1998 Supreme(Cal) 351

High Court Of Calcutta
RUMA PAL, BASUDEVA PANIGRAHI
INDIAN BANK - Appellant
Versus
EURO INTERNATIONAL PTE.LTD. - Respondent
G. A.  2788  Of  1998
Decided On : 08/17/1998

Section 41(b) of the Specific Relief Act, 1963 prohibits courts from granting injunctions that restrain any person from instituting or prosecuting any proceeding in a Court which is not subordinate to the Court from which the injunction is sought.

Headnote:

SPECIFIC RELIEF ACT, 1963 - SECTION 41(B) - BILLS OF EXCHANGE - ENFORCEMENT - INJUNCTION - JURISDICTION - FOREIGN EXCHANGE REGULATION ACT, 1973 - SECTIONS 8, 16, 47 - CONSIDERATION - PRESUMPTION - NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 118 - COURT'S INHERENT POWER - SECTION 151 OF CODE OF CIVIL PROCEDURE, 1908 - ARBITRATION ACT, 1940 - SECTIONS 30, 33 - JURISDICTION OF INDIAN COURTS - FOREIGN PROCEEDINGS - RESTRAINT - SPECIAL CIRCUMSTANCES - OPPRESSION.

Fact of the Case:

A nationalised bank (appellant) sanctioned credit facilities to respondent No. 2 (Ganapati) and granted a packing credit facility to enable Ganapati to export rice to respondent No. 1 (Euro) in Singapore. Ganapati executed several documents, including deeds of hypothecation, a promissory note, and an agreement for bills purchased, as security for the advance. Two Bills of Exchange were executed by Ganapati as drawer on Euro as the drawee and the appellant-Bank as the payee. Euro accepted each Bill of Exchange. The appellant-Bank presented the Bills of Exchange to DBS, Euro's bank at Singapore, for payment upon maturity, but Euro did not pay. Euro filed a suit against Ganapati and the appellant-Bank, claiming a monetary decree, injunctions restraining the appellant-Bank from demanding payment, and a declaration that the appellant-Bank had no right to claim on the basis of the Bills of Exchange.

Finding of the Court:

1. The impugned order restraining the appellant-Bank from enforcing its claim on the Bills of Exchange in any manner whatsoever is contrary to Section 41(b) of the Specific Relief Act, 1963, as it effectively prevents the appellant from initiating proceedings on the Bills of Exchange in any court, including courts of co-ordinate or superior jurisdiction. 2. The appellant-Bank, as the payee on the Bills of Exchange, has the right to realise the amounts stated therein from Euro irrespective of any understanding or agreement between Euro and Ganapati to which the Appellant was not a party. 3. The presumption under Section 118 of the Negotiable Instruments Act that the Bills of Exchange had been drawn for consideration has not been disproved as far as the appellant Bank is concerned on the material before the court. 4. The agreement between Ganapati and Euro was in contravention of the Foreign Exchange Regulation Act, 1973, but this issue need not be considered as the appellant-Bank must succeed on merits. 5. The Bills of Exchange were admissible as they were not stamped, and the respondents did not raise this issue at any stage of the proceedings. 6. The appellant-Bank has a right to claim on the basis of Bills of Exchange on merits, and therefore, even if S. 41 (b) of the Specific Relief Act does not operate extra-territorially, no case has been made out for grant of an injunction against the appellant-Bank in respect of the Bills of Exchange.

Issues: 1. Whether the impugned order restraining the appellant-Bank from enforcing its claim on the Bills of Exchange in any manner whatsoever is contrary to Section 41(b) of the Specific Relief Act, 1963? 2. Whether the appellant-Bank, as the payee on the Bills of Exchange, has the right to realise the amounts stated therein from Euro irrespective of any understanding or agreement between Euro and Ganapati to which the Appellant was not a party? 3. Whether the presumption under Section 118 of the Negotiable Instruments Act that the Bills of Exchange had been drawn for consideration has been disproved as far as the appellant Bank is concerned? 4. Whether the agreement between Ganapati and Euro was in contravention of the Foreign Exchange Regulation Act, 1973? 5. Whether the Bills of Exchange were admissible as they were not stamped? 6. Whether the appellant-Bank has a right to claim on the basis of Bills of Exchange on merits, and therefore, even if S. 41 (b) of the Specific Relief Act does not operate extra-territorially, no case has been made out for grant of an injunction against the appellant-Bank in respect of the Bills of Exchange?

Ratio Decidendi: 1. Section 41(b) of the Specific Relief Act, 1963 denies the court the jurisdiction to grant an injunction restraining any person from instituting or prosecuting any proceeding in a Court which is not subordinate to the Court from which the injunction is sought. 2. The appellant-Bank, as the payee on the Bills of Exchange, has the right to realise the amounts stated therein from Euro irrespective of any understanding or agreement between Euro and Ganapati to which the Appellant was not a party. 3. The presumption under Section 118 of the Negotiable Instruments Act that the Bills of Exchange had been drawn for consideration has not been disproved as far as the appellant Bank is concerned on the material before the court. 4. The agreement between Ganapati and Euro was in contravention of the Foreign Exchange Regulation Act, 1973, but this issue need not be considered as the appellant-Bank must succeed on merits. 5. The Bills of Exchange were admissible as they were not stamped, and the respondents did not raise this issue at any stage of the proceedings. 6. The appellant-Bank has a right to claim on the basis of Bills of Exchange on merits, and therefore, even if S. 41 (b) of the Specific Relief Act does not operate extra-territorially, no case has been made out for grant of an injunction against the appellant-Bank in respect of the Bills of Exchange.

Final Decision: The appeal is allowed, and the order under appeal is set aside except in so far as directions have been given for hearing of Euro' suit. The appeal is accordingly allowed with costs.