Manjeri Muncipality v. A.M. Mohammed Ali

JUDGMENT

K.T SANKARAN, J.

The respondent filed O.S No. 15/2014 on the file of Sub Court, Manjeri against the appellant, the Manjeri Municipality for realisation of money. The respondent/plaintiff entered into a contract with Manjeri Municipality for construction of a Bus Stand-cum-Shopping Complex. The construction work was completed. According to the plaintiff, a sum of 2,10,76,203/- is due from the appellant/defendant Municipality on account of contract work. The suit was filed for realisation of the said amount.

2. The appellant/defendant contended in the written statement that the Municipality could not pay the balance amount payable to the plaintiff on account of paucity funds. The Municipality also disputed the rate of interest. It was stated that a total sum of 5,47,00,771/- was paid to the plaintiff. During the pendency of the suit, a cheque for 30 lakhs was issued to the plaintiff. The balance payable is only 1,16,28,559/-. It is stated in the written statement that the auction to lease out the shop rooms in the building belonging to the Municipality was not fully successful and therefore, the Municipality could not raise funds to discharge the liability to the plaintiff.

3. The plaintiff filed I.A No. 373/2014 under Rules 1 and 2 of Order XXXIX of the Code of Civil Procedure for an injunction restraining the defendant from releasing any amounts in respect of the construction works, which were completed after 4.8.2012 In the affidavit, the plaintiff stated that even when the liability to the plaintiff was not discharged, the defendant invited tenders for other works and those contractors were paid amounts. Only since the other contractors were paid amounts, the Municipality could not discharge the liability towards the plaintiff. If the defendant is restrained from releasing any amount in respect of the new construction works for a period of six months, the amounts due to the plaintiff could be easily discharged by the defendant.

4. The defendant Municipality contested the application for temporary injunction and contended that the application is not maintainable. It was stated that the defendant would be able to discharge the amount due to the plaintiff within nine months. Being a local Self Government institution, the Municipality has to undertake the health related activities, waste management, water supply, providing street lights and other important matters. If an injunction is granted against the Municipality, the activities of the Municipality would come to a stand still.

5. The Court below allowed I.A No. 373/2014 in the following terms:

“Here it is a case in which, defendant is admitting the liability to certain extent. So, even though, the suit is one for realisation of amount, exercising the inherent jurisdiction of this Court, an interlocutory application for temporary injunction is perfectly maintainable before this Court. ……….

xxx xxx xxx xxx

In the result, Interlocutory Application is allowed in part with costs, restraining defendant from undertaking any construction works or making any payments from the date of this order till admitted amount is paid off to the plaintiff or the suit is finally disposed off, without prior permission of this court. In case of emergent needs, Manjeri Municipality is at liberty to undertake such works and dispose of funds up to Rupees one lakh at a time without such prior permission. The emergent works include works connected to health hazards, waste disposal, providing drinking water, maintaining the road and other similar works.”

The order passed by the Court below is under challenge in this appeal.

6. The learned counsel for the appellant/defendant submitted that the order impugned is absolutely without jurisdiction and that the provisions of Rules 1 and 2 of Order XXXIX Code of Civil Procedure are not attracted in the case at all.

7. The learned counsel appearing for the respondent/plaintiff justified the order passed by the Court below. He submitted that even assuming that Rules 1 and 2 of Order XXXIX of Code of Civil Procedure are not applicable to the facts of the case, the Court was justified in invoking the inherent power under Section 151 of the Code of Civil Procedure to pass the order impugned.

8. Rules 1 and 2 of Order XXXIX of the Code of Civil Procedure read as follows:

“1. Cases in which temporary injunction may be granted.- Where in any suit it is proved by affidavit or otherwise-

(a) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree, or

(b) that the defendant threatens, or intends, to remove or dispose of his property with a view to defrauding his creditors,

(c) that the defendant threatens to dispossess, the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit, the Court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal or disposition of the property or dispossession of the plaintiff, or otherwise causing injury to the plaintiff in relation to any property in dispute in the suit as the Court thinks fit, until the disposal of the suit or until further orders.

2. Injunction to restrain repetition or continuance of breach.- (1) In any suit for restraining the defendant from committing a breach of contract or other injury of any kind, whether compensation is claimed in the suit or not, the plaintiff may, at any time after the commencement of the suit, and either before or after judgment, apply to the Court for a temporary injunction to restrain the defendant from committing the breach of contract or injury complained of, or any breach of contract or injury of a like kind and arising out of the same contract or relating to the same property or right.

(2) the Court may by order grant such injunction, on such terms as to the duration of the injunction, keeping an account, giving security, or otherwise as the Court thinks fit.”

9. Sri. Sathyanatha Menon, the learned counsel for the respondent/plaintiff submitted that clause (b) of Rule 1 of Order XXXIX of Code of Civil Procedure would apply to the case on hand. Clause (b) deals with a case where the defendant threatens or intends to remove or dispose of his property with a view to defrauding his creditors. There is no allegation that the Municipality intended to defraud the plaintiff or any other creditor. The ‘threat’ or ‘intention’ contemplated under clause (b) is to remove or dispose of the property of the defendant with a view to defraud his creditors. Payment of money to the other contractors or meeting the expenditure of the Municipality under other heads could not be termed as removal or disposal of the property of the Municipality coming within the meaning of clause (b) of Rule 1 of Order XXXIX of the Code of Civil Procedure. To attract clause (b) of Rule 1, it is not sufficient that the defendant threatens or intends to remove or dispose of his property, but it should be with a view to defraud his creditors. Dealing with the property of the defendant in the normal course of business cannot be termed as an offending act within the meaning of clause (b) of Rule 1 of Order XXXIX of Code of Civil Procedure. Therefore, Rule 1 of Order XXXIX of Code of Civil Procedure does not apply to the case on hand. We are also of the view that the suit being not for restraining the defendant from committing a breach of contract, Rule 2 of Order XXXIX also would not apply. Moreover, the temporary injunction contemplated under Rule 2 is to restrain the defendant from committing the breach of contract or injury complained, of, or any breach of contract or injury of a like kind arising out of the same contract or relating to the same property or right. The normal activities of the Municipality under the Kerala Municipality Act, like the expenditure of amounts for various purposes and payment of amounts due to the contractors for contract works would not constitute ground for the grant of a temporary injunction under Rule 2 of Order XXXIX of the Code.

10. The remaining question to be considered is whether the Court can invoke Section 151 of the Code of Civil Procedure to grant an order of injunction like the one granted by the Court below.

11. In Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal [AIR 1962 SC 527] a Four Judges Bench of the Supreme Court held as follows:

“17. On the first question it is argued for the appellant that the provisions of cl.(c) of S.94, C.P.C make it clear that interim injunctions can be issued only if a provision for their issue is made under the rules, as they provide that a Court may, if it is so prescribed, grant temporary injunctions in order to prevent the ends of justice from being defeated, that the word ‘prescribed’ according to S.2, means ‘prescribed by rules’ and that rules 1 and 2 of Order XXXIX lay down certain circumstances in which a temporary injunction may be issued.

18. There is difference of opinion between the High Courts on this point. One view is that a Court cannot issue an order of temporary injunction if the circumstances do not fall within the provisions of Order XXXIX of the Code: Varadacharlu v. Narsimha Charlu, AIR 1926 Mad 258; Govindarajulu v. Imperial Bank of India, AIR 1932 Mad 180; Karuppayya v. Ponnuswami, AIR 1933 Mad 500 (2); Murugesa Mudali v. Angamuthu Mudali, AIR 1938 Mad 190 and Subramanian v. Seetarama, AIR 1949 Mad 104. The other view is that a Court can issue an interim injunction under circumstances which are not covered by Order XXXIX of the Code, if the Court is of opinion that the interests of justice require the issue of such interim injunction: Dhaneshwar Nath v. Ghanshyam Dhar, AIR 1940 All 185: Becharam Baburam…(Defendant); v. Baldeosahai Surajmal…(Plaintiff).*, AIR 1940 All 241: Bhagat Singh v. Jagbir Sawhney, AIR 1941 Cal 670 and Chinese Tannery Owners' Association v. Makhan Lal, AIR 1952 Cal 560. We are of opinion that the latter view is correct and that the Courts have inherent jurisdiction to issue temporary injunctions in circumstances which are not covered by the provisions of Order XXXIX, C.P.C There is no such expression in S.94 which expressly prohibits the issue of a temporary injunction in circumstances not covered by Order XXXIX or by any rules made under the Code. It is wellsettled that the provisions of the Code are not exhaustive, for the simple reason that the Legislature is incapable of contemplating all the possible circumstances which may arise in future litigation and consequently for providing the procedure for them. The effect of the expression ‘if it is so prescribed’ is only this that when the rules prescribe the circumstances in which the temporary injunction can be issued, ordinarily the Court is not to use its inherent powers to make the necessary orders in the interests of justice, but is merely to see whether the circumstances of the case bring it within the prescribed rule. If the provisions of S.94 were not there in the Code, the Court could still issue temporary injunctions, but it could do that in the exercise of its inherent jurisdiction. No party has a right to insist on the Court's exercising that jurisdiction and the Court exercises its inherent jurisdiction only when it considers it absolutely necessary for the ends of justice to do so. It is in the incidence of the exercise of the power of the Court to issue temporary injunction that the provisions of S.94 of the Code have their effect and not in taking away the right of the Court to exercise its inherent power.

19. There is nothing in Order XXXIX rules 1 and 2, which, provide specifically that a temporary injunction is not to be issued in cases which are not mentioned in those rules. The rules only provide that in circumstances mentioned in them the Court may grant a temporary injunction.”

The decision in Manohar Lal Chopra's case (supra) was relied on in Ram Chand and Sons Sugar Mills Private Ltd, Barabanki (U.P) v. Kanhayalal Bhargava [AIR 1966 SC 1899 (V 53 C 384] and held that the inherent power of the Court is in addition to and complementary to the power expressly conferred under the Civil Procedure Code. But, that power will not be exercised, if its exercise is inconsistent with or comes into conflict with, any of the powers expressly or by necessary implication conferred by the other provisions of the Code. If there are express provisions exhaustively covering a particular topic, they give rise to a necessary implication that no power shall be exercised in respect of the said topic otherwise than in the manner prescribed by the said provisions.

12. In Vareed jacob v. Sosamma Geevarghese [2004 (2) KLT 649 (SC)], the Supreme Court held that the source of power of the court to grant interim relief is under S.94 of the Code of Civil Procedure and exercise of that power can be done only if the circumstances of the case fall under the Rules. It is only in cases where circumstances do not fall under any of the rules prescribed that the Court can invoke its inherent power under Section 151 of the C.P.C

13. In Dalpat Kumar v. Prahlad Singh [AIR 1993 SC 276], the Supreme Court held that the Court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused and compare it with that it is likely to be caused to the other side if the injunction is granted.

14. In Delhi Development Authority v. Skipper Construction Company (P) Ltd. [AIR 1996 SC 2005], the Supreme Court cautioned the Subordinate Courts in the matter of granting interim orders in a mechanical manner. It was held: “On this occasion, we must refer to the mechanical manner in which some of the Courts have been granting interim orders - injunctions and stay orders without realising the harm such mechanical orders cause to the other side and in some cases to public interest. It is no answer to say that “let us make the order and if the other side is aggrieved, let it come and apply for vacating it.” With respect, this is not a correct attitude. Before making the order, the Court must be satisfied that it is a case which calls for such an order. This obligation cannot be jettisoned and the onus placed upon the respondents/defendants to apply for vacating it.”

15. That the Court can exercise the power under Section 151 of the Code of Civil Procedure to grant an order of injunction in the contingencies not covered by Rules 1 and 2 of Order XXXIX of Code of Civil Procedure, is not a ground to grant any order of injunction unmindful of the consequences. Strictly speaking, interim order of injunction is granted to maintain the status quo as on the date of suit, so that a party to the suit should not be allowed to take advantage of the change in the status quo during the continuance of the suit, as well as to prevent injury to a party by changing such status quo. It is true that the Court can grant an order of temporary injunction even in cases not covered by Rules 1 and 2 of Order XXXIX. But, such exercise of power should be to secure the ends of justice. An injunction cannot be granted against a statutory authority preventing that authority from discharging its normal functions. A Municipality is a Local Self Government Institution. Part IXA of the Constitution of India consisting of Article 243P to Article 243ZG was inserted by the Constitution (Seventy fourth Amendment) Act, 1992. Section 243W provides for endowing powers, authority and responsibilities of Municipalities by State legislations. Article 243X provides that Legislature of a State may, by law, authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such conditions and limits. Section 30 of the Kerala Municipality Act provides for the powers, functions and responsibilities of a Municipality to enable it to function as an institution of self Government. Section 563 of the Kerala Municipality Act 1994 provides for bar of jurisdiction of the Civil Court in respect of certain matters mentioned therein. The First Schedule to the Kerala Municipality Act provides for the functions of the Municipality. Category A therein comprises mandatory functions and Category B provides for general functions. Category C deals with Sector-wise distribution of functions, such as Agriculture, Animal Husbandry and Dairy Farming, minor irrigation, fisheries, social forestry, small scale industries, housing, water supply, electricity and energy, education, public works, public health and sanitation, social welfare, eradication of poverty, development of the scheduled caste/scheduled tribe, sports and cultural affairs, public distribution system, natural calamity relief and Co-operation.

16. In a civil suit, the Court may grant temporary injunction to preserve the subject matter of the suit and to maintain status quo. An interim relief, which is outside the scope of the suit, cannot be granted by the Court. In the present suit, the relief is for realisation of money. What is sought for is an interim relief to injunct the Municipality from discharging its statutory functions. Even if the suit is decreed and execution is levied, the relief which the plaintiff has got as per the interim order now passed, cannot be achieved. Therefore, the Court below should have been slow in granting such relief as an interim measure, which is quite outside the scope of the main relief in the suit.

17. In Aristo Printers Pvt. Ltd. v. Purbanchal Erade Centre [AIR 1992 Gauhati 81], the Division Bench of the Gauhati High Court held thus:

“Learned counsel for the respondent contended that the above provisions apply only in regard to the decree to be passed in a suit and not in respect of pendente lite order of injunction. An interim or temporary relief can be granted only in aid of, and as ancillairy to the main relief which may be available to the party on final determination of his rights in a suit or proceedings. If the power to grant temporary relief is conferred to achieve such a purpose, it cannot be that the temporary relief can be granted in a case where a final relief of a similar nature cannot be granted on account statutory bar. If the provisions of Section 41 of the Specific Relief Act prohibit the grant of decree or injunction in cases covered thereunder, it must necessarily follow that the court cannot grant a temporary relief of a similar nature. We are fortified in this view by the decision of the Supreme Court in State of Orissal v. Madan Gopal Gungta, AIR 1952 SC 12 followed in Cotton Corporation of India Limited v. United Industrial Bank Limited, AIR 1983 SC 1272.”

18. In Cotton Corporation of India v. United Industrial Bank [AIR 1983 SC 1272], the Supreme Court held thus:

“……In view of the majority decision, it must be conceded that the court can in appropriate cases grant temporary injunction in exercise of its inherent power in cases not covered by Order 39 C.P.C But while exercising this inherent power, the court should not overlook the statutory provision which clearly indicates that injunction to restrain initiation of proceeding cannot be granted. Section 41(b) is one such provision. And it must be remembered that inherent power of the court cannot be invoked to nullify or stultify a statutory provision.”

19. For the reasons mentioned above, we are of the view that the Court below was not justified in granting the order impugned, practically disabling the Municipality to discharge its statutory functions. Asking the Municipality to approach the Court for permission to meet the expenditure above 1 lakh is really an interference in the statutory functions of the Municipality. Injuncting the Municipality from undertaking any construction work till the admitted amount is paid to the plaintiff is also an order beyond the scope of the suit. Permitting the Municipality to undertake the emergent works up to a limit of 1 lakh without the permission of the Court is not really a concession at all. The Court need not grant concession when the Statute gives power to the Municipality to discharge its official functions. The question is whether the Court was justified in interfering with such affairs. If the Court thought that there is no serious contest, the Court could try the suit without delay and grant a decree in favour of the plaintiff. The plaintiff could resort to execution proceedings and realise the amount from the Municipality. Instead of doing so, the Court granted an interim relief in a suit for realisation of money practically curtailing the functions and powers of the Municipality, which is beyond the jurisdiction of the Civil Court. Accordingly, we set aside the order impugned and dismiss I.A No. 373/2014 filed by the plaintiff in the suit.

The Regular First Appeal is allowed as above.