Hindustan
Petroleum Corporation Ltd. Vs. Sri Sriman Narayan & Anr [2002] Insc 281 (9 July 2002)
D.P.Mohapatra,
Shivaraj V.Patil. 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 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 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.
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. 574.] 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 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, 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 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.
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