Anti suit injunction cannot be sought for.

K.Govindarajan,J.

The appellant having aggrieved by the order dated 5.7.2004, passed by the Company Law Board, (hereinafter called "CLB"), rejecting their application filed in C.A.No.62/2004 in C.P.No.8/2004, preferred the above appeal.

2. The appellant-company established a gas and naphtha fired combined cycle power generation plant at Pillaiperumalnallur in Government of Tamil Nadu. Respondents 1 and 2 are having 46% paid up capital of the Company (26% and 20% respectively). The 3rd respondent-company and the 4th respondent are holding 28% and 26% paid up capital respectively. The 5th respondent is the Managing Director of the appellant Company. Respondents 6 to 8 are Directors of the appellant-company nominated by the 3rd respondent herein. Respondents 9 and 10 are the Directors nominated by the 4th respondent herein. The financing companies, namely, I.D.B.I., and L.I.C., have nominated one Director each. They are not parties to the proceedings. Since the dispute is only between the appellant-company and respondents 1 and 2, the appellant-company has given up respondents 3 to 11, though they have been added in the appeal as respondents.

3. The appellant-company entered into a Power Purchase Agreement, (hereinafter called "PPA"), with the Tamil Nadu Electricity Board, (hereinafter called "TNEB") on 3rd January 1997, as the appellant-company has to sell to the TNEB, capacity and net electrical output of the power generating facility pursuant to the terms and conditions set forth in the said agreement.

4. The PPA among other clauses provides payment security mechanism as follows:-

"(a) direct payments;

(b) letter of credit;

(c) An Escrow account and hypothecation of TNEB's receivables deposited in such account;

(d) guarantee by the State of Tamil Nadu through a sovereign guarantee ("the GOTN" Guarantee") in favour of the appellant- company guaranteeing the TNEB's payment obligations".

According to respondents 1 and 2, TNEB, has not only failed to discharge their obligation under the agreement regarding payment security mechanism but also failed to pay a sum of Rs.468.88 crores (approximately) as on 31st January 2004 towards supply of power by the appellant-company. Since November 2001, the appellant-company had written to TNEB, regarding letter of credit and escrow accounts but no response had been received. In spite of that, the management of the appellant-company did not take any legal action against the TNEB. Since the Company's right to recover the money would become time-barred at the end of 3 years from 26th March 2001, an issue was raised by the nominee director of the 2nd respondent at the 50th Board meeting held on 30th December 2003.

5. Stating that there are some acts of omission and commission and mismanagement of the Company, Company Petition in C.P.No.8/2004 was filed claiming several reliefs as sought for in the petition. Suffice to mention the following relief alone for the purpose of the present case:-

"a (ii) initiating and continuing proceedings qua TNEB and Government of Tamil Nadu for and on behalf of the company with respect to the Company's right under the PPA and GOTN guarantee".

The interim relief also is sought for which is as follows:-

"a (i) Invoke the alternate dispute resolution remedy clause, PPA dated 3.1.1997 for and on behalf of the company and forthwith initiate the proceedings as contemplated therein".

Such a prayer is sought for to enforce clause 16.1 and 16.2 of the PPA. The CLB in the order dated 9.3.2004 declined to grant the interim relief and accepting the contentions of the appellant-company that any extreme measures against TNEB would have disastrous effects on the very business prospects of the company and also on the basis of sequence of events which show the cautious approach of the Board of Directors of the company.

6. On the ground that the Company's right would become time-barred at the end of 3 years from 26th March 2001, the nominee directors of respondents 1 and 2 propos