Full Judgment Text
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CASE NO.:
Appeal (civil) 3661-62 of 2002
PETITIONER:
HINDUSTAN PETROLEUM CORPORATION LTD.,
Vs.
RESPONDENT:
SRI SRIMAN NARAYAN & ANR.
DATE OF JUDGMENT: 09/07/2002
BENCH:
D.P.MOHAPATRA, SHIVARAJ V.PATIL.
JUDGMENT:
D.P.MOHAPATRA,J.
Leave is granted.
These appeals, filed by the defendant M/s.Hindustan
Petroleum Corporation Ltd., are directed against the order
of a single Judge of the High Court of Andhra Pradesh
allowing the appeal filed under Order 43 Rule 1(r) Civil
Procedure Code (for short ’C.P.C.’) by the plaintiff Shri
Sriman Narayan, who is respondent herein. The plaintiff
had filed the appeals challenging the order of the Trial
Court rejecting the petition filed by him under Order 39
Rules 1 & 2 C.P.C. seeking interim injunction, restraining
the defendants from interfering with possession of the
petrol pump, bearing the name and style Super Service
Station at Premises No.5-8-699/8, Nampally Station Road,
Abids, Hyderabad and also to restrain them from
interfering with running the day to day business of the
said petrol pump. The Trial Court took note of the factual
position that the plaintiff instituted the suit on 28th
September, 2000 whereas notice of termination of
dealership agreement had been served on the Manager of
the petitioner on 22nd September,2000 i.e. about a week
prior to institution of the suit, and that there were claims
and counter claims between the parties about the
possession of the petrol pump. The Trial Court also took
note of the case of the petitioner that though notice of
termination was served on 22nd September, 2000 the
attempt of the defendant to dispossess him could not
succeed and the petitioner continued in possession of the
petrol pump till 29th September, 2000 on which date
between 9.30 and 10.30 A.M. he was forcibly dispossessed.
The trial Court also took into consideration the case of the
defendant that on 22nd September, 2000 at about 3.30
p.m. after serving the notice of termination on the Manager
of the plaintiff, possession of the petrol pump was taken
over and the premises were got vacated by the defendant;
that after taking over possession of the petrol pump the
first defendant had handed over the same to the second
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defendant, the Andhra Pradesh State Civil Supplies
Corporation. The Trial Court considered the documents
marked as Exhibits B-3 to B-6, B-8 and B-9 which prima
facie show handing over of the retail outlet at 3.30 p.m.
along with the list of items handed over to the second
defendant by the first defendant on 22nd September, 2000.
The Manager had affixed his signatures on the originals of
Exh.B-3 to B-6. The learned Trial Court on consideration
of the relevant materials on record accepted the case
pleaded by the defendant that possession of the petrol
pump was taken over from the plaintiff through his
Manager and was handed over to the second defendant on
22nd September, 2000. The further finding recorded by the
learned Trial Court was that the plaintiff had failed to
prove that after 22nd September, 2000 he was in
possession and enjoyment of the petrol pump. The Trial
Court held that the plaintiff had failed to prove a strong
prima facie case in his favour. Considering the further
question whether in the circumstances of the case the
plaintiff was entitled for an equitable relief of temporary
injunction, the Trial Court held that the plaintiff was only
a licensee authorised by the first defendant to sell the
petroleum products manufactured by it and an order of
injunction could not be passed in favour of the licensee
against the licensor. On these findings the Trial Court
declined to grant the plaintiff’s prayer for temporary
injunction.
The trial Court summed up its findings in the
following words:-
"As already noted above, the petitioner/
plaintiff has no prima facie case to succeed.
The balance of convenience also is not in
favour of the petitioner/plaintiff. No
irreparable loss or injury also caused to the
petitioner/plaintiff, even if the possession is
not restored, since entitled for the
compensation on proof of his case.
For foregoing discussion, I hold on the
point that the petitioner/plaintiff is not
entitled for temporary injunction as claimed
in I.A.1373/2000 or restoration of alleged
possession as claimed in I.A.1497/2000 and
I answer the point accordingly against the
petitioner/plaintiff.
.From the above principles of law laid
down and in the light of the Sections 52 to
64, the Easement Act, relating to law of
licensees, I have no hesitation in coming to a
positive conclusion that the petitioner/
plaintiff, after service of notice of termination
of the agreement which was admittedly on
22.9.2000, is not entitled for the relief of
temporary injunction, since he is nothing
but a licensee. When the petitioner/plaintiff
is not entitled for temporary injunction even
if he is in possession since it is unlawful, the
question of restoration as claimed in the IA
1497/2000 does not arise."
The High Court in the appeal discussed the case of
parties, the contentions raised on their behalf and
considered the question whether the orders passed by the
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Courts below are sustainable in law. The High Court
observed that in the instant case show cause notice was
issued on the ground that the Corporation was obliged to
adhere to the principles of natural justice to the effect that
such a provision is made in the agreement between the
parties. The High Court appears to have taken note of the
fact that there was cancellation of the dissolutions of the
partnership firm of the plaintiff with effect from 1.3.2000
and that was intimated to the defendant on 3.3.2000.
When such a dissolution had taken place before the issue
of show cause notice the Corporation was not entitled to
take recourse to the stipulations in the agreement
forbidding the grantee from making any change in the
structure of the firm without prior permission of the
Corporation. Construing different clauses of the
agreement including clauses 44, 45, 55 and 57, the High
Court took the view that all illegalities or misconduct or
violation need not ipso facto result in inevitable
termination of the agreement; for this purpose the
Corporation had been vested with the power to call upon
the dealer to rectify the mistake and in spite of such
direction, if the dealer does not rectify the mistake, it
would be open to the Corporation to terminate the
agreement. Such procedure having not been followed by
the defendant in the case the High Court held that the
termination of the dealership agreement was prima facie
illegal. Considering the factual position regarding
possession of the property the High Court took the view
that on the date of filing of the suit the plaintiff was in
possession of the property. The High Court also took the
view that by taking recourse to the extreme step of
termination of the agreement without affording an
opportunity to rectify the defect by the plaintiff, serious
prejudice leading to irreparable injury has been caused to
the plaintiff. On these findings, the High Court felt
satisfied that the orders refusing to grant interim
injunction and rejecting the prayer for restoration of
possession of the property were unsustainable in law.
Accordingly, the orders passed by the trial Court were set
aside and the interlocutory applications, in I.A.Nos.1373
and 1497 of 2000, were allowed as prayed for. It was
directed that the orders were to remain in operation
pending disposal of the suit. The lower Court was directed
to proceed with the trial of the suit expeditiously. The said
order of the High Court is under challenge in the present
appeals.
Shri M.L.Verma, learned senior advocate appearing
for the appellant contended that the order passed by the
High Court is vitiated on account of non-consideration of
the relevant criteria and well settled principles in matters
of grant of interim injunction. Shri Verma further
contended that the High Court has not considered the
reasons given by the Trial Court in the order declining to
accept the respondent no.1’s prayer for interim injunction.
Per contra Shri R.F.Nariman, learned senior counsel
appearing for the respondent no.1 submitted that in the
context of the facts and circumstances of the case as
stated in the impugned order, the High Court rightly
granted the prayer for interim injunction. According to the
learned senior counsel the order is based on relevant
considerations. He urged that this Court may not interfere
with the impugned order.
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It is elementary that grant of an interlocutory
injunction during the pendency of the legal proceeding is a
matter requiring the exercise of discretion of the Court.
While exercising the discretion the Court normally applies
the following tests :-
i) whether the plaintiff has a prima facie
case;
ii) whether the balance of convenience is in
favour of the plaintiff; and
iii) whether the plaintiff would suffer an
irreparable injury if his prayer for
interlocutory injunction is disallowed.
The decision whether or not to grant an interlocutory
injunction has to be taken at a time when the exercise of
the legal right asserted by the plaintiff and its alleged
violation are both contested and remain uncertain till they
are established on evidence at the trial. The relief by way
of interlocutory injunction is granted to mitigate the risk of
injustice to the plaintiff during the period before which
that uncertainty could be resolved. The object of the
interlocutory injunction is to protect the plaintiff against
injury by violation of his right for which he could not be
adequately compensated in damages recoverable in the
action if the uncertainty were resolved in his favour at the
trial. The need for such protection has, however, to be
weighed against the corresponding need of the defendant
to be protected against injury resulting from his having
been prevented from exercising his own legal rights for
which he could not be adequately compensated. The Court
must weigh one need against another and determine where
the "balance of convenience" lies. [See Gujarat Bottling Co.
Ltd.& Ors. Vs. Coca Cola Co. & Ors. (1995) 5 SCC 544 at
574.]
In Dorab Cawasji Warden Vs. Coomi Sorab Warden &
Ors., (1990) 2 SCC 117, this Court, discussing the
principles to be kept in mind in considering the prayer for
interlocutory mandatory injunction observed :
"The relief of interlocutory mandatory
injunctions are thus granted generally to
preserve or restore the status quo of the
last non-contested status which
preceded the pending controversy until
the final hearing when full relief may be
granted or to compel the undoing of
those acts that have been illegally done
or the restoration of that which was
wrongfully taken from the party
complaining. But since the granting of
such an injunction to a party who fails
or would fail to establish his right at the
trial may cause great injustice or
irreparable harm to the party against
whom it was granted or alternatively not
granting of it to a party who succeeds or
would succeed may equally cause great
injustice or irreparable harm, courts
have evolved certain guidelines.
Generally stated these guidelines are :
(1) The plaintiff has a strong
case for trial. That is, it
shall be of a higher standard
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than a prima facie case that
is normally required for a
prohibitory injunction.
(2) It is necessary to prevent
irreparable or serious injury
which normally cannot be
compensated in terms of
money.
(3) The balance of convenience
is in favour of the one
seeking such relief.
Being essentially an equitable relief the
grant or refusal of an interlocutory
mandatory injunction shall ultimately
rest in the sound judicial discretion of
the court to be exercised in the light of
the facts and circumstances in each
case. Though the above guidelines are
neither exhaustive nor complete or
absolute rules, and there may be
exceptional circumstances needing
action, applying them as a prerequisite
for the grant or refusal of such
injunctions would be a sound exercise
of a judicial discretion."
In the case of Indian Oil Corporation Ltd. vs.
Amritsar Gas Service & Ors., (1991) 1 SCC 533, a bench of
three learned Judges of this Court considered the
appropriate relief to be granted in a case arising from
revocation of the distributorship agreement for sale of LPG
by the Indian Oil Corporation under different clauses of
the agreement. In that connection, this Court made the
following observations :-
"The question now is of the relief
which could be granted by the
arbitrator on its finding that
termination of the distributorship was
not validly made under clause 27 of the
agreement. No doubt, the notice of
termination of distributorship dated
March 11, 1983 specified the several
acts of the distributor on which the
termination was based and there were
complaints to that effect made against
the distributor which had the effect of
prejudicing the reputation of the
appellant-Corporation; and such acts
would permit exercise of the right of
termination of distributorship under
clause 27. However, the arbitrator
having held that clause 27 was not
available to the appellant-Corporation,
the question of grant of relief on that
finding has to proceed on that basis.
In such a situation, the agreement
being revocable by either party in
accordance with clause 28 by giving 30
days’ notice, the only relief which could
be granted was the award of
compensation for the period of notice,
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that is, 30 days. The plaintiff-
respondent 1 is, therefore, entitled to
compensation being the loss of
earnings for the notice period of 30
days instead of restoration of the
distributorship. The award has,
therefore, to be modified accordingly.
The compensation for 30 days notice
period from March 11, 1983 is to be
calculated on the basis of earnings
during that period disclosed from the
records of the Indian Oil Corporation
Ltd."
Coming to the case on hand it is to be kept in mind
that the controversy raised in the case relates to a
commercial contract entered between the appellant and
respondent no.1 for sale of petroleum products
manufactured by the appellant Corporation. Permission
for sale of such products was granted by the appellant on
the terms and conditions set out in the agreement. In the
said agreement it was clearly stipulated that the
respondent no.1 shall not change the structure of the firm
without the permission of the appellant. Concededly the
respondent no.1 had changed the structure of the firm
from a proprietary firm to a partnership firm. The
consequence of violation of any condition of the agreement
by the respondent no.1 was provided under clause 45 in
which it was stated that the grantor/licensor will be
entitled to revoke the agreement on the happening of such
event. Therefore, prima facie the appellant was entitled to
take action for revoking the agreement entered with the
respondent no.1. Validity or otherwise of the order of
revocation can be considered at the stage of interim
injunction only for the limited purpose of ascertaining
whether there is prima facie case in favour of the
plaintiff/petitioner and not for determination of the
question finally. From the discussions in the impugned
order it appears that the High Court has dealt with the
matter as if it was deciding the suit.
The questions whether, if the respondent no.1 had
violated the condition stipulated in the agreement by
changing the structure of the firm without taking prior
permission from the appellant, still the latter was bound to
give to the former an opportunity for rectifying the defect;
and whether passing the order revoking the agreement
without affording such opportunity will render the
revocation order invalid, are matters which are to be
considered when the suit is taken up for hearing. These
are not matters to be considered in detail for considering
the prayer for interlocutory order of injunction. Regarding
the question of status quo on the date of the order of
injunction there was serious dispute whether the appellant
had taken over possession of the property after notice of
revocation of the agreement was served on the manager of
respondent no.1 and had made over possession of the suit
property to respondent no.2 for the purpose of running the
petrol pump. The High Court has tried to get over this
question by recording a finding that there were some
materials on record to show that the respondent no.1 was
transacting business of sale of petroleum products on the
date of filing of the suit. This finding has been arrived at
by the High Court without considering the reasons given
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by the Trial Court which had recorded a finding to the
contrary in its order. The High Court has not at all
discussed the considerations which weighed and the
reasons which persuaded the Trial Court in rejecting the
prayer for interim mandatory injunction as prayed for by
respondent no.1. Most importantly, the High Court has
not considered the question whether on the facts and
circumstances of the case, if the prayer for interim
injunction is refused the plaintiff/petitioner will suffer
irreparable loss which cannot be adequately compensated
by damages. As has been held by this Court in Dorab
Cawasji Warden case (supra), ordinarily the relief to be
granted to a plaintiff in such a matter is awarding of
damages and interim injunction of a mandatory nature is
not to be granted.
On consideration of the entire matter, we are
satisfied that the order passed by the High Court granting
the prayer for interim injunction, in the context of facts
and circumstances of the case, is unsustainable.
Accordingly, the appeals are allowed. The order dated
5.12.2000 of the High Court in CMA Nos.3251 and 3255 of
2000 is set aside and the order passed by the Trial Court
in I.A.No.1373 & 1497/2000 in O.S. No.1139 of 2000
dated 06.11.2000 is restored. It is made clear that the
observations made in this judgment will not in any way
affect the merit of the case. In the facts and circumstances
of the case, there will be no orders for costs.