex.B5 non disposal undertaking was given by the Plaintiff No.1 to the defendant No.1 and undertook not to transfer or assign or dispose or encumber the existing or future shareholdings. The factum of execution of Ex.B3 to B5 by the plaintiffs in favour of the defendant No.1 is not disputed by the plaintiffs. No document is produced before this Court by the plaintiffs to show that the Ex.B3 to Ex.B5 stood cancelled. By virtue of subsisting of Ex.B3 to
Ex.B5 in favour of the defendant No.1 and lenders, the plaintiffs cannot plead that the defendant No.1 has no subsisting rights to issue notice under Ex.B6. In view of subsisting of Ex.B3 to Ex.B5 agreements it cannot be said that the defendant no.1 is not vested with any rights or to demand the plaintiffs to pay the dues and redeem the securities pledged with defendant No.1.
10.28.Examination of the evidence on record would reveal that the plaintiffs are contending to have cleared the entire dues payable to defendant No.5. The evidence on record also goes to show that the defendant No.5 is disputing the fact that the plaintiff No.2 paid all the dues payable to defendant No.5.
40 / 50 COS No.02 OF 2016 10.29From the above discussion it can be said that there was no consensus between the plaintiff No.2 and defendant No.5 about the rate of interest leviable on the outstanding amount payable by the plaintiff No.2 to defendant No.5. It is pertinent to note hear that the plaintiffs filed the present suit not for declaration that the plaintiffs are entitled to pay dues at a particular rate of interest and to declare that the amount of Rs.47,56,94,018/- remitted by the Plaintiff No.2 was towards full and final settlement of dues. The contention of the plaintiffs is that entire dues payable by the plaintiff No.2 to defendant
No.5 were already paid and that there are no dues payable to the defendant No.5. Whereas the version of the defendant No.5 is that the plaintiff No.2 is still is under obligation to pay an amount of
Rs.12,29,32,652/- as on 31-8-2016 were along with pre-payment charges of Rs.86,58,000/-.The plaintiffs in this suit have not sought for declaration that the Plaintiff is liable to pay only Rs.47,56,94,018/-to the defendant No.5 towards outstanding loan dues and not more than that. The learned counsel for the plaintiff would argue that Ex.B32 through which the Plaintiff No.2 remitted the amount of
Rs.47,56,94,018/- was admitted by the defendant No.5. To this letter the defendant No.5 got a reply letter addressed dated 23-9-2014/ Ex.B34 issued. After going through the contents of this reply letter under
Ex.B34 it becomes clear that the defendant No.5 did not admit that the remitted amount was received towards full and final settlement. No piece of document is produced by the plaintiffs before this court to 41 / 50 COS No.02 OF 2016 show that the defendant No.5 agreed to receive Rs.47,56,94,018/- towards full and final settlement of dues.
10.30.Thus, be it noted here that the defendant No.5 is claiming that there was still outstanding amount payable to the defendant No.5 by plaintiff No.2 and that the amount remitted by the plaintiff No.2 was not towards full and final settlement. Not only that, defendant No.5 even filed original application vide O.A.No228 of 2017 against the plaintiff No.2 for recovery dues before DRT. Further, the evidence of defendants coupled with Ex.B62 would prove that original application filed by defendant No.5 for recovery of dues from the plaintiff No.2 is pending before Hon’ble Debt Recovery Tribunal.
10.31.After hearing the counsel for both parties and on examination of the evidence on record this court is of the opinion that the issue that the plaintiff No.2 is still liable to pay dues of the loan amount to the tune of Rs.13,15,90,652/- which includes per-closure charges to the defendant No.5 is not resolved and still pending. It can be said that the issue whether the plaintiff is liable to pay any amounts to the defendant No.2 and whether the defendant No.5 is entitled to recover further amounts from the plaintiff No.2 as contended cannot be decided in this suit for the reason as observed above this suit is not for declaration that the amount Rs.47,56,94,018/-remitted by the plaintiff No.2 was toward full and final settlement and that there are no 42 / 50 COS No.02 OF 2016 dues payable to defendant No.5. In as much as original application under Ex.B62 filed by the defendant No.5 for recovery of outstanding loan amount from the defendant No.5 is pending before the Debt
Recovery Tribunal for adjudication, it becomes clear that the dispute, whether there is still outstanding dues payable to the defendant No.5, is still pending. There in the said original application under Ex.B62 the burden lies on the defendant No.5 to prove its claim against the plaintiff No.2.
10.32.The present suit is filed to declare that the notice dated 16- 8-2016 claiming that the plaintiffs are due and payable a sum of
Rs.13,15,90,652/- and threatening action of sale of schedule properties as illegal, void and not binding on the plaintiffs. Until and unless it is declared that there are no dues payable to defendant No.5 by the plaintiff No.2, the Pledge Agreement dated 14.7.2014/Ex.B3 remains in force. The strange thing that is to be observed is that the plaintiffs even could not file and mark the very crucial notice dated 16-8-2016 as exhibit which is sought to be declared as null and void. It is the defendants who exhibited the said notice and got it marked as Ex.B6.
In view of the Ex.B3 agreement, the defendant No.1 is having powers to issue Ex.B6 notice to the plaintiffs and has every right to exercise powers over the schedule share property pledged towards security until it is declared that the Plaintiff No.2 has no dues payable and that plaintiff No.2 cleared all the dues. From the above discussion, it 43 / 50 COS No.02 OF 2016 becomes clear that the defendant No.1 being a security trustee to the defendant No.5 is entitled to issue Ex.B6 notice to the plaintiffs. In view of the above discussion, the notice dated16.8.2016 (Ex.B6) issued by defendant No.1 cannot be declared as void illegal and not binding on the plaintiff. Accordingly issue no.1 is answered.
Issue No.2
11. Whether the plaintiff is entitled for injunction prayed for ?
The plaintiffs sought for injunction to restrain the defendant
No.1 and 5 or any person under them from selling or encumbering or dealing with or exercising any right of any nature including the right of lean over the schedule property. In view of the discussion in the preceding paragraphs on issue No.1 this court opined that the plaintiffs could probablize its contention that the rate of interest 14.65% pa claimed by the defendant No.5 is doubtful and not supported by the evidence. This court further opined that the defendant No.5 is required to prove that the outstanding dues shown in the Ex.B6 is supported by the valid rate of interest and that the defendant No.5 is entitled to claim the same. The same can be decided in the original
Application(OA) filed by the defendant No.5 against the plaintiff pending before the DRT. The result of the OA will decide whether the defendant No.1 and Defendant No.5 can exercise their rights over the 44 / 50 COS No.02 OF 2016 pledged shares i.e, suit schedule property. Till then the defendant No.1 and defendant No.5 are not entitled to dispose the securities furnished by the plaintiff no.1. From the record it is found that this court has already passed interim orders on 19.08.2016 in I.A.No.03/2016 directing the parties to maintain Status-Quo regarding the suit schedule property. In view of the above discussion it is just and necessary to restrain the defendant No.1 and 5 from exercising their rights on the suit schedule property i.e., security shares pledged with the defendant No.1 till the disposal of Original Application(OA) under
Ex.B62 filed by the defendant No.5 before the Hon’ble Debt Recovery
Tribunal for recovery of outstanding loan dues. Accordingly the issue
No.2 is answered.
Issue No.3
12. To what relief ?
In view of the findings of this court on issue No.1 and 2, though the notice under Ex.B6 cannot be declared as void and not binding on the plaintiffs, the plaintiffs are entitled to the temporary relief of injunction to restrain the defendant No.1 and defendant No.5 from exercising any rights over the securities furnished by the plaintiff No.1 to the defendant No.1 till the original application (OA) claiming the outstanding amounts filed by the Defendant No.5 against the plaintiff 45 / 50 COS No.02 OF 2016
No.2 pending before the Hon’ble Debt Recovery Tribunal is disposed off.
In the result, the suit of the plaintiff is allowed in part and the defendant No.1 and defendant No.5 are restrained from exercising any rights over the shares of the plaintiffs i.e., suit schedule property pledged with the defendant No.1 till the claim of the defendant No.5 vide Original Application No.228 of 2017 before the Hon’ble Debt
Recovery Tribunal is disposed off. The relief of the plaintiffs to declare the notice dated 16-8-2016 (Ex.B6) as void, illegal and not binding on the plaintiffs is rejected. Parties shall bear their own costs.
Typed to my dictation corrected and pronounced by me in open court on this the 27 th day of April, 2026.
JUDGE,
PRINCIPAL SPECIAL COURT IN THE CADRE
OF DISTRICT JUDGE FOR TRIAL AND DISPOSAL
OF COMMERCIAL DISPUTES AT HYDERABAD
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
FOR PLAINTIFF: FOR DEFENDANTS : PW1: K.bhujanga Rao DW1 : Sanjeev Chopra DW2 : Vikram Goel
EXHIBITS MARKED FOR PLAINTIFF :
46 / 50 COS No.02 OF 2016
Ex.A1True copy of Resolution, dated: 15.07.2019 passed by Greenko Tejassarnika Hydro Energies Private Limited
Ex.A2True copy of Resolution, dated: 15.07.2019 passed by Greenko Tejassarnika Hydro Energies Private Limited.
Ex.A3Ex A3 is the Copy of Certificate of Incorporation with Memorandum and Articles of Association, dated 25.09.2006
Ex.A4Ex A4 is the Copy of Certificate of Incorporation with Memorandum and Articles of Association, dated: 21 03 2002
Ex.A5Ex.A5 is the Copy of Certificate of Common Agreement, dated: 13.03.2006 between plaintiff No.2 and defendant No.1 to 4.
Ex.A6Ex A6 is the Copy of HUDCO Certificate of Novation and Amendment Agreement to the Common Agreement, dt: 26.03.2008 between Plaintiff No.2 and def No.1 to 5.
Ex.A7Ex.A7 is the Copy of Certificate of Share Purchase Agreement,
dated: 01.04.2014.
Ex.A8Ex.A8 is the Copy of Certificate of Letter, dated 28.07.2014 addressed to defendants by Lanco Budhil Hydro Power Pvt. Ltd.
Ex.A9Ex.A9 is the Copy of Certificate of Letter, dated:31.07.2014 addressed to defendants by Lanco Budhil Hydro Power Pvt. Ltd.
Ex.A10 Ex.A10 is the Copy of Certificate of Letter, dated 03.09.2014 addressed to defendant No.5 by Lanco Budhil Hydro Power Pvt. Ltd.
Ex.A11 Copy of Certificate of tools Letter, dated 23.09.2014 issued by defendant No.5 to Lanco Budhil Hedro Power Pvt. Ltd.
Ex.A12 Copy of Certificate of Letter, dated: 12.06.2015 issued by defendant No.5 to Lanco Budhil Hydro Power Pvt. Ltd.
Ex.A13 Copy of Certificate of Letter, dated: 16.10.2015 issued by defendants to Lanco Budhil Hydro Power Pvt. Ltd.
47 / 50 COS No.02 OF 2016
Ex.A14 Received copy of Certificate of Legal Notice. dated: 31.05.2016 got issued by defendant No 5 to Plaintiff No.2 and others
Ex.A15 Copy of Certificate of Letter, dated 07.06.2016 written by defendant No.5 to Govt. of Himachal Pradesh with a copy to the plaintiff
Ex.A16 True copy of Certificate of Board Resolution, dated 18.03.2014
Ex.A17 True copy of Certificate of Board Resolution, dated:01.08.2015
Ex.A18 Copy of Certificate of letter, dated 22.07.2014 written by defendant No.1 to defendant No.2
Ex.A19 Copy of Certificate of letter, dated: 03.06.2016 written by defendant No. 5 to defendant No 1
Ex.A20 Copy of Certificate of Letter, dated 23.06.2016 written by defendant No.5 to defendant No.1
Ex.A21 Copy of Certificate of Letter, dated: 28.06.2016 written by defendant No.1 to defendant No.5.
Ex.A22 Copy of Certificate of Letter, dated 05.07.2016 written by defendant No.5 to defendant No.1
Ex.A23 Copy of Certificate of Office copy of interim reply. dated: 15.07.2016.
Ex.A25 Demand notice from HUDCO by email
FOR DEFENDANTS : Ex.B1Extract of item no.369.15 of 369 meeting of board of directors of HUDCO, dated 05.10.2004
Ex.B2Recall notice, dated 16.10.2015
Ex.B3Pledge agreement, dated 14.07.2014
Ex.B4Power of attorney dated 14.07.2014 48 / 50 COS No.02 OF 2016
Ex.B5Non-disposal undertaking, dated 14.07.2014.
Ex.B6Notice U/s. 176 of the Indian Contract Act 1872, dt. 16.08.2016
Ex.B7Certificate of incorporation, dated 21.03.2002
Ex.B8Fresh certificate of incorporation consequent upon change of name, dated 06.08.2010.
Ex.B9HUDCO letter addressed to Greenco Budhil Hydro power Pvt. Ltd. 07.11.2015.
Ex.B10 HUDCO letter addressed to Greenco Budhil Hydro power Pvt. Ltd. d ted 30.11.2015.
Ex.B11 Common agreement, dated 13.03.2006.
Ex.B12 Letter of offer, dated 07.08.2007
Ex.B13 HUDCO Novation and Amendment Agreement, dt. 26.03.2018.
Ex.B14 Senior Rupee Loan Facility agreement, dated 13.03.2016.
Ex.B15 Senior Rupee Loan Facility amendment agreement, dated 26.03.2008
Ex.B16 Facility Agent agreement, dated 31.05.2007
Ex.B17 Facility Agent amendment agreement, dated 26.03.2008.
Ex.B18 Inter creditor Agreement, dated 31.05.2007
Ex.B19 Inter creditor Association and amendment Agreement, dated 26.03.2008
Ex.B20 Security trustee Agreement, dated 13.03.2006
Ex.B21 Amendment to the Loan documents dated 08.10.2012
Ex.B22 Amendment to the Loan documents dated 14.06.2011
Ex.B23 Mail from Greenko, dated 30.07.2014.
Ex.B24 Letter from Lanco, dated 28.07.2014.
Ex.B25 HUDCO letter to ICICI bank, Ltd., dated 20.08.2014 49 / 50 COS No.02 OF 2016
Ex.B26 HUDCO mail, dated 20.08.2014.
Ex.B27 HUDCO letter to ICICI bank, Ltd., dated 01.09.2014
Ex.B28 Lanco letter to HUDCO, dated 03.02.2014.
Ex.B29 HUDCO letter to Lanco, dated 05.03.2014
Ex.B30 HUDCO letter to Lanco, dated 21.05.2014.
Ex.B31 Mail from Greenco to HUDCO dated 03.09.2014
Ex.B32 Lanco letter to HUDCO dated 03.09.2014
Ex.B33 Lanco letter to HUDCO dated 17.09.2014.
Ex.B34 HUDCO letter to Lanco, dated 23.09.2014.
Ex.B35 HUDCO letter to Lanco, dated 10.11.2014
Ex.B36 HUDCO letter to ICICI bank, Ltd., dated 30.04.2012.
Ex.B37 HUDCO letter to Lanco, dated 16.07.2012.
Ex.B38 HUDCO letter to ICICI bank, Ltd., dated 04.10.2012
Ex.B39 HUDCO letter to ICICI bank, Ltd., dated 05.02.2013
Ex.B40 HUDCO letter to ICICI bank, Ltd, dated 01.05.2013.
Ex.B41 HUDCO letter to ICICI bank, Ltd., dated 24.07.2013
Ex.B42 HUDCO letter to ICICI bank, Ltd., dated 15.07.2014
Ex.B43 HUDCO letter to ICICI bank, Ltd., dated 18.02.2014
Ex.B44 HUDCO letter to Lanco, dated 05.06.2014
Ex.B45 HUDCO letter to ICICI bank, Ltd., dated 02.08.2014
Ex.B46 HUDCO letter to ICICI bank, Ltd., dated 01.09.2014
Ex.B47 HUDCO letter to Lance, dated 23.09.2014
Ex.B48 HUDCO letter to Lance, dated 10.11.2014
Ex.B49 HUDCO letter to Lance dated 01.01.2015 50 / 50 COS No.02 OF 2016
Ex.B50 Mail from Lanco to HUDCO, dated 07.02.2014
Ex.B51 Mail from ICICI bank Ltd., dated 21.05.2014.
Ex.B52 Mail from Lanco, dated 28.10.2013.
Ex.B53 Letter from Lanco, dated 09.02.2015
Ex.B54 Letter from HUDCO to Lanco, dated 07.04.2015.
Ex.B55 Letter from HUDCO to Lanco, dated 12.06 2015
Ex.B56 Legal notice, dated 31.05.2016
Ex.B57 HUDCO letter to IDBI trusteeship Services Ltd, dt. 05.07 2016
Ex.B58 Greenco letter to HUDCO, dated 15.07 2016
Ex.B59 HUDCO letter to IDBI trusteeship Services Ltd., dt. 22.07 2016
Ex.B60 HUDCO letter to Greenco, dated 01.02.2016.
Ex.B61 HUDCO letter to Govt. of Himachal Pradesh, dated 07 06 2016.
Ex.B62 Application in OA.No.789/2017 dated 9.2.2017
Ex.B63 Written statement in CA.No.789/2017 dated 26.8.2017
Ex.B64 Rejoinder/replication in OA.No.789/2017 dated 23.7.2018
Ex.B65 Statement of account as on 30.11.2019
sd/-
G. UDAY KUMAR,
JUDGE,
PRINCIPAL SPECIAL COURT IN THE CADRE
OF DISTRICT JUDGE FOR TRIAL AND DISPOSAL
OF COMMERCIAL DISPUTES AT HYDERABAD