Sri. Suryanarayana Paper and Boards Private Limited and others vs V. Padmakumar and 2 others

These two revision petitions are against the orders passed by the District Munsif, Udumalaipet, in I.A. Nos. 266 and 267 of 1995, granting an

interim injunction at the time of ordering notice on 31-1-1995. In I.A. No. 266 of 1995 the injunction was restraining the respondents from taking

any steps to delete Art. 16 of the Articles of Association of the 1st respondent company in violation of the rights of the plaintiffs under the said

Articles. In I.A. Nos. 267 of 1995, the injunction was one, restraining respondents 2 to 6 from transferring the shares held by them in the 1st

respondent company to any persons without offering them in the first instance to the plaintiffs and restraining the company from registering or giving

any effect to the transfer of such shares. In both the applications, the orders passed are in the following terms.

Heard and perused. Issue notice with copy of documents. Ad interim injunction granted till 9-2-1995.

Order XXXIX, Rule 3 of the CPC contains a specific provision that after it is proposed by the Court to grant an injunction without giving notice

of the application to the opposite party, the court shall record the reasons for its opinion that the object of granting the injunction would be

defeated by delay. The court is also enjoined to do certain other things. It is not necessary to mention them here. Referring to the said provision of

the Code. I held in Rajapalayan Industrial and Commercial Syndicate Ltd. and Another Vs. K.A. Vairaprakasam and Another, that if an order of

injunction is made without recording reasons, the injunction would be in violation of the procedure under Order XXXIX, Rule 3 of C.P.C. and I

had deprecated the practice of granting such orders of injunction. The said principle is also laid down by the Supreme Court in Morgan Stanley

Mutual Fund Vs. Kartick Das, . Referring to an earlier judgment in Shivkumar Chadha v. Municipal Corporation of Delhi (1993 (3) SCC 101) the

Supreme Court extracted the following passage from the said judgment :--

..... the court shall ''record the reasons'' why an ex parte order of injunction was being passed in the facts and circumstances of a particular case.

In this background, the requirement for recording the reasons for grant of ex parte injunction cannot be held to be a mere formality. This

requirement is consistent with the principle, that a party to a suit who is being restrained from exercising a right which such party claims to exercise

either under a statute or under the common law, must be informed why instead of following the requirement of Rule 3, the procedure prescribed

under the proviso has been followed. The party which invokes the jurisdiction of the court for grant of an order of restraining against a party,

without affording an opportunity to him of being heard must satisfy the court about the gravity of the situation and court has to consider briefly these

factors in the ex parte order. We are quite conscious of the fact that there are other statutes which contain similar provisions requiring the court or

authority concerned to record reasons before exercising power vested in them. In respect of some of such provisions it has been held that they are

required to be complied with but non-compliance therewith will not vitiate the order so passed. But same cannot be said in respect of the proviso

to Rule 3 of Order 39. The Parliament has prescribed a particular procedure for passing of an order of injunction without notice to the other side,

under exceptional circumstances. Such ex parte orders have far reaching effect, as such a condition has been imposed that court must record

reasons before passing such order. If it is held that the compliance with the proviso aforesaid is optional and not obligatory, then the introduction of

the proviso by the parliament shall be a futile exercise and that part of Rule 3 will be surplusage for all practical purposes. Proviso Rule 3 of Order

39 of the Code, attracts the principles, that if a statute requires a thing to be done in a particular manner, it should be done in that manner or not all.

This principle was approved and accepted in well-known cases of Taylor v. Taylor 1875 1 Ch D 426 and AIR 1936 253 (Privy Council) . This

Court has also expressed the same view in respect of procedural requirement of the Bombay Tenancy and Agricultural Lands Act in the case of

Ramachandra Keshav Adke v. Govind Joti Chavare 1975 1 SCC 915"".

The Court then observed :--

As such whenever a considers it necessary in the facts and circumstances of a particular case to pass an order of injunction without notice to other

side, it must record the reasons for doing so and should take into consideration, while passing an order of injunction, all relevant factors, including

as to how the object of granting injunction itself shall be defeated if an ex parte order is not passed.

In the same case, the Supreme Court has also pointed out that the residence of a company in India is where its registered office is located and

normally cases should be filed only where the registered office of the company is situated. In the present case, admittedly all the defendants in the

suit arc only in Coimbatore. The 1st defendant is a company, which has its registered office at Coimbatore. Defendants 2 to 6, who are

shareholders of the 1st defendant company, are also residing in Coimbatore. The plaintiffs arc residing in Udumalaipet. In paragraph 13 of the

plaint it is alleged that the cause of action arose within the jurisdiction of the Court at Udumalaipet, where the plaintiffs arc residing and where they

are entitled to receive the notices from the 1st defendant company. Admittedly the plaintiffs did not receive any notice from the 1st defendant

company on the date when they filed the suit or when they obtained an order of injunction. In those circumstances, the court at Udumalaipet had

no jurisdiction whatever to entertain the suit of the plaintiffs. The Court ought to have returned the suit for presentation in proper court even on the

allegations contained in the plaint. In spite of the averment in paragraph 13 of the plaint, the District Munsif, Udumalaipet chose to receive the plaint

and granted an interim order as prayed for by the Plaintiffs.

For the aforesaid reasons, both the orders of interim injunction are unsustainable and they have to be set aside. These revisions are filed under

Art. 227 of the Constitution of India.

Learned counsel for the plaintiffs submits that the revision petitioners have suppressed certain relevant facts and obtained interim orders from this

court when they filed the revisions. According to him, the revision petitioners entered appearance in the suit on 9-2-1995 and filed counter affidavit

in I.A. Nos. 266 and 267 of 1995. It is also stated by him that they prayed for an adjournment and the matter was adjourned to 14-2-1995. It is

submitted that from the said date, the matter was adjourned to 17-2-1995 and then to 20-2-1995. It is vehementally contended that the revision

petitioners have not brought to the notice of this Court the factum of their having entered appearance in the suit and filing a counter for the purpose

of contesting the applications. It is also argued that on 17-2-1995, the revision petitioners did not bring to the notice of the trial Court or to the

plaintiffs that they had obtained an interim order of suspension from this court in these civil revision petitions. It is therefore contended that the

revision petitioners are guilty of fraud and they should not get any beneficial order from this Court. Reliance is placed on the judgment of the

Supreme Court in S.P. Chengalvaraya Naidu (dead) by L.Rs. Vs. Jagannath (dead) by L.Rs. and others, . The following passage is referred to by

learned counsel :

The principle of ''finality of litigation'' cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of

dishonest litigants. The Courts of law arc meant for imparting justice between the parties. One who comes to the court must come with clean

hands, we are constrained to say that more often than not, process of the Court is being abused. Property-grabbers, tax-evaders bank-loan-

dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal-gains indefinitely. We

have no hesitation to say that a person whose case is based on falsehood, has no right to approach the court. He can be summarily thrown out at

any stage of the litigation.

The principle enunciated by the Supreme Court in the above decision will not apply to the present revision petitions. The contentions of learned

counsel for the respondents are factually disputed by the revision petitioners. According to them, on 9-2-1995 defendants were ready to get along

with the matter and that is why they filed the counter affidavit on that date. There was no necessity for them to ask for any adjournment of the

matter. It is stated by them that the plaintiffs were not willing to get along with the proceedings and they took an adjournment on 14-2-1995 and

again on 17-2-1995 and the matter was posted to 20-2-1995. In view of the disputed facts, it is not possible to accept the contention that the

revision petitioners had suspressed some facts before this Court when they obtained an interim order from this Court.

The contention that they had not brought to the notice of the trial court or the plaintiffs the passing of the interim order by this Court will not give

rise to any argument in these revision petition to help the respondents to contend that the revision petitions shall be dismissed. It is only a

subsequent cause of action, if at all. According to learned counsel, if the plaintiffs had been made aware of the orders of this Court on 16-2-1995,

they would have taken steps either to get the order of this Court vacated immediately or to have filed another suit in the court at Coimbatore and

obtained interim reliefs. Learned counsel for the revision petitioners submits that the copy of the order of this Court was not available to them till

20-2-1995 and therefore they did not inform the trial court of the same on 16-2-1995. Whatever may be the relevant facts in that regard, it is not

relevant in the present revision petition. In so far as these revision petitions are concerned, the Orders of the trial court passed in the interlocutory

applications are wholy unsustainable and without jurisdiction and they have to be set aside. If it is open in law to the respondents to challenge the

validity of the General Body Meeting held on 20-2-1995 of the company, they can resort to such remedies as are available to them in law. They

can urge all the facts which are relevant and necessary in their case for getting the relief prayed for by them in such a proceeding.

In the result, the revision petitions are allowed. The orders passed by the District Munsif, Udumalaipet on 31-1-1995 are set aside. I.A. Nos.

266 and 267 of 1995 are dismissed. No costs.

Revision allowed.