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Prabhu Dayal v. Laldas Maganlal
Structured Summary of the Opinion (Ismail, J.)
Factual and Procedural Background
The applicant, Pandit Prabhu Dayal, executed an equitable mortgage on 14 May 1930 in favour of Seth Lal Das for a large sum; the properties hypothecated under that mortgage were located within the United Provinces. On 9 October 1934 the applicant executed a subsequent mortgage in favour of Seth Lal Das and his wife which included some properties outside the province. The principal and interest under the 14 May 1930 bond formed part of the consideration for the 1934 mortgage; the deed stated that the first mortgage was thereby satisfied and discharged. Under the later deed the applicant was required to pay periodic instalments of interest; he paid instalments until April 1938 and then withheld payments, alleging (and not disputed) that he was advised he was paying a higher rate of interest than permitted to him as an agriculturist under the Agriculturists' Relief Act.
The applicant requested accounts; upon failure by the creditors to render accounts he filed a suit under section 33 of the Agriculturists' Relief Act in the Civil Judge's Court, Agra, on 5 March 1937. The plaint was returned and later presented to the Munsif of Agra on 10 February 1938. While that suit was pending, in October 1938 the mortgagees instituted a suit in Bombay for enforcement of the 1934 mortgage (the Bombay High Court's jurisdiction for that suit was assumed for the purposes of the application). The applicant applied to the Munsif of Agra for an injunction restraining the mortgagees from proceeding with the Bombay suit; the Munsif refused but the District Judge granted an injunction. The suit before the Munsif under section 33 was ultimately dismissed. The applicant appealed to the District Judge (appeal still pending). The injunction granted earlier lapsed with termination of the suit; the applicant applied to the District Judge for an ad interim injunction which was refused. The applicant filed a first appeal to this Court against the District Judge's refusal; the appeal had not been admitted. The applicant then applied to this Court for a temporary injunction pending disposal of the appeal; an ex parte temporary injunction was granted by a learned Judge on 17 March 1939 and notice issued to the opposite party, who appeared and contested the application. The present opinion concerns that application under Order XXXIX, rules 1 and 2 and section 151 of the Civil Procedure Code.
Legal Issues Presented
- Whether a suit by an agriculturist under section 33 of the Agriculturists' Relief Act is maintainable where the mortgage is indivisible and some hypothecated properties are situated outside the United Provinces (i.e., the effect of extraterritorial properties on maintainability).
- Whether Order XXXIX rule 2 (injunctions in suits restraining breach of contract or other injury "of any kind") permits restraining the mortgagees from instituting or prosecuting their suit in the Bombay High Court.
- Whether Order XXXIX rule 1 (interim injunction where property is in danger of being wasted, damaged, alienated, or wrongfully sold in execution) applies to restrain enforcement proceedings of a mortgage pending adjudication in the applicant's suit.
- Whether this Court, under its inherent jurisdiction (section 151 CPC and equity principles), may restrain a party within its reach from prosecuting a suit in a foreign forum (here, restraint of mortgagees from proceeding in Bombay) when the act is a lawful exercise of contractual or legal rights.
Arguments of the Parties
Opposite Party's (Mortgagees') Arguments
- The suit by the applicant under the Agriculturists' Relief Act is not maintainable because some hypothecated properties lie outside the United Provinces; reliance placed on the Bench ruling in Wahid Uddin v. Makhan Lal that an indivisible mortgage including properties outside the province made such a suit not maintainable.
- Order XXXIX rule 1 has no application to these facts; the Court lacks jurisdiction to enjoin the mortgagees from pursuing their legal remedy in the Bombay High Court.
- The mortgagees are entitled to enforce their mortgage in a court (Bombay) that will not apply the local agriculturists' relief legislation; that is a lawful exercise of their rights and not contrary to equity.
Applicant's Arguments
- The applicant contends that his suit and the present application are governed by Order XXXIX rules 1 and 2 of the Civil Procedure Code and that an injunction should be issued to restrain the mortgagees from prosecuting their suit in Bombay while the applicant's proceedings under the Agriculturists' Relief Act (section 33) continue.
- The applicant attempted to distinguish the Bench ruling relied on by the mortgagees (Wahid Uddin v. Makhan Lal), though the Court declined to decide the merits of that point at this stage and left it for later determination if the appeal is admitted.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Wahid Uddin v. Makhan Lal | Bench ruling that a suit under the Agriculturists' Relief Act was not maintainable where an indivisible mortgage included properties outside the province. | The Court noted the ruling and observed it would be binding on a single Judge, but declined to express an opinion on the merits of the applicant's case at this stage; the question was to be considered later if the appeal is admitted. |
| Darab Kuar v. Gomti Kuar | Held earlier that section 493 applied to suits restraining breach of contract or akin injuries; prior judges declined injunction to restrain interference in management of property. | The Court observed that since the phrase "of any kind" was added to the rule in the present Code, the earlier restrictive view in Darab Kuar is no longer good law; nevertheless the Court reasoned that rule 2 cannot be used to restrain the lawful exercise of rights. |
| Narayan Vithal Samant v. Jankibai | Full Bench (Bombay) held a single Judge sitting on the Original Side could, under section 151 CPC, restrain parties in a suit before him from proceeding with a suit in a subordinate Judge's court (thereby effectively staying those proceedings). | The Court found this precedent inapplicable because the suit for enforcement of the mortgage was not pending in a court subordinate to this Court (i.e., the Bombay suit was not in a subordinate court of this Court). |
| Mulchand Raichand v. Gill & Co. | Supported the view that a High Court Judge could restrain proceedings in a subordinate court under inherent jurisdiction. | The Court treated the decision as similar in principle to Narayan Vithal Samant but inapplicable on the facts because the Bombay suit was not in a subordinate court. |
| Naik v. Balwant Sitaram | Held that the Bombay High Court had jurisdiction to restrain a defendant from proceeding with his suit in the Hyderabad courts where the subject-matter was the same and the defendant had entered appearance and made a counter-claim in the Bombay proceedings. | The Court cited this case as showing that the High Court has inherent jurisdiction apart from the Code, but noted that those facts (appearance and counter-claim) were material to the relief granted there. |
| Venechand v. Lakhmichand Manekchand Pratt | Observed the High Court's jurisdiction to restrain a party within its jurisdiction from prosecuting a suit in a foreign court, relying on equity principles (quotation of Lord Cranworth in Carron Iron Co. v. Maclaren). | The Court cited this observation to state the general equitable principle under which a court may act in personam to prevent conduct contrary to equity by parties within its reach, but emphasised the necessity of inequitable conduct as a precondition for exercising that jurisdiction. |
| Carron Iron Co. v. Maclaren | Principle (quoted): "The court acts in personam and will not suffer any one within its reach to do what is contrary to its notions of equity, merely because the act to be done may be in point of locality beyond its jurisdiction." | The Court relied on the principle (as quoted in Venechand) to explain the basis of equity jurisdiction to restrain parties within reach, but concluded the principle required a showing of conduct contrary to equity, which was not made here. |
Court's Reasoning and Analysis
The Court approached the matter in stages, examining first the statutory rules invoked (Order XXXIX rules 1 and 2) and then the inherent equitable jurisdiction under section 151 CPC and the authorities dealing with restraint of foreign or parallel proceedings.
On Rule 2: The Court observed that the phrase "of any kind" was added to the present Code and that earlier decisions (Darab Kuar v. Gomti Kuar) that limited section 493's scope no longer reflected the statutory text. However, the Court drew a limiting principle: the rule cannot be used to restrain the lawful exercise of a right. The Court concluded that the mortgagees had a lawful right to bring a suit in Bombay just as the applicant had a right to pursue relief under local agriculturists' legislation. Because the mortgagees' action could not properly be characterized as illegal or dishonest, rule 2 did not assist the applicant.
On Rule 1: The Court found it difficult to say the property was in danger of being wasted, damaged, alienated, or wrongfully sold in execution. The mortgagees had not obtained a decree and enforcement of a mortgage, the Court held, could not be characterised as wasting or damaging property. Sub-clause (b) was also inapplicable. Accordingly rule 1 did not, in terms, apply to justify an injunction.
On inherent jurisdiction/equity (section 151 CPC and precedents): The Court acknowledged authorities from the Bombay High Court where single Judges or Full Benches had restrained parties from proceeding in subordinate or foreign courts in certain factual contexts (e.g., where proceedings were in subordinate courts, where the defendant had entered appearance and made a counter-claim, or where conduct was contrary to equitable notions). The Court distilled the central justification for such equitable intervention: it is exercised where a party within the court's reach is doing something against the court's notions of equity.
Applying that principle to the present facts, the Court asked whether the mortgagees' conduct amounted to inequitable conduct. After careful consideration the Court concluded it did not: the mortgagees were pursuing a lawful contractual remedy in a forum that would not apply the local agriculturists' relief legislation. The legislature had provided special reliefs for agriculturists which the applicant could legitimately seek, but the mortgagees could not be blamed for choosing a forum that would enforce their contract without regard to that local statute. The Court therefore held that equitable jurisdiction should not be invoked to restrain the mortgagees from claiming their legal remedy in Bombay.
The Court did acknowledge that parallel suits in different courts may produce complications and should, if possible, be avoided, but stated that potential complications do not justify restraining a party from seeking a legal remedy otherwise available to them.
Holding and Implications
Holding: The temporary injunction previously granted is discharged and the applicant's application is dismissed with costs.
Implications:
- Direct effect: The applicant loses the interim relief; the mortgagees are not restrained from prosecuting their suit in the Bombay High Court. The Court directed that the record be sent immediately to the court below so the applicant may proceed with his appeal there.
- On precedent and legal principle: The Court applied existing equitable principles limiting a court's power to restrain lawful proceedings in another forum and emphasised that such relief requires a showing of conduct contrary to notions of equity; none was found on these facts. The opinion does not purport to set a novel precedent beyond applying those principles to the case at hand.
Ismail, J.:— This is an application by Pandit Prabhu Dayal under order XXXIX, rules 1 and 2 and section 151 of the Civil Procedure Code. The facts that have given rise to this application may be briefly stated. It appears that the applicant, executed an equitable mortgage on 14th May, 1930, in favour of Seth Lal Das for a large sum of money. The properties hypothecated under this mortgage were situate within the United Provinces. On 9th October, 1934, the applicant executed another mortgage in favour of Seth Lal Das and his wife. In this mortgage, some properties outside this province were also included. The principal and interest due under the bond of 14th May, 1930, formed part of the consideration of the later mortgage. It was stated in the deed that in consequence of the execution of the second mortgage the first mortgage was satisfied and discharged. Under the terms of the mortgage deed the applicant was required to pay a certain amount periodically on account of interest due under the mortgage. It is stated by the applicant, and this statement is not disputed, that the applicant paid the instalments till April, 1938. Since then the payment of interest has been withheld. The applicant states that he was advised that he was paying a higher rate of interest than what he was bound to do as an agriculturist according to the provisions of the Agriculturists' Relief Act. He therefore called upon the creditors to render accounts to the applicant. As the creditors failed to render accounts a suit was filed by the applicant under section 33 of the Agriculturists' Relief Act in the court of the Civil judge, Agra, on the 5th of March, 1937. On the objection of the mortgagees the plaint was returned for presentation in the court of the Munsif of Agra. The plaint was then presented in the latter court on 10th February, 1938. While this suit was pending, in October, 1938, the mortgagees brought a suit at Bombay for the enforcement of the mortgage of 1934. It is assumed for purposes of this application that the Bombay High Court has got jurisdiction to try the suit instituted by the mortgagees. The applicant made an application to the Munsif of Agra for the issue of an injunction restraining the mortgagees from proceeding with the Bombay suit. The Munsif rejected the application but the learned District Judge granted it. Ultimately the suit pending in the court of the Munsif under section 33 of the Agriculturists' Relief Act was dismissed. The applicant then filed an appeal from the decision of the trial court in the court of the District Judge which is still pending. The injunction granted by the District Judge having come to an end with the termination of the suit the applicant applied to the District Judge for the issue of an ad interim injunction. This application, however, was rejected. The applicant has filed a first appeal from order to this Court against the order of the District Judge refusing to grant injunction. This appeal has not been admitted yet. The applicant after filing the appeal made an application for the issue of a temporary injunction pending the disposal of the appeal. This was granted on the 17th of March, 1939, by a learned Judge of this Court and notice was issued to the opposite party to show cause why the ex parte order granting a temporary injunction may not be confirmed. The opposite party has now appeared and contests the application of the applicant on several grounds. I have heard learned counsel for the parties at considerable length and I now proceed to consider some of the points raised at the Bar.
Learned counsel for the opposite party contends that the suit instituted by the applicant under the Agriculturists' Relief Act is not maintainable as some of the properties hypothecated are situate outside the United Provinces. In support of this contention reliance is placed on a Bench ruling of this Court in Wahid Uddin v. Makhan Lal(1). In that case properties in Meerut and Delhi were hypothecated by an agriculturist. The mortgagor brought a suit under section 33 of the Act. The learned Judges held that the suit was not maintainable as the mortgage was indivisible and some of the properties were outside this province to which the provisions of the Act did not apply. Learned counsel for the applicant has attempted to distinguish this ruling. In my opinion it is not proper for me to express any opinion on the merits of the case. This is a question that will have to be considered later. It is urged by learned counsel for the opposite party that the suit in Bombay is for the enforcement of the second mortgage, while the suit under section 33 of the. Act refers to the mortgages of 1933 and 1934 both. It is urged that the mortgage of 1930 does not subsist while the suit with reference to the second mortgage is not maintainable in view of the ruling cited above. This again is a matter which will have to be determined later if the appeal filed by the applicant is admitted. It may be mentioned that the ruling of the Bench would be binding on me as a single Judge. As stated above I am not prepared to enter into the merits of the case.
The next point stressed by learned counsel for the mortgagees is that order XXXIX. rule 1 has no application to the facts of the present case and that this Court has no jurisdiction to issue an injunction restraining the mortgagees from seeking their legal remedy in the Bombay High Court. Learned counsel for the applicant contends that his application is covered by order XXXIX. rules 1 and 2. I now proceed to examine the aforesaid rules. Rule 2 provides: “In any suit for restraining the defendant from committing a breach of contract or other injury of any kind …. The words “any kind” have been added in the present Code of Civil Procedure. They were absent in the old Code. In Darab Kuar v. Gomti Kuar it was held that section 493 applied to suits restraining a defendant from committing a breach of contract or injuries akin to breaches of contract. The learned Judges declined to grant an injunction restraining the defendant from interfering in the management, of the properties in dispute. This ruling, however, is no longer good law in view of the addition of the words “of any kind”. The question is whether the lawful exercise of a right vested in a person can be legally restrained by the court under this rule. In my opinion this cannot be done. It must be conceded that the mortgagees have as much right to bring a suit in Bombay as the applicant has or a right to institute a suit at Agra. The mortgagors want to take advantage of a local legislation which is enacted exclusively for the benefit of the agriculturists. The mortgagees on the other hand are anxious to enforce the terms of a contract solemnly entered into by the parties. It is impossible to hold that the action of the mortgagees is illegal on dishonest. In my judgment rule 2 does not help the applicant.
Coming to, rule 1, I find it difficult to hold that the property in suit is in danger of being wasted, damaged or alienated by any party to the suit or wrongfully sold in execution of a decree. The mortgagees have not yet obtained a decree and therefore no question of execution arises. The enforcement of a mortgage can never be characterised as an attempt to waste or damage any property. Sub-clause (b) obviously has no application. In my opinion therefore rule 1 in terms does not apply.
It may be urged that apart from the provisions of the Code this Court has power to restrain a party from proceeding with a suit in another court. This view has been taken in several cases in Bombay. In Narayan Vithal Samant v. Jankibai a Full Bench of the Bombay High Court held that a single Judge sitting on the Original Side is competent under section 151 of the Code of Civil Procedure to restrain the parties in a suit before him from proceeding with a suit in a Subordinate Judge's court in the mofassil and so in effect stay the proceedings. The suit for the enforcement of the mortgage, however, is not pending in a court subordinate to this Court and therefore this ruling is inapplicable. A similar view was taken in Mulchand Raichand v. Gill & Co.(2). In Naik v. Balwant Sitaram(3) it was held that the Bombay High Court had jurisdiction in the plaintiff's suit to pass an order restraining the defendant horn proceeding with his suit in the Hyderabad courts. The facts were that the defendant filed a suit in Hyderabad State, being a resident of that State, against the plaintiff and subsequently the plaintiff filed another suit against the defendant in the Bombay High Court. The subject matter of the suit was the same and the defendant entered appearance in the plaintiff's suit without protest and also made a counter claim. On these facts an injunction restraining the defendant was issued. This case no doubt shows that the High Court has got inherent jurisdiction apart from the provisions of the Code. In Venechand v. Lakhmichand Manekchand Pratt, J., observed: “There is no doubt?s to the jurisdiction of this Court to restrain a party within its jurisdiction from prosecuting a suit in a foreign court. The principle on which this jurisdiction is exercised is set forth in the judgment of Lord Cranworth in the case of Carron Iron Co. v. Maclaren. It is that ‘The court acts in personam and will not suffer any one within its reach to do what is contrary to its notions of equity, merely because the act to be done may be in point of locality beyond its jurisdiction’.”
It will be observed that the only justification for the exercise of the equity jurisdiction by this Court is that a party to the suit is doing something which is against its notions of equity. The question therefore is whether the mortgagees in this case are guilty of any such conduct. After giving my very serious consideration to the able arguments advanced by learned counsel for the parties I am unable to say that the action of the mortgagees can be characterised as illegal or even improper. The legislature in its wisdom has thought it fit to grant reliefs to a certain class of persons. In conferring such a right the terms of the contract entered into between the parties are to be ignored. Even the provisions of other enactments are superseded by this special enactment. The applicant is fully entitled to claim benefit of the provisions of the Act and no reasonable objection can be raised against his attempt to obtain a reduction of interest payable under the bond. On the other hand the mortgagees cannot be blamed for instituting a suit for the enforcement of their mortgage in a court which will not recognize the provisions of the local Act. In my judgment the opposite party is within his rights in instituting the suit in Bombay and should not be restrained from taking such a course.
There is no doubt that the institution of two parallel suits in two courts may lead to complications which if possible should be avoided. It is for the applicant to take such steps as may be open to him. This Court however will not be justified in restraining one of the parties from claiming his legal remedy. An Older of injunction no doubt will be helpful to the applicant, but it will manifestly be detrimental to the interest of the opposite party. In my opinion there is no justification for such a discrimination.
In the result I discharge the temporary injunction and dismiss the application with costs. I direct that the record be sent immediately to the court below to enable the applicant to proceed with his appeal.
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