A disputed, vague management MOU cannot support injunction against the trust owning the suit property.

The appellant No.1, Learners Education Trust, operated Learner’s High School and Learner’s Junior College on trust property at Doomdooma, Tinsukia. Appellant No.2, its managing trustee, and appellant No.3 entered into a Memorandum of Understanding (MoU) with the respondent on 19 December 2018, under which the respondent claimed to have invested approximately ₹1 crore and obtained control and management of the educational institutions, along with a special power of attorney to operate bank accounts and manage the institutions.

Disputes subsequently arose regarding the respondent’s management, alleged interference by the appellants, and revocation of the power of attorney. The respondent instituted Title Suit No. 30/2019 seeking declarations concerning his rights under the MoU and power of attorney, together with permanent and temporary injunctions.

The Civil Judge granted an ad-interim injunction on 20 May 2019 restraining the appellants from dispossessing the respondent or interfering with his control and management of the institutions.

After objections were filed, the trial court made the injunction absolute by order dated 12 May 2023.

The appellants challenged both orders under Order 43 Rule 1(r) read with Section 104 CPC.

1. Whether the respondent established a prima facie legal right under the MoU and special power of attorney sufficient to justify an injunction against the appellants pending trial.

2. Whether the balance of convenience favoured continuation of the injunction, particularly when the suit property belonged to the appellant Trust and the MoU allegedly conferred only management rights over the educational institutions.

3. Whether the respondent would suffer irreparable injury incapable of monetary compensation if the injunction were refused.

4. Whether an injunction could be granted against the Trust and its managing trustee, as the alleged true owners of the suit property, in favour of the respondent whose authority was founded on a disputed MoU and a revoked power of attorney.

5. Whether the fiduciary character of the relationship and the respondent’s alleged failure to approach the court with clean hands disentitled him to equitable injunctive relief.

The Court applied Order 39 Rules 1–3 CPC, under which temporary injunctions are preventive and primarily intended to preserve the subject matter of litigation pending adjudication; the applicant must establish a prima facie case, balance of convenience, and irreparable injury, as explained in Dalpat Kumar v. Prahlad Singh, Shiv Kumar Chadha v. Municipal Corporation of Delhi, and Hindustan Petroleum Corpn. Ltd. v. Sriman Narayan.

The Court relied on Gujarat Bottling Co. Ltd. v. Coca Cola Co., holding that interim relief requires a balancing of the competing risks of injury and is equitable in nature; a party seeking injunction must approach the court with clean hands.

It further applied Percept D’Mark (India) (P) Ltd. v. Zaheer Khan, that injury capable of adequate monetary compensation is not irreparable and that injunction is unavailable where the underlying contract is determinable or involves personal, confidential, or fiduciary obligations.

Under Premji Ratansey Shah v. Union of India and Mahadeo Savlaram Shelke v. Pune Municipal Corporation, a person in unlawful possession cannot obtain an injunction against the true owner.

Relying on Best Sellers Retail (India) Pvt. Ltd. v. Aditya Birla Nuvo Ltd., the Court held that where the totality of contractual obligations creates a fiduciary relationship, injunction cannot ordinarily be granted to enforce such duties.

The Court also considered the requirements of a legally binding agreement—offer, acceptance, consideration, lawful object, intention to create legal relations, and certainty of terms—in assessing the MoU.

The Court held that the respondent’s alleged right arose exclusively from the MoU and power of attorney, the latter having already been revoked.

The MoU was under challenge in the appellants’ counterclaim on grounds of fraud, vagueness, uncertainty, lack of a specified duration, and its apparently one-sided creation of perpetual rights in favour of the respondent.

Accordingly, the trial court erred in treating the existence of disputed documents and pending factual controversies as sufficient to establish a prima facie case.

On balance of convenience, the trial court had focused on alleged interference with school functioning and the interests of students and staff, but failed to account for the Trust’s ownership of the property and the appellants’ contention that the MoU granted, at most, management rights over the institutions and did not create any interest in the land or buildings.

The alleged financial and business loss arising from the respondent’s investment was considered compensable in damages, particularly in light of the respondent’s settlement proposal involving monetary compensation.

The Court further found that the respondent’s authority to remain in possession was clouded by the revocation of the power of attorney and challenge to the MoU, and that the fiduciary nature of the parties’ obligations militated against injunctive enforcement.

Finally, the respondent had allegedly omitted reference to an additional six bighas of adjoining land, demonstrating a lack of clean hands and independently disentitling him to equitable relief.

The appeal was allowed.

The order dated 12 May 2023 making the interim injunction absolute was set aside and quashed; the parties were directed to bear their own costs.