The judgment establishes the principle that lack of cause of action and non-disclosure of facts can lead to the rejection of a plaint. It also emphasizes the importance of good faith in seeking amendments to the plaint.

V.K. Shali, J.

1. This order shall dispose of the application being I.A. No.6063/2010 filed under Order VII Rule 11 CPC by defendant Nos.4 to 13 which is pending for the last more than four years and in respect of which a preliminary issue was framed on 16.1.2014 “as to whether the plaint as framed qua defendant Nos.1, 2, 4 to 13 or any one of them is liable to be rejected?” It shall also decide the application filed by the plaintiff under Order VI Rule 17 CPC being I.A. No.2737/2014.

2. Briefly stated the plaintiff, a private limited company, has filed a suit for recovery of approximately Rs.78 lacs against defendants numbering 13 out of which an amount of approximately Rs.43 lacs is stated to be the principal amount and the balance is stated to be the interest @ 24 per cent with quarterly rest till the time of filing of the suit.

3. The case which has been setup by the plaintiff is that defendant No.3, M/s. Rockman Projects Ltd. is a company owned and controlled by defendant No.1, C.S. Agarwal and defendant No.2, D.K. Jain. Both of them are the Directors of the said defendant No.3 company. In addition to this, defendant No.2, D.K. Jain and his family members also own defendant No.4 company, M/s. Rajdhani Nursuries Pvt. Ltd. The said defendant No.4 is a holding/parent company of most of the companies of defendant Nos.5 to 11. The defendant Nos.12 and 13 are the Directors of these family companies, defendant Nos.4 to 11. It has been alleged in the plaint that the plaintiff company had advanced a sum of Rs.43 lacs to defendant No.3 on execution of a Memorandum of Understanding dated 18.6.2007 to develop a Special Economic Zone (hereinafter referred to as ‘SEZ’). The said Memorandum of Understanding was signed by defendant No.1 on behalf of defendant No.3 company, M/s. Rockman Projects Ltd. on the basis of Board Resolution. Along with the Memorandum of Understanding, it has been alleged that maps of various parcels of land were annexed and also signed by defendant No.1. It has been alleged that for developing this SEZ, the two companies were to float a Special Purpose Vehicle (hereinafter referred to as ‘SPV’) to which the entire land holding as envisaged in the Memorandum of Understanding was to be transferred. The defendant No.1 had agreed to buy 74 per cent of the shareholding of the Special Purpose Vehicle for a sum of Rs.185 crores out of which, Rs.43 crores was paid. It has been alleged that a part of this amount of approximately Rs.11 crores or so out of Rs.43 crores, was diverted by defendant No.3 in the defendant Nos.4 to 11 companies, namely, M/s. Rajdhani Nursuries, the holding company of M/s. Superquick Holdings Pvt. Ltd., M/s. Monsoon Finance Ltd., M/s. Urgent Holdings Ltd., M/s. German Gardens Ltd., M/s. Tower leasing and Finance Ltd., M/s. Super Prompt Holdings Ltd., M/s. Rajdhani Securities Ltd. of which defendant Nos.12 and 13, namely, Archana Jain and S.K. Jain respectively, who are alleged to be related to defendant No.2, are the Directors and hence these companies and the two Directors were also impleaded as parties.

4. Along with the plaint, an application for ex parte ad interim injunction was also filed. The court issued summons.

5. The suit for recovery came up for the first time for hearing along with an application for an ex parte ad interim stay before this court on 19.1.2010. Summons and notices were directed to be issued to the defendants for 17.3.2014.

6. On 25.1.2010, that is just after five days or so, an application filed by defendant Nos.1 and 3 under Section 151 CPC for seeking an ex parte ad interim injunction of status quo with regard to certain properties, details of which were mentioned in para 18 of the application, came up for hearing before the court. The plaintiff was curiously present and supported the application of defendant Nos.1 and 3 for passing an ex parte ad interim order of status quo against the properties mentioned in para 18 of the application which was neither owned