Manohar Lal Chopra v Rai Bahadur Rao Raja Seth Hiralal (1962)

Two questions of principle meet in this case, and it is set for the first of them.

First, and the reason it is a leading case: is the power to grant a temporary injunction exhausted by s. 94(c) read with Order XXXIX Rules 1 and 2, or may a court grant an injunction under its inherent power in s. 151 in circumstances outside those rules? The majority held that the inherent power survives.

Second, and equally examinable: even where the power exists, when should it be exercised to restrain a party from prosecuting a suit in another competent court? On this the majority held against the party who had obtained the injunction.

The appellant and the respondent were partners in a firm called Diamond Industries, formed at Indore to work coal mines at Kajoragram in District Burdwan and to manufacture cement, with its head office at Indore. The partnership was dissolved by a deed of dissolution dated 22 August 1945. Under the deed the appellant became liable to render full and true accounts of all moneys advanced by the respondent and of the partnership business, and was entitled to one-fourth of Rs 4,00,000 contributed by the respondent as capital, but not until accounts had been rendered, checked and audited.

The second proviso to the deed recorded the parties' agreement that, as the partnership agreement had been entered into at Indore, all disputes and differences — whether as to money, or as to the relationship, or as to the rights and liabilities of the parties in respect of the dissolved partnership, or as to questions arising under the document — should be decided amicably or in court at Indore and nowhere else.

On 29 September 1945 the respondent sent a registered notice requiring the appellant to explain and satisfy him at Indore about the colliery accounts within three months, alleging that the accounts had not been properly kept, that many entries appeared to be wilfully falsified with mala fide intention, and that there were false and fictitious entries causing wrongful loss to the respondent. The appellant replied on 5 December 1945 denying the allegations.

On 18 August 1948 the appellant instituted a suit in the court of the Subordinate Judge at Asansol for Rs 1,00,000 as his share in the capital and assets of the firm and Rs 18,000 as interest or damages. The respondent later sued at Indore. He applied for and obtained from the Additional District Judge an injunction restraining the appellant from proceeding with the Asansol suit, on the footing that the appellant was seeking to violate the forum clause in the deed of dissolution.

The High Court of Madhya Bharat dismissed the appeal on 10 May 1955. It agreed that Order XXXIX Rule 1 did not apply to the facts, but held that the injunction could be issued in exercise of the inherent powers of the court under s. 151.

1. May a court issue a temporary injunction in circumstances not covered by Order XXXIX, in exercise of its inherent power under s. 151? 2. If it may, was the discretion properly exercised on these facts?

Yes. The courts have inherent jurisdiction to issue temporary injunctions in circumstances not covered by the provisions of Order XXXIX. On this the High Courts had been divided — one line holding that no injunction may issue outside Order XXXIX, the other holding that it may where the interests of justice require — and the majority preferred the second line.

The reasoning. There is no expression in s. 94 which expressly prohibits the issue of a temporary injunction in circumstances not covered by Order XXXIX or by rules made under the Code. It is well settled that the provisions of the Code are not exhaustive, for the simple reason that the legislature cannot contemplate all the circumstances that may arise in future litigation and provide a procedure for them. The effect of the words about a thing being prescribed is only this: where the rules prescribe the circumstances in which a temporary injunction may issue, ordinarily the court is not to use its inherent powers but is merely to see whether the case falls within the prescribed rule. If s. 94 were not in the Code at all, the court could still issue temporary injunctions, in exercise of its inherent jurisdiction. Section 94 has its effect in regulating that power, not in taking away the court's right to exercise its inherent power. And there is nothing in Order XXXIX Rules 1 and 2 providing that a temporary injunction is not to be issued in cases outside them; the rules provide only that in the circumstances mentioned the court may grant one.

No party may insist on it. No party has a right to insist on the court exercising its inherent jurisdiction; the court does so only when it considers it absolutely necessary for the ends of justice.

The Padam Sen principle, applied and limited. In Padam Sen v State of U.P. (1961) the court had said that the inherent powers of the court are in addition to the powers specifically conferred by the Code and are complementary to them, so that the court is free to exercise them for the purposes mentioned in s. 151 when their exercise is not in any way in conflict with what is expressly provided in the Code or against the intentions of the legislature. The majority reads this as meaning that the inherent powers are not controlled by the Code, but are not to be exercised in conflict with an express provision — a restriction that exists not because the powers are controlled by the Code, but because it must be presumed that a procedure specifically provided by the legislature is dictated by the interests of justice. In Padam Sen itself the order appointing a commissioner to seize the plaintiff's account books was held bad, not because the court lacked power to appoint a commissioner outside s. 75 and Order XXVI, but because the power had been exercised with respect to a matter affecting the substantive rights of the plaintiff rather than a matter of procedure.

The injunction should not have been maintained. The Indore court had reasoned that the appellant had based his Asansol plaint on the deed of dissolution while avoiding all reference to the forum clause, that the Asansol suit had been filed in anticipation of the Indore suit, and that this was a flagrant breach of contract amounting to a misuse and abuse of the process of the court. The majority rejected each limb. The appellant had attached the deed to his Asansol plaint; even had he pleaded the forum clause it would have made no difference to the Asansol court entertaining the suit, since it was not disputed that both courts could try it; the Asansol suit could not be said to have been filed in anticipation of the Indore suit, which followed some months later, there being nothing to show that the appellant then knew the respondent was contemplating a suit at Indore; and the notices had been exchanged more than two and a half years before the Asansol suit.

The majority went further and said that it was the respondent's own conduct in applying for the injunction in September 1953, knowing of the Calcutta High Court's orders confirming the refusal of a stay of the Asansol suit and directing that court to decide the issue of jurisdiction early, which could be said to amount to an abuse of the process of the court.

The general principle on restraining another suit. Following the English authorities, the burden lies on the party seeking to restrain another action to show that the multiplicity of actions is vexatious, and he does not discharge it merely by showing that there is a multiplicity. Where it is the plaintiff of the subsequent suit who seeks to restrain the plaintiff of the earlier suit from proceeding, that cannot be justified on general principles where the previous suit was instituted in a competent court.

The dissenting judgment reasoned the other way from the same materials. Where the Code deals expressly with a particular matter, the provision should normally be regarded as exhaustive; the power to issue an injunction is restricted by s. 94 and Order XXXIX, and a civil court other than a chartered High Court may not ignore those restrictions in purported exercise of inherent jurisdiction. On this view Padam Sen is destructive of the appellant's argument, because s. 75 carries an implicit prohibition against appointing a commissioner for other purposes, and by parity of reasoning the power to grant an injunction must be taken to be exercisable only in the circumstances set out in Order XXXIX Rules 1 and 2.

For a question on s. 151, this is the primary authority for the proposition that the Code is not exhaustive and that inherent power is complementary to, and not controlled by, the express provisions — subject to the rule that it may not be exercised in conflict with an express provision or against the intention of the legislature, and never over substantive rights.

For a question on temporary injunctions, use it to complete the picture that Order XXXIX Rules 1 and 2 begin: the rules state when the court may grant an injunction, not when it may not.

Mention the dissent. A question that asks whether the Code is exhaustive is asking you to weigh two competing constructions, and the dissent gives you the other side in the words of the same case.

The party who won the point of law lost the case. The court held that the power existed and then held that it should not have been exercised. That combination is the model answer to a problem which gives you an injunction restraining a suit in another competent court: state the power, then apply the vexatiousness test, and remember on whom the burden lies.