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N. Govindarajulu Nay... v. The Imperial Bank Of...
Factual and Procedural Background
This opinion addresses an application filed for a stay of further proceedings pursuant to an ex parte decree passed in O. S. No. 84 of 1930 before the Sub-Court of Vellore. The stay was sought pending disposal of an appeal against an order refusing to set aside the ex parte decree. The application was initially treated as a request for an ex parte stay order but was converted into an application for an injunction restraining execution of the decree, raising the question of whether such an injunction lies.
Legal Issues Presented
- Whether a High Court has the power to grant a stay of execution or injunction restraining execution of a decree pending disposal of an appeal against an order refusing to set aside an ex parte decree.
- Whether the High Court's power to grant such injunctions is restricted to the provisions of the Code of Civil Procedure or extends to an equitable jurisdiction derived independently of the Code.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bhagwat Rajkoer v. Sheo Golam Sahu [1904] 31 Cal. 1081 | High Court has no power under Order 41, Rule 5 to stay execution of a decree in such proceedings. | Supported the initial view that the Court could not grant a stay under the Code provisions, leading to conversion of the application into one for injunction. |
| Varadacharyulu v. Narasimhacharyulu A.I.R. 1926 Mad. 268 | An injunction cannot be granted under Section 151 of the Code if it is not permissible under Order 39, Rules 1 or 2. | Followed to show limitation on injunction powers strictly under the Code. |
| Ayyaperumal Nadar v. Muthuswami Pillai A.I.R. 1927 Mad. 687 | Reaffirmed the principle limiting injunctions to those allowed under Order 39, Rules 1 or 2. | Confirmed the restrictive interpretation of injunction powers under the Code. |
| Ellerman Lines Ltd. v. Read [1928] 2 K.B. 144 | English Court’s equitable power to restrain enforcement of foreign judgments by persons subject to its jurisdiction on grounds of equity and conscience. | Illustrated the principle that injunctions restraining enforcement of foreign judgments do not arrogate jurisdiction over foreign courts but act on conscience. |
| Ganga Singh v. Pirthichand Lal A.I.R. 1922 Pat. 34 | English precedents used to support injunction power without reference to the Code of Civil Procedure. | The court declined to follow this authority fully as it was based purely on English precedents without regard to the Code. |
| Periakruppan Chettiar v. Ramaswami Chettiar A.I.R. 1928 Mad. 491 | High Courts possess equitable jurisdiction independent of the Civil Procedure Code to grant injunctions in appropriate cases. | Accepted as sufficient authority for the proposition that the High Court is not bound by the Code’s terms in issuing injunctions in appropriate cases. |
| Rash Behary Dey v. Bhowani Churn Bhose [1907] 34 Cal. 97 | Supports the independent equitable power of High Courts. | Referenced to support the existence of equitable jurisdiction independent of the Code. |
| Mungle Chand v. Gopal Ram [1907] 34 Cal. 101 | Supports the independent equitable power of High Courts. | Referenced alongside Rash Behary Dey to uphold equitable jurisdiction. |
| Singaravelu Mudali v. Balasubramania Mudali A.I.R. 1926 Mad. 1126 | Injunction power under Rule 2, Order 39, with obiter observations on equitable power beyond the Code. | Cited as authority favouring equitable power but noted that the injunction was brought within Code provisions, making other observations obiter. |
Court's Reasoning and Analysis
The Court began by recognizing the limitation under the Code of Civil Procedure, specifically Order 41, Rule 5, which does not empower the Court to grant a stay of execution in the present circumstances. It acknowledged the restrictive interpretation that injunctions cannot be granted under Section 151 of the Code if not allowed under Order 39, Rules 1 or 2.
However, the Court examined English authorities, notably Ellerman Lines Ltd. v. Read, which establish an equitable power to restrain enforcement of foreign judgments by persons subject to the Court’s jurisdiction, acting on principles of equity and conscience rather than procedural jurisdiction.
The Court then considered Indian precedents, particularly Periakruppan Chettiar v. Ramaswami Chettiar, which confirmed that the High Courts possess an equitable jurisdiction independently of the Civil Procedure Code to grant injunctions in appropriate cases. This equitable jurisdiction stems from the historic powers of the old Supreme Court.
Balancing these principles, the Court found that the concurrent proceedings—execution of the decree and an appeal which might set aside the decree—could lead to incompatible outcomes if allowed to proceed simultaneously. Thus, it was appropriate to exercise the equitable jurisdiction to restrain execution pending the appeal.
On the merits, the Court observed that the appeal had some prospects of success and that the petitioner’s request for a stay was based on economic difficulty rather than distrust of the decree-holder. Accordingly, the Court ordered an injunction restraining execution on condition that the petitioner furnish security for the outstanding amount and undertake to pay interest at 8% for the period the injunction remains in force. Failure to comply would result in dismissal of the petition and termination of the injunction.
Holding and Implications
The Court granted an injunction restraining the decree-holder from executing the ex parte decree pending disposal of the appeal, subject to the petitioner providing security and undertaking to pay interest.
The decision confirms that High Courts possess an equitable jurisdiction independent of the Civil Procedure Code to grant injunctions in appropriate cases, particularly to prevent irreparable harm from concurrent proceedings that may produce conflicting outcomes. While the Court did not expressly set new precedent, it reaffirmed existing equitable principles and clarified their application in the context of execution of decrees pending appeal. The direct effect is to protect the judgment-debtor’s interests during the pendency of the appeal, balancing the rights of both parties.
1. This application was filed for the stay of further proceedings in pursuance of an ex parte decree passed in O. S. No. 84 of 1930 on the file of the Sub-Court of Vellore pending disposal of an appeal against an order refusing to set that ex parte decree aside. When the stay application came up for the issue of ex parte orders, I understand that it was held by the learned Judge who disposed of it, following Bhagwat Rajkoer v. Sheo Golam Sahu [1904] 31 Cal. 1081 and some cases of this Court, that this Court has no power in proceedings of this nature to stay execution of a decree Under Order 41, Rule 5. Accordingly the application was converted into one for an injunction to restrain the respondent from executing the decree, and the question has been raised before me whether an application of this kind will lie. So far as a Court which is restricted to the terms of the Code of Civil Procedure is concerned, it has been held by Phillips, J., in Varadacharyulu v. Narasimhacharyulu A.I.R. 1926 Mad. 268, which I had occasion to follow in Ayyaperumal Nadar v. Muthuswami Pillai A.I.R. 1927 Mad. 687, that if an injunction cannot be passed under the provisions of Order 39, Rule 1 or Rule 2, it is not permissible to seek the power Under section 151 of the code in order to justify such an order. It has however been argued now that a High Court is not restricted to the terms of the Code, but possesses an equitable power, otherwise derived, to control the proceedings in other Courts. There can bo no doubt that in England a power of this character exists and a discussion of the nature of it will be found in Ellerman Lines Ltd. v. Read [1928] 2 K.B. 144. In that case the question arose as to whether a British subject could be restrained from enforcing a foreign judgment, in execution, and the Court of appeal answered the question in the affirmative, the principle upon which the matter was decided being clearly explained in the judgment of Atkin, L.J., namely, that the Court in granting injunctions does not seek to assume jurisdiction over the foreign Court or arrogate to itself some superiority which entitles it to dictate to the foreign Court, or that it seeks to criticize the foreign Court or its procedure:
The English Court has regard to the personal attitude of the person who has obtained the foreign judgment. If the English Court finds that a person subject to its jurisdiction has committed a breach of covenant, or has acted in breach of some fiduciary duty or has in any way violated the principles of equity and conscience, and that it would be inequitable on his part to seek to enforce a judgment obtained in breach of such obligations, it will restrain him, not by issuing an edict to the foreign Court, but by saying that ho is in conscience bound not to enforce that judgment.
2. I do not propose to go so far as the learned Judges who decided Ganga Singh v. Pirthichand Lal A.I.R. 1922 Pat. 34, and who appear to have based their decision as to the power of a Court (not necessarily a High Court) to issue an injunction in certain circumstances purely upon English precedents and without any reference to the terms of the Code of Civil Procedure. But there is authority for the view that the High Courts, over and above the powers which they enjoy under that Code, possess an equitable jurisdiction derived from the old Supreme Court to issue an injunction in appropriate cases. This is the basis of the decision in Periakruppan Chettiar v. Ramaswami Chettiar A.I.R. 1928 Mad. 491 where Ramesam and Devadoss, JJ. held that the Chartered High Courts have such a power following Rash Behary Dey v. Bhowani Churn Bhose [1907] 34 Cal. 97 and Mungle Chand v. Gopal Ram [1907] 34 Cal. 101. In the former of these two decisions Woodroffe, J., who certainly is a high authority on questions of procedure, gave it as his opinion that a High Court had and has, independently of the Civil Procedure Code, power to make an order of the nature sought, and he answered in the negative the question whether there was anything in the Civil Procedure Code which took away that power. That case was decided under the old Code, but I do not think that there is anything either in Section 151 or any other provision of the new Code which would deprive a High Court of powers derived independently of it. Another case Singaravelu Mudali v. Balasubramania Mudali A.I.R. 1926 Mad. 1126, decided by Ramesam, J., has been cited to me as an authority in favour of the existence of the power, but I observe that he was able to bring the injunction within the terms of Rule 2, Order 39, so that the remaining observations in the learned Judge's judgment are, I think, merely obiter, though, as I understand them, he was of opinion that a power exists apart from the terms of that rule. It appears to me however that Periakaruppan Chettiar v. Ramaswami Chettiar A.I.R. 1928 Mad. 491, is sufficient authority for the general proposition that this Court is not bound by the terms of the Code in issuing injunctions in appropriate cases. It appears to me that a case of the present description is eminently appropriate for the exercise of such a power. We have two proceedings going on at the same time, one the execution of the decree and the other a proceeding which may eventuate in the decree being set aside. It is quite clear that these two proceedings, if allowed to go on independently, may lead to incompatible and perhaps unfortunate consequences. I think accordingly that, in general, there is justification for a Court exercising the power to restrain the holder of the decree against which such proceedings are pending from exercising it.
3. On the merits I have perused the order of the learned Subordinate Judge refusing to set aside the decree and it appears to me, without in any way expressing any definite opinion, that the appeal has some prospects of success. The decree is a large one for a sum of Rs. 12,000 and it is admitted that about Rs. 9,000 has been paid. The petitioner admits that he asks for a stay not because he distrusts the stability of the decree-holder but because ho finds difficulty under the existing economic conditions in raising the balance. I think in the circumstances that there are sufficient grounds for granting his request on the basis of his furnishing security and I accordingly order that an injunction do issue to the decree-holder not to execute the decree until the disposal of the Civil Miscellaneous Appeal provided that the judgment-debtor gives security within six weeks from the date of the receipt of this order to the satisfaction of the Subordinate Judge of North Arcot for the outstanding amount of the decree and that he further undertakes to pay interest at the rate of 8 per cent, in the event of the money being found due, for the period during which the injunction is in force. Failing compliance with these directions the injunction will terminate and the petition will stand dismissed with costs.
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