1. The plaintiffs are the three partners and their partnership firm who claim that they are carrying on the business of manufacture and sale of nylon hosiery goods in Delhi. Defendants 1 to 4 are manufacturers of various types of nylon filament yarn, including nylon-6 multi-filament yarn and supply about 90 per cent, of the total nylon yam produced in India. Defendants 1 to 4 also manufacture nylon crimped/dyed yam. Defendant 5 is an Association of synthetic fibre industry, Bombay of which defendants 1 to 4 are members. Defendants 6 to 23 are various associations/Co-operative Societies, who represent, some of the actual users of the said nylon-6 multi-filament yarn and also nylon crimped/dyed yam. Defendant 24 is the Chairman of the Central Nylon Committee: defendant 25 is the Member-Secretary of the Central Nylon Committee and defendant 26 is the Chairman of the Silk and Rayon Textile Export Promotion Council and is also a member of the said Central Nylon Committee.
2. Defendants 1 to 4 and defendants 6 and 8 to 14 entered into an agreement dated April 22, 1972 (hereinafter referred to as “the April Agreement”) whereby the selling prices of various deniers and specifications of only nylon multi-filament yam were fixed as the ceiling prices and defendants 1 to 4 agreed to maintain the pattern of their production to be able to meet the requirements of the Actual Users Industry from time to time. On September 9, 1973, defendants 1 to 4 and 6 to 23 entered into another agreement (hereinafter referred to as “the September Agreement”) superseding the April Agreement. This agreement purports to have been entered into to avoid hardship, to evolve a voluntary system of production, a suitable voluntary system of pricing, a suitable system of equitable distribution to Actual Users and to foster a spirit of co-operation between the parties. A central Review Committee was set up under this agreement to consider problems of distribution of nylon yam manufactured by defendants 1 to 4. The plaintiffs do not claim to be parties to either the April Agreement or the September Agreement. They, however, felt aggrieved by the aforesaid defendants entering into the September Agreement. In consequence, the plaintiffs filed the present suit praying that the September Agreement be declared to be void and/or illegal: that the defendants, their agents and servants be restrained by a perpetual injunction from, in any manner, directly or indirectly distributing nylon multifilament yam and/or nylon crimped and/or nylon crimped/dyed yam under the said Agreement dated September 9, 1973; and the said Agreement be ordered to delivered up and be cancelled. Along with the suit the plaintiffs moved an application under Order 39, Rules 1 and 2 read with Section 151 of the CPC praying that pending the disposal of the suit a temporary injunction restraining the defandants, their agents or servants from, in any manner directly or indirectly distributing nylon multi-filament varn, and/or nylon crimped and/or nylon crimped/dyed yarn under the Agreement dated September 9, 1973, entered into between defendants 1 to 4 and defendants 6 to 23. An ex parte temporary injunction in the above terms was also sought.
3. The suit was valued for the purposes of jurisdiction at Rs. 200/- and was filed in the court of the Senior Sub-Judge, Delhi, on being assigned to a Subordinate Judge an ex parte interim injunction was issued in terms of the prayer in the said application. This led the All India Man Made Textiles Manufacturing Association, defendant No. 7, to move an application under Order 39. Rule 4 of the CPC for setting aside the ax parte ad interim injunction issued by the Subordinate Judge on December 1, 1973. There were other proceedings in the matter ending with the suit being transferred by this Court to its file on its Extraordinary Original Civil Jurisdiction Side. By an order dated December 24, 1973 Hon'ble the Chief Justice vacated the ex parte ad interim injunction and directed the two applications to be heard by me. That is how the matter has come up before me. The plaintiffs' case, as set out in the plaint, is that they are the manufacturers of nylon hosiery goods for the manufacture of which goods the raw material is nylon-6 crimped/texturised, crimped/dyed yarn. The plaintiffs used to purchase their requirements of the raw material from the Khanna Ravon Industries and Reliance Textile Industries (Private) Limited. A small quantity is also claimed to have been purchased by the plaintiffs from defendant No. 1 through its authorised dealers during the year April 1, 1972 to March 31, 1973. According to the plaintiffs defendants 1 to 4 manufactured about 90 per cent of the total nylon yarn produced in India. This nylon yam is purchased by crimpers who process it. The nylon yarn processed by the crimpers is the basic raw material for the business of manufacture of nylon hosiery goods. It is alleged that under the September Agreement nylon yarn of various types is to be supplied by defendants 1 to 4 to Actual Users which does not include crimpers; and unless the crimpers agree that they are only processers of the Actual Users of nylon yarn they will not get any supplies. The result would be that unless the crimpers agree that they are not Actual Users and are only processers of the Actual Users they would not get delivery of grey and/or dyed/crimped textile yarn or nylon yarn to be processed and made into grey and/or dyed/crimped/texturised yarn from defendants 1 to 4 and manufacturers of nylon hosiery goods would not be able to get the supplies of their raw material from the crimpers who were the main suppliers of the nylon hosiery goods industry. It is alleged by the plaintiffs that the September Agreement thus aims at ousting crimpers and in turn cripple the nylon hosiery goods industry inasmuch as this industry would not be able to get its supplies of the raw material from the crimpers. The contention is that on account of the compelling conditions imposed on the crimpers under the September Agreement to accept that they are not the Actual Users, defendants 1 to 4 are depriving the plaintiffs from receiving crimped/dyed yarn. It is alleged that the defendants are manipulating the market and pushing up the prices of the raw material. Under the September Agreement the plaintiffs would only get a very small quota of the crimped/dyed yarn from defendants 1 to 4. It is not staled if Khanna Rayon Industries and Reliance Textile Industries (P) Ltd., would be able to supply the raw material to the plaintiffs. The September Agreement is thus said to be in contravention of the provisions of the Monopolies and Restrictive Trade Practices Act. 1969. In consequence, it is claimed that the agreement being against public policy was liable to be declared void and defendants retrained from enforcing it. The plaintiffs claim that the defendants have entered into a conspiracy to do various acts with an intention to injure the plaintiffs and other hosiery goods manufacturers and the crimpers. This constitutes a tort of conspiracy and interference with the plaintiffs' trade by unlawful means. As a result of this alleged injury threatened and being caused to the plaintiffs an interim injunction is sought by the plaintiffs against the defendants, as noticed earlier.
4. Most of the defendants are represented in court including the Federation of Hosiery Manufacturers Association of India. They have resisted the grant of the temporary injunction.
5. As already stated, the plaintiffs are not a party to the September Agreement. Their principal complaint is that by the operation of the September Agreement the crimpers will not be able to get nylon yarn for being processed into the raw material required for the hosiery industry. As such the plaintiffs would suffer great loss and may have to close down their manufacturing unit.
6. The grant of perpetual injunctions is governed by the provisions in Chapter VIII of the Specific Relief Act, 1963. The grant of temporary injunctions is regulated by the Code of Civil Procedure. Section 38 of the Specific Relief Act reads as under:
“38(1) Subject to the other provisions contained in or referred to by this Chapter, a perpetual injunction may be granted to the plaintiff to prevent the breach of an obligation existing in his favour, whether expressly or by implication.
(2) When any such obligation arises from contract, the court shall be guided by the rules and provisions contained in Chapter II.
(3) When the defendant invades or threatens to invade the plaintiff's right to, or enjoyment of, property, the Court may grant a perpetual injunction in the following cases, namely:—
(a) where the defendant is trustee of the property for the plaintiff;
(b) where there exists no standard for ascertaining the actual damage caused, or likely to be caused by the invasion:
(c) where the invasion is such that compensation in money would not afford adequate relief;
(d) where the injunction is necessary to prevent a multiplicity of judicial proceedings.”
7. As would be apparent from a reading of the above section a perpetual injunction can be granted to prevent the breach of an obligation existing in favour of the plaintiff, whether expressly or by implication; or when such obligation arises from a contract which can be specifically enforced; or when the defendant invades or threatens to invade the plaintiff's right to, or enjoyment of property, inter alia, where the invasion is such that compensation in money would not afford adequate relief or where there exists no standard for ascertaining the actual damage caused or likely to be caused by the invasion. The plaintiffs claim that they would be entitled to a perpetual injunction to prevent the breach of an obligation existing in their favour by implication and also because the plaintiffs' right to or enjoyment of property is being invaded or threatened, the damage from which cannot be ascertained nor would compensation in money be an adequate relief. Since they claim they would be entitled to a perpetual injunction on the facts of this case a temporary injunction should be granted pending the disposal of the suit. Whether the plaintiffs have made out a prima facie case for the grant of a perpetual injunction will be commented upon by me hereafter.
8. As already noticed, the grant of temporary injunction is governed by the Code of Civil Procedure and the relevant provisions in this behalf are Section 151 of the CPC and Order 39, Rr. 1 and 2. Section 151 of the CPC saves the inherent powers of the court to do justice between the parties. It will, however, be attracted only if there is no other statutory provision under which relief may be claimed. I have, therefore, to see whether the provisions of O. 39, Rules 1 and 2 are attracted in the present case.
9. Rule 1 of Order 39 is obviously not attracted in the circumstances of the case as there is no allegation or averment that any property in dispute in this suit is in danger of being wasted, damaged or alienated by the defendants or is likely to be wrongfully sold in execution of a decree. Similarly, there is no allegation or averment that the defendants threaten or intend to remove or dispose of their property with a view to defraud their creditors. Reading Rule 2 of Order 39 of the CPC, it is urged that the defendants are liable to be restrained from committing “other injury of any kind”. So, all that has to be seen is whether the plaintiffs have made out a case that the defendants are committing “other injury of any kind”. This being the position the plaintiffs can succeed in this interlocutory application only if they bring their case within the ambit of Rule 2 of Order 39 of the CPC.
10. Mr. D.V Patel, the learned Counsel for the plaintiffs, invited my attention to paragraph 20 of the plaint which sets out the injury being committed by the defendants to the detriment of the plaintiffs. He contends that by virtue of the provisions of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Monopolies Act) an implied obligation has come into existence in favour of the plaintiffs and the entering into of the September Agreement is a breach of that obligation. In order to appreciate the contention it will be necessary to notice a few provisions of the Monopolies Act.
11. The Monopolies Act was enacted by the Parliament to provide that the operation of the economic system does not result in the concentration of economic power to the common detriment, for the control of monopolies, for the prohibition of monopolistic and restrictive trade practices and for matters connected therewith or incidental thereto. The entering into of the September Agreement is claimed to be a restrictive trade practice as defined in the Monopolies Act and to which the provisions of Sections 33, 35, 37. 38 and 48 of the Monopolies Act are attracted. Reading the definitions given in the Monopolies Act, “a restrictive trade practice” means a trade practice which has, or may have the effect of preventing, distorting or restricting, competition in any manner and in particular, (i) which tends to obstruct the flow of capital or resources into the stream of production, or (ii) which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions. A trade practice itself has been defined by clause (u) of Section 2 as under:—
““Trade practice” means any practice relating to the carrying on of any trade, and includes—
(i) anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders,
(ii) a single or isolated action of any person in relation to any trade;”
12. Section 33 of the Monopolies Act requires that any agreement relating to a restrictive trade practice falling within one or more of the categories specified in that section shall be subject to registration in accordance with the provisions of Chapter V of the Act. The September Agreement is claimed to fall within the ambit of clauses (a) and (j) of Section 33 which read as under:—
“(a) any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought;
(j) any agreement to sell goods at such prices as would have the effect of eliminating competition or a competitor;” Section 35 of the Monopolies Act lays down that agreements falling within the ambit of Section 33 become registrable under the Act. Section 37 gives power to the Commission appointed under the Monopolies Act to enquire into the restrictive trade practices. This section reads as under:—
“37. Investigation into restrictive trade practices by Commission.— (1) The Commission may inquire into any restrictive trade practice, where the agreement, if any relating thereto has been registered under Section 35 or not, which may come before it for inquiry and, if after such inquiry it is of opinion that the practice is prejudicial to the public interest the Commission may, by order, direct that—
(a) the practice shall be discontinued or shall not be repeated;
(b) the agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified in respect thereof in such manner as may be specified in the order.
(2) The Commission may, instead of making any order under this section, permit the party to any restrictive trade practice, if he so applies to take such steps within the time specified in this behalf by the Commission as may be necessary to ensure that the trade practice is no longer prejudicial to the public interest and, in any such case, if the Commission is satisfied that the necessary steps have been taken within the time specified it may decide not to make any order under this section in respect of that trade practice.
(3) No order shall be made under sub-section (1) in respect of—
(a) any agreement between buyers relating to goods which are bought by the buyers for consumption and not for ultimate re-sale whether in the same or different form, type or specie or as constituent of some other goods;
(b) a trade practice which is expressly authorised by any law for the time being in force.
(4) Notwithstanding anything contained in this Act if the Commission, during the course of an inquiry under sub-section (1), finds that a monopolistic undertaking is indulging in restrictive trade practices, it may after passing such orders under sub-section (1) or sub-section (2) with respect to the restrictive trade practices as it may consider necessary, submit the case alone with its findings thereon to the Central Government with regard to any monopolistic trade practice for such action as that Government may take under Section 31.”
13. Section 38 lays down that for the purpose of any proceedings before the Commission, under Section 37 a restrictive trade practice shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more of the circumstances enumerated in that section to exist. In other words the circumstances enumerated are what may be called ‘gateways’ for an agreement not to be regarded as being prejudicial to public interest. Section 48 of the Monopolies Act lays down penalties which a person may incur on prosecution for failure to register an agreement as contemplated by Sections 33 and 35 of the Monopolies Act.
14. The learned counsel for the plaintiffs urged that although it is the Commission under the Monopolies Act which has to investigate as to whether the September Agreement suffers from the vice of a restrictive trade practice and if it is satisfied that it does so suffer it may by order direct that the practice be discontinued or the agreement shall be void, yet the civil courts are not precluded from looking into the matter and if satisfied grant at least an interim relief that the September Agreement be not acted upon by the defendants. It was contended that inasmuch as the giving effect to the plaintiffs the civil courts should step in to prevent that injury, particularly because the agreement is in violation of law. Everyone has a right to earn his living in his own way provided he does not violate some law prohibiting him from so doing or infringe the legal rights of other people. It is contended that the defendants by entering into the September Agreement cannot claim that they are exercising their right to earn their living in their own way and so, cannot be stopped from exercising that right because in the exercise of that right they are violating the Monopolies Act and are infringing the legal rights of the plaintiffs. Support for this contention was found from a decision of the House of Lords in Quinn v. Leathem, 1900-1903 All ER 1. In this case the House of Lords was considering an appeal of a defendant against whom and three others an action was brought to recover damages for wrongful interference with the plaintiff's business of a butcher. After noticing the decision of Lord Halsbury, L.C in Mogul Steamshio Co. v. McGregor, Gow & Co., (1889), 23 QBD 598 and various other decisions in which an individual's right and freedom to trade upon what terms he wills was upheld it was observed that although a person has a right to earn his living in his own way, he cannot do so if he violates some law prohibiting him from so doing or infringe the legal rights of other people. This right involves liberty to deal with other persons who are willing to deal with him. A conspiracy by persons, maliciously and with intention to injure a plaintiff and not legitimately to advance their own interest, is actionable in civil proceedings for damages. There can be no doubt about this proposition of law but the question is of the applicability of the rule enunciated by the House of Lords to the facts of the present case. There is no averment worth the name in the plaint that the defendants have maliciously and with intention to injure the plaintiffs entered into a conspiracy. Whether the September Agreement amounts to violating some law or infringes legal rights of other people is a matter which will be commented upon hereafter.
15. Mr. Patel urged that the September Agreement violates a law and legal rights of the plaintiffs because the trade practice contained in the September Agreement is against public interest and unlawful by virtue of the provisions of Section 38 of the Monopolies Act. If that be so, then he claims that he is entitled to the grant of a temporary injunction and interference by the civil courts at this stage.
16. My attention was invited to two English decisions which I may first notice before commenting upon the contention of the learned counsel.
17. In Daily Mirror Newspapers Ltd. v. Gardner, (1968) 2 All ER 168 the Court of Appeal in England was concerned with “stop notices” asked to be issued by the National Federation of Newsagents, Booksellers and Stationers by all its members to the wholesalers to effectuate a complete boycott of the plaintiffs' newspaper, The Daily Mirror, for one week. These “stop notices” were asked to be issued in a dispute regarding commission payable by the newspaper to the wholesalers and the retailers. It was held on action having been brought by the Daily Mirror Newspapers Ltd. for injunction that the plaintiffs having shown prima facie an actionable wrong by the defendants the court should exercise its discretion to grant a temporary injunction, as the balance of convenience was greatly in favour of preserving the present position. The plaintiffs were held to have established a prima facie case of inducement by the defendants without lawful justification of breaches of contract by the wholesalers with the plaintiffs and prima facie the recommendation of the defendants was equivalent to a restriction deemed contrary to the public interest by virtue of Section 21 and Section 6 of the Restrictive Trade Practices Act, 1956. Lord Denning. M.P in his speech noticed the contention of the plaintiffs that the defendants were using unlawful means to injure the trade of the plaintiffs because they were contravening the Restrictive Trade Practices Act, 1956. Under Section 21 of that Act a restriction is deemed to be contrary to public interest and although this matter would be decided by the Restrictive Trade Practices Court, it was within the purview of the civil court if the Federation made a recommendation which was unlawful and that recommendation interfered with the trade or business of another to issue an interlocutory injunction.
18. In Brekkes Ltd. v. Cattel, (1971) 1 All ER 1031. the Court of Chancery issued an interlocutorY injunction where it was conceded that the defendants, who were members of a Birmingham association representing the interest of the Birmingham Wholesale Fish Market and the Hull Fish Merchants Protection Association Ltd. implemented or sought to implement a resolution of the Birmingham Association that their members would not accept fish from Hull conveyed on any vehicles other than those officially nominated by the Hull Association which ousted the plaintiffs and amounted to a restrictive trade practice within the meaning of Restrictive Trade Practices Act, 1956. It was observed in the course of judgment that inasmuch as such a conspiracy amounted to a tort, it was actionable because the trade practice was unlawful within the meaning of the English Act.
19. Section 20 of the Restrictive Trade Practices Act, 1956 (the English Act), inter alia, lays down, where any such restrictions are found by the court to be contrary to the public interest, the agreement shall be void in respect of those restrictions. The Monopolies Act on the other hand, lays down that the Commission may inquire into any restrictive trade practice and, if after such inquiry it is of the opinion that the practice is prejudicial to the public interest, the Commission may by order direct that,— (a) the practice shall be discontinued or shall not be repeated; (b) the agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified in respect thereof in such manner as may be specified in the order. There is thus an essential difference between the english act and the indian act. Under the English Act once the court comes to the conclusion that a particular restriction is contrary to public interest the agreement automatically becomes void in respect of those restrictions. Under the Indian Act if the Commission is of the opinion that the practice is prejudicial to the public interest it has by order to declare the agreement to be void. Thus, under the English Act a restrictive trade practice found contrary to public interest is void ab initio but under the Indian Act it has to be declared void. So, an agreement containing a restrictive trade practice would not be unlawful till the Commission issues a direction that it is void. I, therefore, do not find any force in the argument that assuming the September Agreement contains restrictive trade practice it is an unlawful agreement. This opinion, however, is only on the prima facie aspect of the case and would not prejudice the ultimate decision of the case.
20. Coming now to the two English decisions relied upon by Mr. Pa??? I find on facts the rule enunciated is not attracted to the circumstances of the present case. In both the cases the action complained of was directed against the plaintiff in so many words. In the present case the September Agreement is not directed against the plaintiffs as such. Indeed, the plaintiffs' complaint is that the crimpers would not be able to get yarn for being processed and in turn being supplied to the plaintiffs. The crimpers have not come forward to make any complaint nor is there any averment that the crimpers are not getting supplies. The condition imposed on the crimpers that they should first admit that they are not Actual Users is a matter which the crimpers could complain of and not the plaintiffs. Prima facie therefore, the plaintiffs have not made out any case of short supplies or non-supply even if it be assumed that there is any obligation on defendants 1 to 4 to make supplies to the plaintiffs.
21. Mr. Patel urged that if this agreement is allowed to stand the defendants would control the entire market and there would not be free competition. The plaintiffs on their own showing purchase most of their yarn from manufacturers other than defendants 1 to 4 though they are said to fabricate 90 per cent of the yam. No case has been made out, prima facie, that the suppliers of the plaintiffs are not getting the yarn from defendants 1 to 4 or that those suppliers are unable to supply raw material to the plaintiffs. Indeed, prima facie, the plaintiffs do not seem to have any cause of action against the defendants.
22. Section 23 of the Contract Act does not seem to be attracted because the consideration or object of the September Agreement, prima facie, is not forbidden by any law nor does it defeat any provision of law nor is fraudulent or involving or implying injury to the person or property of another. It is urged that it is against public policy but then it would be against public policy only if after a proper inquiry by the Commission under the Monopolies Act it is found that it falls within the ambit of Sections 37 and 38. It is neither possible nor desirable for this court to comment upon this aspect particularly at this stage.
23. In view of my opinion expressed above on the prima facie aspect of the case it is unnecessary to comment upon the provisions of Section 41 of the Specific Relief Act. I may however, mention that as at present advised the plaintiffs do not appear to be entitled to any of the reliefs claimed in the plaint. First, the grant of these reliefs does not, in any way, seem to benefit the plaintiffs. The annulment of the September Agreement cannot guarantee supplies to the plaintiffs ???r can a permanent injunction against the defendants from acting on the September Agreement ensure supply of raw material to the plaintiffs. Secondly, there is no cause of action to claim these reliefs. It was urged that if the September Agreement is not acted upon the nylon yam will be available in free market. But all these are speculative matters and cannot be gone into at this stage. The plaintiffs are certainly not entitled to claim delivery and cancellation of the September Agreement as they are not party to the same. Prima facie, therefore, the plaintiffs have no case.
24. It is settled law that no interim injunction would be issued if the final relief cannot be granted. As was held in K.P.M Aboobucker v. K. Kunhamoo, AIR 1958 Mad 287: “An interim relief is granted to a person on the footing that that person is prima facie entitled to the right on which is based the claim for the main relief as well as the interim relief. That relief is granted as an interim measure till the disposal of the suit in which is to be investigated the validity of the claim or right that has been put forward. If no such claim has been put forward in the suit, it means that there can be no occasion for investigation of such a claim in the suit, there can be no justification for the grant of an interim relief which will just lapse on the termination of the suit, but which will leave the parties in the same position in which they were before the institution of the suit, in the course of which the interim relief was sought and obtained. That is not the scope of O. 39, Rule 1.”
25. Coming now to the other two important factors to be considered in grant of a temporary injunction, namely, balance of convenience and irreparable injury, I find that as at present advised the balance of convenience is in favour of the defendants. A large number of people have got together, and those people are organisations to further trade interests of both production and distribution. The plaintiffs have not filed the suit in a representative capacity but on their own behalf.
26. They are by all standards small consumers. As against this the defendants would be dealing with bulk of the production of the defendants 1 to 4. Even then a good portion of the production of defendants 1 to 4 will go to the free market. In this view of the matter the trade of the defendants cannot be jeopardised just to meet the possibility of the plaintiffs not getting supplies of raw material from crimpers, who themselves are not complaining.
27. As far as irreparable injury is concerned, there again it has to be weighed as to who would suffer more and whether the plaintiffs cannot be compensated in money. It may be that on account of non-availability of raw material the plaintiffs have to close down but then if there is any privity of contract between them and the defendants they can claim damages for any loss that may be sustained. I find the issue of a temporary injunction would disturb a settled state of dealings between the defendants since September, 1973.
28. The result is that without prejudice to the case of the parties I find no justification to issue the temporary injunction asked for and dismiss the plaintiff's application.
29. The learned counsel for the defendants had pressed for costs but, in my view, the award of costs should be held over and would follow the ultimate decision of the suit.
30. Application rejected.