Indian Kanoon - Search engine for Indian Law

It may be noted here that the injunction granted in terms of prayer Clauses (a) and (b) of the Notice of Motion No. 4541 of 2001 is continuing till today.

2. The brief facts are that the Appellant Company Shree Maheshwar Hydel Power Corporation Limited is implementing the Hydro Electric Project known as Maheshwar Hydro Electric Project which is being implemented pursuant to the Narmada Water Dispute Tribunal Award. The said Award relates to the various projects to be constructed in the Narmada River basin, and one of them is the Maheshwar Hydro-Electric Project.

3. It appears that initially, the Maheshwar Project was taken up by the Narmada Valley Development Authority (NVDA) for implementation. However, the Narmada Valley Development Authority could not effectively implement and construct the same and hence, it was handed over to the Madhya Pradesh Electricity Board (MPEB). The Government of Madhya Pradesh, as a part of the overall Government of India guidelines to encourage private participation in the electricity sector, chose to invite private parties. Accordingly the private tenders/bids were invited. In the said bids the S. Kumars group had also competed, and on their successful bid being made, the S. Kumars group formed into the present Appellant Company known as Shree Maheshwar Hydel Power Corporation Limited. Appellant Company was incorporated under the Companies Act, 1956 on 11th May, 1993 as a Generating Company with the sole purpose to develop, build, own and operate the 400 MW Maheshwar Hydro Electric Project located in Khargone District, South-Western region of Madhya Pradesh.

17. Mr. Vahanvati, the learned Advocate General has contended that, as stated right at the outset, that the Appellant Company is not seeking a blanket injunction against the Respondents/Defendants from making any defamatory statement, however, the injunction sought against the Respondents/Defendants can be restricted as under :--

"The Respondents shall not make defamatory statements against the Appellants imputing financial irregularity or dishonesty on the part of the Appellants or Shree Maheshwar Hydel Project including but not limited to allegations viz. connivance, conspiracy, syphoning of funds, loot, unleashing terror."

30. Mr. Desai, the learned counsel for the respondents very strongly questioned the wisdom of having the aforesaid Maheshwar Hydel Power Project and also seriously questioned the necessity of investing more than 1000 crores of rupees on such a project, which according to him, may not at all take off. According to Mr. Desai, the learned counsel for the respondents, the State of Madhya Pradesh needs about 27000 million units of electricity whereas this Maheshwar project would only supply 823 million units of electricity. In this context, he referred to and relied upon M. R. Shivaraman Committee Report wherein it is mentioned that the projected price of power may not allow even Government of Madhya Pradesh to function properly and the State Government may even go bankrupt. It is the contention of Mr. Desai, the learned counsel for the respondents that the very project would ruin the Madhya Pradesh State Electricity Board and the Madhya Pradesh Government, Mr. Desai pointed out to various financial irregularities of the Appellant Company and in that context he sought to contend that the Respondents were fully justified in using the expression "loot" of public money. He referred to the Speech made by the Hon'ble Finance Minister of Union of India made before the Parliament which has been published in the Newspaper, wherein the Hon'ble Finance Minister has described persisting defaults as "loot" of public money. Mr. Desai, the learned counsel for the respondents also pointed out that even the Appellant Company has large financial liability and it is not repaying the loan in time, Mr. Desai referred to Exhibit 12 contained in Volume III regarding "RBI pulls up IFCI for poor supervision, Rediff. com August 8, 2001" showing as to how there is poor supervision of IFCI. Mr. Desai sought to justify the use of expression "Syphon off in the Press-Note by referring to a circular issued by the Reserve Bank of India dated 30th May, 2002 which pertains to wilful defaulters and action against them. He referred to paragraph No. 4.2 of the said circular of the Reserve Bank of India, wherein it is mentioned that siphoning of funds should be construed to occur if any funds borrowed from banks/FIs are utilised for purposes unrelated to the operations of the borrower, to the detriment of the financial health of the entity or of the lender. Mr. Desai, the learned counsel for the respondents referred to and relied upon the Re-Appraisal note on the project of Shree Maheshwar Hydel Power Corporation Ltd. issued by the IFCL Limited wherein it is reported that as per the statutory Auditors certificate dated 9th April, 1999 the Appellant Company has incurred expenditure of Rs. 3184 mn and it is further mentioned therein that the Appellant Company has reported that it has further incurred an expenditure of Rs. 392 mn till 31st October, 1999. It is further reported therein that out of the said expenditure, certain advances of Rs. 1064 mn has been given to some parties, which the Appellant Company is in the process of recovering. To put it in other words, it is the contention of Mr. Desai, the learned counsel for the Respondents that the Appellants have failed to recover the amounts/advances given to various parties.