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H.L Roy v. Indo Swiss Co.
Structured Summary of the Opinion (Chatterji, J.)
Factual and Procedural Background
The dispute concerns possession and title to an electrical undertaking at Giridih. Defendants 1–3 (the Roys) formed a partnership in 1928 called Lalji and Co. (defendant 4). Lalji and Co. obtained a license under the Electricity Act (IX of 1910) in 1929 to supply electricity to Giridih and intended to transfer the business to a company subsequently formed, the Giridih Electric Supply Corporation (defendant 7, "the Company"). Agreements were made in September 1929 under which Lalji and Co. acted as Managing Agents for the Company, and the Company began supply operations in March 1931. Permission to transfer the licence to the Company was sought and ultimately refused in 1935.
The Roys were adjudicated insolvent on 17 July 1934; they claimed the electrical undertaking among their assets. The official assignee of the insolvency proceeding could not take actual possession due to statutory restrictions under the Electricity Act and appointed N.L. Roy (defendant no. 3) to carry on the undertaking for the assignee. The Company was wound up on 20 August 1935 and an official liquidator took steps to take possession. After enquiries, the official assignee of the Calcutta High Court relinquished any claim to the undertaking in March 1938.
The official liquidator obtained an order under section 185 of the Companies Act from Wort, J., on 5 January 1940 and took possession on 12 January 1940. The Roys succeeded on Letters Patent appeal on 9 May 1940, holding that (a) their possession had been asserted as their own rights (so section 185 application was not maintainable for possession) and (b) possession could be obtained only by suit; the Court also held the Company was prima facie entitled to the movables though not the land for the power house.
Restitution was initially refused but ultimately allowed by this Court on 26 October 1943, subject to postponement of delivery of possession for three months to permit the respondent (the purchaser under the liquidator) to institute a suit if advised. In the interim the official liquidator sold the undertaking to the plaintiff on 16 August 1941 (purchase price Rs. 91,000), and the plaintiff was placed in possession on 8 December 1941; the plaintiff obtained sanction under section 28(1) of the Electricity Act to carry on the undertaking.
The plaintiff instituted Title Suit No. 2 of 1944 claiming the undertaking belonged to the Company and vested in the plaintiff by purchase from the official liquidator, and applied for a temporary injunction restraining defendants 1–4 from taking possession. The Subordinate Judge granted the injunction on 25 July 1944. The plaintiff also sought amendment of the plaint to add alternative bases of title (a verbal one-year lease from 1 January 1930 with holding over, or an irrevocable licence); the Subordinate Judge allowed the amendment on 14 February 1945. The Roys (defendants 1–4) appealed the injunction order and filed a civil revision against the amendment order. The present opinion resolves those challenges.
Legal Issues Presented
- Whether a court may lawfully grant a temporary injunction in a suit by invoking its inherent power under section 151 of the Civil Procedure Code, as opposed to under the specific provisions of Order 39 read with section 94 of the Code.
- Whether the plaintiff was entitled to a temporary injunction restraining the defendants from taking possession of the disputed property when the defendants sought to enforce an order of restitution in their favour.
- Whether the Subordinate Judge committed any jurisdictional error in allowing the amendment of the plaint to add alternative averments concerning lease or irrevocable licence.
Arguments of the Parties
Respondent / Plaintiff (as represented by Mr. S. N. Bose)
- Argued that the Subordinate Judge validly granted a temporary injunction and that the Court may exercise inherent jurisdiction under section 151 of the Civil Procedure Code to grant such relief where necessary for protection of property.
- Relied upon the decision in Dhaneshwar Nath Tewari v. Ghanshyam Dhar Misra for the proposition that apart from Order 39 the Court has inherent jurisdiction to grant temporary injunctions to protect property that is the subject matter of litigation.
- Contended that the case could fall under rule 2 of Order 39 (injunction to restrain commission of breach of contract or other injury of any kind), and that the defendants were going to commit “other injury of any kind” by taking possession.
- Argued that the balance of convenience favoured the plaintiff and therefore an injunction was appropriate.
Appellants / Defendants (the Roys and Lalji & Co.)
- Objected to the amendment of the plaint (the Subordinate Judge nevertheless allowed the amendment).
- Contended (by implication from the appeal) that the injunction granted by the Subordinate Judge was not justified, given the restitution order in their favour; the appeal challenges the injunction and the revision challenges the amendment allowance.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Dhaneshwar Nath Tewari v. Ghanshyam Dhar Misra | Authority for the proposition that, apart from the provisions of Order 39, a court has inherent jurisdiction under section 151 CPC to grant a temporary injunction to protect property pending the determination of rights. | The court considered and distinguished this authority. Chatterji, J. declined to follow it for the circumstances before him, holding that injunctions are governed by the specific provisions of Order 39 and section 94 CPC and cannot be granted merely by invoking inherent jurisdiction under section 151 where the Code prescribes specific remedies. |
Court's Reasoning and Analysis
The court's analysis proceeded in two parts: (A) the lawfulness of granting an injunction under inherent jurisdiction (section 151 CPC), and (B) the propriety of granting the injunction on the facts, plus a brief note on the amendment application.
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(A) Scope of Inherent Jurisdiction vs. Order 39 and Section 94:
Chatterji, J. held that specific provisions for injunctions exist in Order 39, rules 1 and 2, and that section 94 CPC contemplates granting temporary injunctions only "if it is so prescribed" — i.e., where the Code provides for such an injunction. Consequently, the court concluded it is not open to a court to grant a temporary injunction in exercise of its inherent power under section 151 CPC where the Code prescribes specific provisions for injunction. The judge thus rejected the proposition (derived from Dhaneshwar Nath Tewari) that inherent jurisdiction under section 151 can be used to grant injunctions contrary to the express framework of section 94 and Order 39.
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(B) Application of Legal Principle to the Facts:
Even assuming the plaintiff's reliance on rule 2 of Order 39 (for restraining "other injury of any kind"), the court examined whether the defendants were going to commit any injury by taking possession. The court emphasized that the defendants' intended possession was the execution of a restitution order of this Court in their favour. The plaintiff's present possession resulted from an earlier erroneous order; accordingly, the plaintiff could not lawfully ask the court to prevent the defendants from enforcing the restitution order and thereby preventing them from reaping the benefit of that order.
The judge observed that while the restitution order had postponed delivery of possession for three months to permit the respondent to bring suit "if so advised," that condition did not authorize relief beyond what was legally open to the plaintiff. The Subordinate Judge's injunction, having the practical effect of preventing enforcement of the restitution order (which bound the plaintiff), was therefore unjustified.
On the point of the balance of convenience, the court held that this question does not arise where the plaintiff's claim for an injunction is unlawful as a matter of law; since it was unlawful to seek an injunction that would prevent enforcement of the restitution order, the balance of convenience could not salvage the plaintiff's application.
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(C) Amendment of the Plaint:
Concerning the civil revision challenging the Subordinate Judge's allowance of amendment to the plaint (adding alternative allegations of a one-year verbal lease with holding over or an irrevocable licence), Chatterji, J. found no demonstration of error of jurisdiction in the Subordinate Judge's decision. Consequently, the court dismissed the civil revision.
Holding and Implications
Primary Holding: The appeal against the order granting a temporary injunction is allowed and the injunction is discharged.
Civil Revision Holding: The civil revision challenging the order allowing amendment of the plaint is dismissed.
Consequences for the parties:
- The defendants (the Roys) are not to be restrained by the injunction previously granted and are entitled to seek to enforce the restitution order in their favour; the injunction that prevented them from taking possession was discharged.
- The plaintiff's possession, being founded on an earlier erroneous order, does not justify a court-ordered injunction preventing defendants from obtaining possession pursuant to the restitution order which binds the plaintiff.
- There will be no order as to costs in respect of both the appeal and the civil revision (the appeal was allowed; the civil revision was dismissed; no costs awarded).
The court expressed a legal rule (as applied in this case) that temporary injunctions must be granted in accordance with the Code (Order 39 and section 94) and cannot be created merely by invoking inherent jurisdiction under section 151 CPC where the Code prescribes specific remedies. The court rejected reliance upon the decision in Dhaneshwar Nath Tewari for the facts at hand.
Final Orders as recorded in the opinion:
- Application (presumably for injunction) dismissed by the High Court bench.
- Appeal against the Subordinate Judge's injunction order allowed.
- Civil revision against amendment dismissed.
Chatterji, J.:— This is an appeal by the defendants 1 to 4 from an order passed by the learned Additional Subordinate Judge of Hazaribagh in Title suit no. 2 of 1944 granting an injunction restraining them from taking possession of the disputed property. The application in revision which is also filed by them is directed against an order allowing amendment of the plaint.
The defendants 1 to 3 are brothers, who will be referred to hereinafter as the Roys. In 1928 they formed a partnership called Lalji and Co. (defendant no. 4). In the same year Lalji and Co. applied to the Provincial Government for a license under the Electricity Act (IX of 1910) to supply electrical energy to Giridih town and the neighbourhood. They intimated to the Government that they wanted to float a company, and after that was done, the business would be transferred to the Company. On the 9th July, 1929, the Government granted a license to Lalji and Company. Then a company was floated called the Giridih Electric Supply Corporation which was registered on the 6th September, 1929. This corporation is defendant no. 7 and will be referred to hereinafter as the Company. On the 14th September, 1929, two agreements were entered into between Lalji and Company and the Company to the effect that Lalji and Company would be the Managing Agents of the Company and the Company would conduct the business in their name during the period previous to the transfer of the license. In due course a powerhouse was erected and the necessary plant, machinery, etc., were installed; and the Company began to supply electrical energy to Giridih town and the neighbourhood from about the 14th March, 1931. In November 1932 Lalji and Company applied to the Government for permission to transfer the business to the Company. Permission was, however, refused in 1935.
On the 17th July, 1934, the Roys were adjudicated insolvent by the Calcutta High Court on the application of certain creditors. In the list of assets filed by the Roys in the insolvency proceeding, they claimed the plant, machinery, etc., that is to say, the entire electrical undertaking valued at Rs. 2,41,898-13-8 to be theirs. The official assignee appointed in the insolvency proceeding could not be put in actual possession of the undertaking by reason of the provisions of the Electricity Act. He appointed N.L Roy, defendant no. 3, to carry on the electrical undertaking at Giridih on his behalf.
On the 20th August, 1935, this Court passed an order winding up the Company, and on the 6th September, 1935 an official liquidator was appointed. This gentleman desired to take possession of the assets of the Company, but he was told by Lalji and Company that the undertaking belonged to them to whom the license had been granted and as they had been adjudged insolvent by the. Calcutta High Court, the undertaking was in the possession of the official assignee of that Court. At the instance of the creditors and the official liquidator, the official assignee of the Calcutta High Court made enquiries as to whether the electrical undertaking at Giridih really belonged to the Company or to the insolvents. The official assignee, being of opinion that the undertaking really belonged to the Company, gave up all claim to the electrical undertaking in March 1938.
The official liquidator thereupon pressed the Roys to give up possession to him of the assets of the Company. They refused to do so, whereupon the official liquidator filed an application under section 185 of the Companies Act in this Court. That application was allowed by Wort, J. on the 5th January, 1940. In pursuance of his order the official liquidator took possession of the entire undertaking on the 12th January, 1940.
Against the decision of Wort, J. the Roys preferred a Letters Patent appeal which was allowed on the 9th May, 1940, by Harries, C.J and Manohar Lall, J. on the ground that the Roys being in possession of the undertaking not as officers or agents of the Company but in assertion of their own right, the application under section 185 of the Companies Act was not maintainable, and possession could only be obtained from them by means of a suit. It was, however, found that
“the Company was prima facie entitled to the moveable properties which had been acquired by the Corporation, though they ware not entitled to possession of the land upon which the power house stood”.
The Roys then applied for restitution, but their application was rejected by Agarwala, J. on the 16th August, 1940. Against his decision the Roys preferred a Letters Patent Appeal which was eventually allowed on the 26th October, 1943, in these terms:
“In the circumstances, restitution must be allowed, but subject to this condition, which is necessary to impose for the ends of justice, that delivery of possession to the appellants will be postponed for three months from this date to enable the respondent to bring a suit, if so advised, and obtain such relief as may be open to him in law”.
During the pendency of the appeal in the restitution proceedings the entire undertaking was sold by the official liquidator under the Order of the Company judge to the present plaintiff on the 16th August, 1941, for Rs. 91,000, and the plaintiff was put in possession on the 8th December, 1941. In the meantime the plaintiff obtained sanction from the Provincial Government under section 28(1) of the Electricity Act to carry on the undertaking. The plaintiff was impleaded as a respondent in the said appeal.
In consequence of the order passed in the last-mentioned appeal allowing restitution, the plaintiff instituted the present title suit no. 2 of 1944 alleging that the disputed property that is, the entire electrical undertaking together with the land on which the power house stands belonged to the Company, and by virtue of the purchase from the official liquidator, it vested in the plaintiff. The plaintiff also filed an application for temporary injunction to restrain the defendants 1 to 4 from taking possession of the disputed property. The learned Subordinate Judge by his order, dated the 25th July, 1944, granted a temporary injunction, as prayed for. It is against this order that the Miscellaneous Appeal is directed.
The plaintiff further filed an application for amendment of the plaint. In the original plaint it was alleged that the Company had a lease for 99 years from the defendants 1 to 4 in respect of the land and that lease vested in the plaintiff by virtue of the transfer by the official liquidator. In the petition for amendment, it was stated that if the lease for 99 years was not proved, there was in any case a verbal lease for one year from the 1st January, 1930, after which there was holding over, and that in the alternative, there was an irrevocable license. Notwithstanding the objection of the defendants 1 to 4, the Subordinate Judge by his order, dated the 14th February, 1945, allowed amendment of the plaint as prayed for. The civil revision is directed against this order.
I shall first deal with the appeal. The learned Subordinate Judge apparently passed the order under section 151 of the Civil Procedure Code. But it seems to me that the Court cannot invoke its inherent power under section 151 for the purpose of granting an injunction. Specific provisions for injunction are made in Order 39, rules 1 and 2. Section 94 of the Code lays down:
“In Order to prevent the ends of justice from being defeated the Court may, if it is so prescribed…………………(c) grant a temporary injunction and in case of disobedience commit the person guilty thereof to the civil prison and order that his property be attached and sold”.
The words “if it is so prescribed” indicate that a temporary injunction can be granted if there is any provision for it in the Code. In other words, such injunction cannot be granted except under the specific provisions made for it in the Code. Consequently, it is not open to a Court to grant injunction in exercise of its inherent power under section 151. Mr. S.N Bose on behalf of the respondent relies on the case of Dhaneshwar Nath Tewari v. Ghanshyam Dhar Misra in which it was held that, apart from the provisions of Order 39 of the Civil Procedure Code, the Court has inherent jurisdiction to pass an order of temporary injunction providing for the necessary protection and security of the property which is the subject-matter of the litigation. In that case injunction was granted during the pendency of an application for leave to sue as pauper. Order 39 provides for injunction in a suit. So the question arose whether the Court could grant injunction when there was no suit yet. It was held that injunction could be granted in exercise of the Court's inherent power under section 151. With all respect, I am unable to agree that where the case cannot be brought under Order 39, the Court has still inherent power to grant injunction in exercise of its inherent power under section 151. The Court will then be acting against the express provision of section 94 of the Code.
It is contended by Mr. S.N Bose that even if the present case does not fall under rule 1 of Order 39, it certainly falls under rule 2 which provides that injunction may be granted in a suit for restraining the defendant from committing a breach of contract or other injury of any kind. It is said that in the present case the defendants are going to commit “other injury of any kind”. The question, therefore, arises whether the defendants are really going to commit any injury. The position is this. The official liquidator appointed by this Court took possession of the disputed property on the 12th January, 1940, by virtue of the erroneous order of Wort, J., dated the 5th January, 1940, which was set aside on Letters Patent appeal on the 9th May, 1940. The Roys then applied for restitution which was eventually allowed by this Court on the 26th August, 1943, in Letters Patent Appeal. They are entitled to reap the benefit of the order for restitution which was eventually passed in their favour. How, then, can it be said that if they take possession by enforcing that order by which the plaintiff is bound, they will commit injury to the plaintiff? The plaintiff is in possession by virtue of an erroneous order, and it does not lie in the plaintiff's mouth to say that the defendants are going to commit injury by enforcing the order for restitution. It is true that in the application for injunction it was not specifically prayed that the defendants should be prevented from, executing or enforcing the order; but that is the practical effect of the injunction asked for.
The learned Subordinate Judge was apparently influenced by the terms of the order for restitution passed by this Court in the Letters Patent Appeal, in so far as it allowed three months' time to the plaintiff to institute a suit, delivery of possession being postponed for that period. But it will be noticed that this Court was careful to say that the plaintiff might bring a suit, if so advised, and “obtain such relief as may be open to him in law”. Certainly this did not authorise the plaintiff to ask for a relief which was not open to him in law. In my opinion, the learned Subordinate Judge was not justified in granting the injunction prayed for.
It is argued by Mr. Bose that the balance of convenience lies entirely in favour of the plaintiff. But the question of balance of convenience can arise only if it is lawful for the plaintiff to ask for an injunction. From what I have already said, it was certainly not lawful for the plaintiff to ask for an injunction the effect of which would be to prevent the defendants from reaping the benefit of the order of the Court by which the plaintiff is bound. It may be mentioned here that in the plaint the plaintiff does not challenge the order for restitution. We are informed that the plaintiff has filed an application for leave to appeal to the Privy Council from that order, but that is a matter with which we are not concerned at present.
The appeal must, therefore, be allowed and the injunction granted by the Court below must be discharged. There will be no order for costs.
As regards the civil revision, it has not been shown to us that the learned Subordinate Judge committed any error of jurisdiction in allowing amendment of the plaint. The civil revision must, therefore, be dismissed but there will be no order for costs.
Sinha, J.:— I agree.
K.D
Application dismissed.
Appeal allowed.
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