The judgment established the principle that the jurisdiction of the Civil Court to grant injunctions may be barred if a remedy has been provided under specific financial acts, and that the relief of declaration cannot be granted if the jurisdiction to grant consequential relief of injunction is barred.

1. The two plaintiffs viz. GVK Development Projects Pvt. Ltd. and GVK Ratle Hydro Electric Project Pvt. Ltd. have instituted this suit against the three defendants viz. (a) Power Finance Corporation Ltd. (PFC), (b) Government of Jammu & Kashmir, and, (c) Union of India, for (i) declaration that the demand notice dated 28th July, 2016 issued by the defendant no.1 PFC is not in accordance with the Loan Agreement between the defendant no.1 PFC and the plaintiffs and is illegal and not binding on the plaintiffs; (ii) permanent injunction restraining the defendant no.1 PFC from initiating coercive action, as the execution of the Ratle HEP (850 MW) Project integrally connected with the Loan Agreement has been frustrated by the impossibility of performance; and, (iii) interim order directing the defendant no.1 PFC not to impose any interest or penal interest or other charges till this Court decides the legality of the notice dated 28th July, 2016.

2. The suit came up before this Court first on 7th September, 2016 when it was adjourned to 16th September, 2016. On 16th September, 2016, though summons of the suit and notice of the application for interim relief were issued, but no ex parte relief granted.

3. On 5th October, 2016, the counsel for the defendant no.1 PFC sought time to file written statement / reply and while granting opportunity therefore, the assurance of the counsel for the defendant no.1 PFC that the defendant no.1 shall not take any further action pursuant to demand notices dated 28th July, 2016 and 23rd September, 2016 and the agreement of the parties to endeavour to find amicable settlement, were recorded.

4. The matter was adjourned from time to time and the interim arrangement has continued till now.

5. The defendant no.1 preferred FAO(OS) No.122/2017 against the order dated 7th March, 2017 in the suit, urging that the assurance made on 5th October, 2016 was continuing to bind the defendant no.1 and that owing to order dated 7th March, 2017 allowing impleadment of defendants no.2 and 3, the matter was unreasonably delayed for completion of pleadings by the said defendants resulting in irreparable loss to the defendant no.1 PFC. However, the said appeal was disposed of by directing expeditious hearing before this Bench.

6. The suit came up before the undersigned on 8th January, 2018 when it was enquired from the counsel for the plaintiffs as to how the plaintiffs could seek a negative declaration and restraint against the defendant no.1 PFC from taking actions as may be available to it in law. On request of the counsel for the plaintiffs, the hearing on the said aspect was adjourned.

7. Thereafter again, the process of adjournments continued.

8. Last, on 12th April, 2018, the counsel for the plaintiffs stated that the plaintiffs had commenced some settlement talks with the defendant no.1 PFC and sought adjournment on that ground. The counsel for the defendant no.1 again expressed urgency. Making it clear that if no settlement was arrived at, the aspect of maintainability of the suit will be heard and decided today, the matter was adjourned to today.

9. Today again, the counsel for the plaintiffs has started by seeking adjournment for the purpose of settlement and which has been opposed by the counsel for the defendant no.1 PFC.

10. The counsels have been heard.

11. The counsel for the defendant no.1 PFC has informed (i) that under a Loan Agreement dated 8th August, 2013 at page 182 of Part-III file, the defendant no.1 PFC agreed to loan a sum of Rs.4076 crores to the plaintiff no.2 and the plaintiff no.1 is the parent company of the plaintiff no.2; (ii) that the said loan was for the power project over Chenab River in Jammu & Kashmir; (iii) that the defendant no.1 PFC, out of Rs.4706 crores, disbursed Rs.816.90 crores to the plaintiff no.2; (iv) that as of today, a sum of about Rs.1139 crores is due from the plaintiff no.2 to the defendant no.1 PFC; (v) that the defendant no.1 PFC, in accordance with the Loan Agree