IMPORTANT POINT
The High Court wrongly granted interim injunction as it did not consider the question whether on the facts and circumstances of the case, if the prayer for interim injunction is refused the plaintiff will suffer irreparable loss which cannot be adequately compensated by damages.

Headnote:Civil Procedure Code, 1908-Order 39 Rules 1 and 2, Order 43 Rule 1(r)-Contract to grant Petrol Pump-Contract stipulating no change in partnership without prior consent of granter-Granter dissolving the firm-Contract terminated-Reversion taken -Application for interim injunction and restoration of possession-Dismissed by Trial Court as no prima facie case, no balance of convenience and no irreparable injury-High Court in appeal granted interim injunction and restitution-Whether sustainable in law? (No) -Case law discussed.
       Held : 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. (Para 7)
       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 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. (Paras 11, 12 & 13)

Judgement Key Points

Based on the provided legal document, the key points are as follows:

The High Court wrongly granted interim injunction without considering whether, if the injunction was refused, the plaintiff would suffer irreparable loss that cannot be compensated by damages. The court must evaluate whether the plaintiff has a prima facie case, if the balance of convenience favors the plaintiff, and if irreparable injury would occur without the injunction (!) .
The grant of an interlocutory injunction is a discretionary matter requiring careful exercise of judicial discretion, applying tests such as the strength of the prima facie case, the likelihood of irreparable harm, and the balance of convenience (!) (!) .
The purpose of interlocutory injunctions is to prevent injury during the pendency of a legal proceeding, especially where damages would be inadequate to compensate for the injury caused by the violation of rights. Such relief should be granted only when justified by the circumstances (!) (!) .
In cases involving commercial contracts, particularly those related to sale or licensing of products, the courts emphasize that violations of contractual conditions may justify revocation or termination, but the validity of such actions must be assessed carefully, especially regarding procedural fairness and whether the defendant was given an opportunity to rectify violations (!) (!) .
The courts are cautious about granting mandatory interim injunctions, especially when it involves restoring status quo or reversing acts already performed, unless the applicant demonstrates a strong case, imminent irreparable harm, and that the balance of convenience favors such relief (!) (!) .
When considering whether to grant or refuse interim relief, courts should thoroughly analyze the facts, the reasons provided by lower courts, and whether the refusal would cause irreparable harm that damages cannot remedy. The courts must exercise discretion based on the specific circumstances of each case (!) (!) .
The appellate courts have the authority to set aside interim orders if they find that the original decision was made without proper consideration of legal principles or relevant facts, and they can restore the lower court's order if it was justified (!) (!) .
Overall, the decision to grant or deny interim relief must be based on a balanced evaluation of legal rights, potential harm, procedural fairness, and the likelihood of success at trial, ensuring that justice is served without causing undue prejudice to either party (!) (!) (!) .

Please let me know if you need further analysis or specific legal advice based on this document.

JUDGMENT

D.P. Mohapatra, J.-Leave is granted.

2. 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 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 plaintiffs prayer for temporary injunction.

3. 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. 13

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2002 Supreme(SC) 673

IMPORTANT POINTThe High Court wrongly granted interim injunction as it did not consider the question whether on the facts and circumstances of the case, if the prayer for interim injunction is refused the plaintiff will suffer irreparable loss which cannot be adequately compensated by damages.

Cases Referred (3)

IMPORTANT POINT
The High Court wrongly granted interim injunction as it did not consider the question whether on the facts and circumstances of the case, if the prayer for interim injunction is refused the plaintiff will suffer irreparable loss which cannot be adequately compensated by damages.