1. The plaintiff has sued for recovery of principal amount of Rs.61,41,717/- together with interest and service tax i.e. for a total sum of Rs.1,00,10,570/- from the defendant.
2. The suit was entertained and pleadings have been completed. The suit is ripe for framing of issues, if any.
3. The plaintiff has filed IA No.8107/2016 under Order XII Rule 6 of Code of Civil Procedure, 1908 (CPC) for decree on admissions.
4. The counsels have been heard.
5. The claim of the plaintiff is on the basis of the agreement contained in letter dated 16th January, 2013 of the plaintiff to the defendant and duly acknowledged by the defendant and whereunder the defendant had appointed the plaintiff as advisor to achieve the financial closure for the debt component of the proposed thermal power project of the defendant at Angul, Odisha. The defendant under the said agreement had agreed to pay fee as under to the plaintiff:
D. Fee
The fee payable for the services rendered would be directly payable by the Company to the Advisor as per the following schedule:
| S. No | Milestone | Amount Payable (INR) |
| 1 | On signing and acceptance of this engagement letter | 5,00,000 |
| 2 | On preparation of transaction documents | NIL |
| 3 | On transaction closure | 0.25% of the portion of gross transaction amount directly attributable to the Advisor |
| 3A | Of which-On sanction of the loan | 50% of the fee listed in S. No.3 above |
| 3B | Of which On disbursement of the first tranche of the consolidated loan amount | 50% of the fee listed in S. No.3 above |
The fees quoted above are exclusive of service tax, payable extra at the rate prevailing on the date of invoice.
The amount payable by the Company hereunder shall be payable within 15 days of presentation of the invoice.
The Syndication Fee or any part thereof shall be payable only on receipt of final sanctions for the full debt amount for which this engagement has been entered into. However, in case the full tie-up of the debt for the Project is delayed and the Company decides to avail part of the debt so tied-up for the Project, the fee payable on such part of debt shall be payable immediately to the Advisor based on the above milestone.
The break-up of the fee payment into milestones is only for the purpose of convenience and spreading out of the fee payments by the Company to the Advisor. The Debt Syndication Fees are a composite whole and in the event that any milestone is skipped / an activity is not required, the fee payment indicated against the said milestone will be payable along with the immediately succeeding milestone or as may be advised by the Advisor.
For tax, legal and other specialized technical requirements, the services of an external tax/technical/legal consultant may be sought by the Company. The terms and conditions would be settled directly between the Company and the external consultant for tax and legal services. The expenses incurred for other consultancies will be borne and paid directly by the Company. The Advisor shall not be liable in any manner whatsoever for the actions/inactions of the external consultant appointed by the Company . (emphasis added)
6. The claim of the plaintiff is under Column 3A of the table aforesaid i.e. for 50% of the fee listed at Serial No.3 of the table.
7. It is inter alia the contention of the counsel for the defendant (i) that this Court has no territorial jurisdiction to try the suit; and, (ii) that the suit is pre-mature as fee at Serial No.3A has not become due to the plaintiff. It is further the case of the defendant that the fee was payable only on receipt of financial sanctions for the full debt amount and which have not been received.
8. The counsel for the plaintiff, to contend that the final sanctions for the full debt amount have been received relies upon the letters dated 8th July, 2013 and 29th June, 2012 of the Rural Electrification Corporation Limited (RECL) and Power Finance Corporation Limited (PFCL) to the defendant at page 222 and 227 respectively of the defendant s documents.
9. While RECL in its letter has stated as under:
With reference to your request for additional financial assistance for the establishment of subject cited project, we are pleased to inform you that your request has been considered favourably and REC is agreeable to sanction a additional Rupee Term Loan assistance of Rs.900 Cr. To M/s NSL Nagapatnam Power and Infratech Private Limited For setting up of 1320 MW (2 X 660) Coal Based Thermal Power Project At Tentulei Village, Talchar Taluk, Angul District in the state of Odisha. With the said additional sanction of Rs.900 Cr, REC s total sanction amount shall stand at Rs.2900 Cr.
You are requested to kindly submit the balance Processing Fee and Lead Fee as per the attached Invoice (Annex I) within 30 days so as to enable us issue the sanction letter along with the terms and conditions of sanction. Kindly acknowledge the receipt of this letter. (emphasis added)
PFCL in its letter has inter alia stated as under:
Please refer to your application for financial assistance vide letter cited above and further correspondence / discussions you/your representatives had with us regarding financial assistance to part finance the proposed 1320 MW (2 X 660 MW) Coal Based Thermal Power Project at Angul in Odisha with an estimated project cost of Rs.7796.78 crore.
The proposal has been considered and Power Finance Corporation Limited ( PFC / the Corporation ) is inprinciple agreeable to grant you Rupee Term Loan Assistance (the RTL assistance ) to the extent of Rs.1950 crore (Rupees One Thousand Nine Hundred and Fifty Crore only) or amount sanctioned by the lead FI, REC, whichever is lower. The following may kindly be noted in this regard:
1. The aforesaid term loan is subject to the terms and conditions set out in the annexure I and Annexure-II hereto and would further be subject to the conditions set out in the Rupee Term Loan Agreement to be finalized later by the Lenders Consortium.
2. In case the above terms and conditions are acceptable to you, you may furnish to us within 30 days from the date of receipt of this letter, two certified copies of the resolutions duly passed by Board of Directors of NSL Nagapatnam Power and Infratech Pvt. Ltd. ( NPIPL ) as per pro-forma in AnnexureIII.
3. Please note that this communication should not in any way be construed as giving rise to any binding obligation on the part of PFC unless M/s NPIPL communicates to PFC within 30 days from the date of receipt of this letter that the terms and conditions set out herein are acceptable to it and unless the Loan Agreement and other documents relating to the above assistance are executed by M/s NPIPL in such form as may be required by PFC within six months from the date of this letter or such further time as may be allowed by PFC in its absolute discretion. (emphasis added)
10. Though the counsel for the plaintiff has also drawn attention to the letter dated 20th November, 2013 of PFCL at page 265 of the defendant s documents but the terms thereof are found to be same as have been set out hereinabove. The counsel for the plaintiff has not cited any other letters of sanction.
11. Though the counsel for the plaintiff contends the aforesaid documents to be sanction but in my view they cannot be treated as so. The said letters of RECL and PFCL are only of in-principle approval and cannot in banking parlance be treated as of sanction or on receipt of which financial closure can be said to have been achieved and when only the plaintiff was due the fee from the defendant for recovery of which the suit is filed.
12. The counsel for the plaintiff however relies on the reply dated 14th September, 2015 of the Advocate for the defendants to the counsel for the plaintiff to the legal notice at page 34 of the plaintiff s documents and contends that the defendant therein promised payment of further amounts in due course and sought time for payment. The counsel for the plaintiff further contends that there are plethora of other emails of the defendant to the plaintiff filed before this Court wherein also the defendant has promised to pay the suit amount to the plaintiff.
13. The counsel for the defendant, without being able to show any pleading to the said effect in the written statement, however contends that since according to the counsel for the plaintiff also the relationship is an on going one, with the claim of the plaintiff under Serial No.3B of the table aforesaid still remaining, the defendants in the said communications merely assured the plaintiff that the payments would be made. It is further stated that the payments already made to the plaintiff are also as a gesture of goodwill and without the same being due to the plaintiff.
14. Seeing the clause aforesaid in the agreement between the parties in totality, I am of the view that the admission to which the counsel for the plaintiff has drawn attention cannot be treated to be such, on the basis of which the plaintiff can be said to be entitled to a decree on admissions. It cannot be lost sight of that the agreement also envisaged spreading out of the payment for convenience and otherwise unequivocally provided that the payments were to be made only on financial closure being achieved and which as per commercial parlance would be achieved only when a binding commitment is made by the financial institution to render financial assistance. The letters on the basis of which the plaintiff claims the same to have happened do not contain a binding commitment; rather, PFCL in its communication has expressly stated that the communication should not be treated as a binding commitment. Financial closure is the time when the documents have been executed and the conditions precedent have been satisfied and draw downs are permissible. On a perusal of the letters aforesaid of RECL and PFCL it is evident that that stage has not been reached. Financial Closure, in letter dated 23rd April, 2010 of the Reserve Bank of India to the Primary (Urban) Cooperative Banks prescribing the Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances, also has been defined as a legally binding commitment of equity holders and debt financiers to provide or mobilise funding for the project and which funding should account for not less than 90% of the total project cost.
15. Thus no case for grant of a decree on admissions or under Order XV of CPC is made out.
16. IA No.8107/2016 is dismissed.
17. On the pleadings of the parties, the following issues are framed:
(I) Whether the principal amount claimed by the plaintiff has fallen due to the plaintiff in terms of the agreement? OPP
(II) If the above issue is decided in favour of the plaintiff, whether the plaintiff is entitled to interest at the rate claimed or at any other rate and service tax as claimed? OPP
(III) Whether this Court has territorial jurisdiction to entertain the suit? OPP
(IV) Whether the plaintiff is entitled to any future interest and if so, at what rate and for what period? OPP
(V) Relief.
18. No other issue arises or is pressed.
19. The parties to file their list of witnesses within fifteen days.
20. The plaintiff to file affidavits by way of examination-in-chief of all its witnesses within eight weeks.
21. The counsel for the plaintiff has not accepted the option given of having the evidence recorded before the Court Commissioner.
22. List before the Joint Registrar on 6th October, 2016 for fixing the dates of trial.