Appeal From Order No.14 of 2010

7th May, 2010

Petitioner Counsel: Shri. M.P.S. RAO,KAUSHIK SOCHENNAM , Ms. JIMI JOHN
Respondent Counsel: Shri. A.N.S. NADKARNI,Shri. D. PANGAM

Cases Cited:
Shiv Kumar Chadha Vs. Municipal Corporation of Delhi, (1993)3 SCC 161 [Para 11,16,17]
A. Venkatasubbiah Naidu Vs. S. Chellappan, 2001(1) ALL MR 247 (S.C.)=(2000)7 SCC 695 [Para 12,14,17,19]

JUDGMENT

JUDGMENT :- Heard. Admit. By consent heard forthwith.

2. This is defendant no.1's appeal and is directed against ex-parte Order dated 13-4-2010 of the learned Civil Judge, Senior Division, Panaji in Special Civil Suit No.4/2010/A.

3. Some facts are required to be stated to dispose off the present appeal.

4. The parties hereto shall be referred to in the names as they appear in the cause title of the said Civil Suit.

5. The defendant no.1 (appellant herein) has set up a case that there was a Charter Party Agreement between defendant no.1 and defendant no.2/Trustworth Shipping Private Ltd. and that the plaintiff had given an oral guarantee for implementation of the said agreement.

6. On 6-2-2010, the plaintiff filed the said civil suit before the learned Civil Judge, Senior Division, Panaji, inter alia, for a declaration that there was no contract of guarantee as between the plaintiff and defendant no.1 as regards the alleged charter party allegedly negotiated between the defendant no.1 and defendant no.2, and in any case there was no arbitration agreement as between the plaintiff and defendant no.1 either in the alleged contract of guarantee or otherwise. The plaintiff also sought injunction, and, ad-interim temporary injunction was granted to the plaintiff ex-parte in terms of prayer clauses (i) and (ii) of para 47(D) of the plaint. The said prayers read as follows :-

"(D) Pending the hearing and final disposal of this Suit, this Hon'ble Court be pleased to issue temporary injunction in the following terms :-

(i) To restrain the Defendant No.1 and/or any persons/entities claiming through or under the Defendant No.1 from in any manner initiating/instituting proceedings with and/or in any manner taking any steps whatsoever in relation to the arbitration proceedings before the Arbitrator Mr. Simon Gault in London, or any other Arbitral Tribunal on basis of the alleged Arbitration Agreement contained in the alleged contract of guarantee by and between the Plaintiff and the Defendant No.1.

(ii) To restrain the Defendant No.1 and/or any persons/entities claiming through or under the Defendant No.1 from in any manner publishing or issuing any press release containing defamatory matter involving the Plaintiff in relation to the alleged guarantee or alleged charter party agreement by and between the Plaintiff and the Defendant No.1 or Defendant No.2."

7. Notice was made returnable on 22-2-2010. However, none appeared on behalf of the defendants on that day, though duly served, and the suit was adjourned to 6-4-2010. However, in between, the defendants put up their appearance in the said civil suit on 15-3-2000. On 3-4-2010, the defendant no.1 was informed by the plaintiff by e-mail that they were in contempt of the Order dated 6-2-2010. On 8-4-2010, Ms. John, learned Counsel of defendant no.1 addressed a letter to the Counsel of the plaintiff Shri. Mahesh Sonak informing that they had not committed any contempt or any offence as alleged by them.

8. In between the plaintiff filed another application on 6-4-2010 purporting it to be an application under Order 39, Rules 1 and 2. Notice was issued returnable on 27-4-2010. This application was filed with the following prayers :

"A(i) To restrain the Defendant No.1 and/or any persons/entities claiming through or under the Defendant No.1 from in any manner initiating/instituting proceedings with and/or in any manner taking any steps whatsoever in relation to the arbitration proceedings before the Arbitrator Mr. Simon Gault in London, or any other Arbitral Tribunal on basis of the alleged Arbitration Agreement contained in the alleged contract of guarantee by and between the Plaintiff and the Defendant No.1.

A(ii) To restrain the Defendant No.1 and/or any persons/entities claiming through or under the Defendant No.1 from in any manner publishing or issuing any press release containing defamatory matter involving the Plaintiff in relation to the alleged guarantee or alleged Charter Party Agreement by and between the Plaintiff and the Defendant No.1."

9. Then the plaintiff filed another application on 12-4-2010 purporting it to be an application under Order 39, Rules 1 and 2, Rule 2-A read with Section 151, C.P.C.. From this application it can be seen that the plaintiff was aware that appearance was filed on behalf of defendants. Notice of this application was made returnable on 27-4-2010. In the said application, it was inter alia, alleged that the defendants suppressing relevant facts, the defendant no.1 and its Managing Director (who was not a party to the suit) had taken steps, in defiance to the orders, in filing fresh proceedings, and therefore had committed contempt of Court... etc.. Notice was ordered to be issued returnable on 27-4-2010 and the said application came to be granted ex-parte, by the learned Civil Judge, Senior Division, in terms of prayer clause D which reads as follows :-

"(D) For an Order and Direction in the interest of Justice directing the Respondent Nos.1 and 1-A to maintain complete status quo as of 6th February, 2010 and to act in terms of the Order of Injunction issued on 6th February, 2010 and not to take any further steps or continue with any further proceedings with regard to the alleged Contract of Guarantee which is the subject matter of challenge in terms of Prayer Clauses (A) and (B) of the Plaint before this Hon'ble Court and for an Order of ad-interim relief in these terms."

10. When this appeal came up for hearing before this Court on 26-4-2010 the requirement of personal appearance of the Managing Director of defendant no.1, as directed by Order dated 13-4-2010 was stayed. At present, there is no dispute that defendant no.1 has initiated a claim on 5-3-2010 before the High Court of Justice, Queen's Bench Division, Commercial Court at London, notice of which was served upon the plaintiff on 7-4-2010. However, it is interesting to note that in the application dated 12-4-2010 there is no mention at all where new proceedings were filed i.e. to sustain a grave allegation of contempt. That the claim was filed before the High Court of Justice was suppressed.

11. Be that as it may, Shri. M.P.S. Rao, the learned Senior Counsel appearing on behalf of the Appellant/Defendant No.1 submits that the defendants having put up their appearance on 15-3-2010, the learned Civil Judge, Senior Division should not have passed an ex-parte Order against them, without notice inasmuch as the learned Civil Judge had not even recorded that there was any urgency in the matter to pass such an order. Learned Counsel further submits that if at all on 6-2-1020 there was any restraint against the defendants it was for initiation of arbitration proceedings in terms of prayer (D)(i) of the plaint and, by filing a claim before the High Court of Justice Queen's Bench, defendant no.1 has not breached the ex-parte order dated 6-2-2010. Learned Counsel submits that there were no telling circumstances to enable the learned Civil Judge to make an ex-parte order on 13-4-2010 when the defendants had already put up their appearance on 15-3-2000 and were to appear on 27-4-2010. Shri. M.P.S. Rao, learned Senior Counsel has placed reliance on Shiv Kumar Chadha Vs. Municipal Corporation of Delhi and others ((1993)3 SCC 161), in support of his submissions.

12. On the other hand, Shri. A. N. S. Nadkarni, learned Senior Counsel appearing on behalf of the plaintiff and relying on A. Venkatasubbiah Naidu Vs. S. Chellappan and others ((2000)7 SCC 695 : [2001(1) ALL MR 247 (S.C.)]) has submitted that the impugned ex-parte Order is deemed to contain the requirements of Rule 3, Order 39, C.P.C. Learned Senior Counsel further submits, relying on the same Judgment, the defendant no.1 could not have come to this Court before the expiry of 30 days and ought to have filed an application before that very Court for setting aside the ex-parte order made against the defendants. Learned Senior Counsel has also submitted that the plaintiff is ready to go before the trial Court and apply for and obtain a fresh order and till then the plaintiff needs to be protected since otherwise the proceedings before the Queen's Bench which are fixed on 18th instant will proceed further in accordance with law. This submission or arrangement is not acceptable to the learned Senior Counsel appearing on behalf of defendant no.1 who has submitted that they have no control over the proceedings before the High Court, in England, and, who otherwise has no objection in case the impugned order is set aside and both the parties are remitted to the learned trial Court, with a direction to pass a fresh order on the application dated 12-4-2010 after hearing both the parties.

13. Be that as it may, the plaintiff after filing the suit on 6-2-2010 had already obtained ex-parte orders against the defendants. As already seen, the plaintiffs had filed another application on 6-4-2010 of which notice was given returnable on 27-4-2010. Order 39, Rule 3, C.P.C. provides that a Court is required to give a notice to opposite party before granting injunction. It further provides that the Court shall, in all cases, except where it appears that the object of granting the injunction would be defeated by the delay, before granting an injunction, direct notice of the application for the same to be given to the opposite party :

Provided that, where it is proposed to grant an injunction without giving notice of the application to the opposite party, the Court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay, and require the applicant --

(a) to deliver to the opposite party, or to send to him by registered post, immediately after the order granting the injunction has been made, a copy of the application for injunction together with -

(i) a copy of the affidavit filed in support of the application;

(ii) a copy of the plaint; and

(iii) copies of documents on which the applicant relies, and (b) to file, on the day on which such injunction is granted or on the day immediately following that day, an affidavit stating that the copies aforesaid have been so delivered or sent.

14. The Apex Court in A. Venkatasubbiah Naidu Vs. S. Chellappan and others [2001(1) ALL MR 247 (S.C.)] (supra) in para 15 posed the question as to what would be the position if a Court which passed an order granting interim ex-parte injunction did not record reasons thereof, and, answered the same by observing that such an order could be deemed to contain such requirements at least by implication even if they are not stated in so many words. The Hon'ble Supreme Court proceeded to observe that if a party, in whose favour an order was passed ex-parte, fails to comply with the duties which he has to perform as required by the proviso quoted above, he must take the risk. Non-compliance with such requisites on his part cannot be allowed to go without any consequence and to enable him to have only the advantage of it. The consequence of the party who secured the order for not complying with the duties he is required to perform is that he cannot be allowed to take advantage of such order if the order is not obeyed by the other party. The Apex Court in para 21 observed as follows :-

"It is the acknowledged position of law that no party can be forced to suffer for the inaction of the court or its omissions to act according to the procedure established by law. Under the normal circumstances the aggrieved party can prefer an appeal only against an order passed under Rules 1, 2, 2-A, 4 or 10 of Order 39 of the Code in terms of Order 43, Rule 1 of the Code. He cannot approach the appellate or revisional court during the pendency of the application for grant or vacation of temporary injunction. In such circumstances the party which does not get justice due to the inaction of the court in following the mandate of law must have a remedy. So we are of the view that in a case where the mandate of Order 39, Rule 3-A of the Code is flouted, the aggrieved party, shall be entitled to the right of appeal notwithstanding the pendency of the application for grant or vacation of a temporary injunction, against the order remaining in force. In such appeal, if preferred, the appellate court shall be obliged to entertain the appeal and further to take note of the omission of the subordinate court in complying with the provisions of Rule 3-A."

15. The Apex Court also observed that Order 39, Rule 1, is repository of the power to grant orders of temporary injunction with or without notice, interim or temporary, or till further orders or till the disposal of the suit. Hence, any order passed in exercise of the aforesaid powers in Rule 1 would be appealable, as indicated in Order 43, Rule 1 of the Code. The choice is for the party effected by the order either to move the appellate Court or to approach the same Court shall pass the ex-parte order for any relief.

16. The Apex Court in Shiv Kumar Chadha Vs. Municipal Corporation of Delhi and others (supra) [speaking through three learned Judges] has observed that the power to grant injunction is an extraordinary power vested in the Court to be exercised taking into consideration the facts and circumstances of a particular case. The Courts have to be more cautious when the said power is being exercised without notice or hearing the party who is to be affected by the order so passed. Such ex-parte orders have far reaching effect and as such a condition has been imposed under proviso to Rule 3 of Order 39, C.P.C. that a Court must record reasons before passing such order. This is imperative in nature and not optional. When the statute itself requires reasons to be recorded, the Court cannot ignore that requirement by saying that if reasons are recorded it may amount to expressing an opinion in favour of the plaintiff before hearing the defendant. Proviso to Rule 3 attracts the principle that if a statute requires a thing to be done in a particular manner it should be done in that manner or not all. The requirement for recording the reasons for grant of ex parte injunction cannot be held to be a mere formality. This requirement is consistent with the principle that a party to a suit who is being restrained from exercising a right which such party claims to exercise either under a statute or under the common law must be informed why instead of following the requirement of Rule 3, the procedure prescribed under the proviso has been followed. The party who invokes the jurisdiction of the Court for grant of an order of restraint against a party, without affording an opportunity to him of being heard, must satisfy the Court about the gravity of the situation and Court has to consider briefly these factors in the ex-parte order.

17. In my view, the Judgment of Shiv Kumar Chadha Vs. Municipal Corporation of Delhi and others (supra) which is a three Judge Judgment still holds the field and is required to be followed by this Court in preference to the observations made in the case of A. Venkatasubbiah Naidu Vs. S. Chellappan and others [2001(1) ALL MR 247 (S.C.)] (supra). It is well settled law that one of the remedies available to a defendant against an ex-parte order is by way of appeal and this has been recognized by the Apex Court in A. Venkatasubbiah Naidu Vs. S. Chellappan and others (supra) amongst other cases. There is nothing in the provisions of Order 39, C.P.C. or the Judgment of the Apex Court to suggest that no appeal lies against an ex-parte order before the expiry of 30 days. The impugned Order does not at all meet the requirements as laid down by the proviso to Rule 3 of Order 39, C.P.C. which in the words of the Apex Court are imperative in nature and not optional. The plaintiff had informed defendant no.1 on 3-4-2010 that they had committed contempt of the ex parte order dated 6-2-2010. What prevented the plaintiff from informing defendant no.1 or the other defendants that they would file an application on 12-4-2010 before the learned Civil Judge ? The plaintiff was fully aware, as pleaded in para 2, that defendant no.1 was restrained from any manner initiating proceeding or taking steps whatsoever in relation to arbitration proceedings before the learned Arbitrator Mr. Simon Gault in London or before any other Tribunal on the basis of alleged arbitration agreement contained in the alleged contract of guarantee and if that be so the learned Civil Judge, Senior Division first had to find out whether there was prima facie breach of the said order dated 6-4-2010, even before issuing notice, much less passing an ex-parte order. An ex-parte order for breach of another ex-parte order, under Rule 2-A, Order 39 is unheard of. Likewise, an ex-parte order to maintain status quo as on 6-2-2010 without knowing the fact situation on the date of order(13/4/2010) is also unheard off. Prayer (D) was meant to take care of the claim before the High Court, Queen Bench and which was beyond prayers D(i) or (ii) of the plaint or the application for temporary injunction dated 6-4-2010 and such a prayer could not have been granted without notice to the defendants who were already before the Court and the plaintiff had notice of the defendant's claim on 7-4-2010. If the plaintiff had disclosed in the application that the claim was filed before the High Court in London, I am sure the learned Civil Judge, Senior Division would not have passed such an order. The plaintiff suppressed that fact in the application dated 12-4-2010 which was to their knowledge. The plaintiff has alleged in para 2 of the application that defendants are out to make mockery of law and justice. The boot appears to be on the other foot.

18. The impugned order was passed without application of mind and with utter disregard to the provisions of proviso below Rule 3, Order 39, C.P.C..

19. The learned Civil Judge, Senior Division was fully aware that the defendants had put up their appearance and could have been given a short notice before their application was considered for the second time, ex-parte. The learned Civil Judge, Senior Division has not at all recorded as to what was the hurry in granting an application of the type filed by the plaintiff for the second time. In my view, the impugned order which is not in conformity with the proviso to Rule 3 of Order 39 is required to be set aside. It is good to remind the Civil Judges what the Apex Court has stated in A. Venkatasubbiah Naidu Vs. S. Chellappan and others [2001(1) ALL MR 247 (S.C.)] (supra) :

"In appropriate cases the appellate court, apart from granting or vacating or modifying the order of such injunction, may suggest suitable action against the erring judicial officer, including recommendation to take steps for making adverse entry in his ACRs. Failure to decide the application or vacate the ex parte temporary injunction shall, for the purposes of the appeal, be deemed to be the final order passed on the application for temporary injunction, on the date of expiry of thirty days mentioned in the Rule."

20. Consequently, the appeal is allowed. The impugned Order is set aside. Both the parties are directed to remain present before the learned trial Court on 12-5-2010 at 10.00 a.m. Any further orders may be passed only after hearing both the parties. Observations made herein will not come in the way of the learned Civil Judge, Senior Division in disposing the applications for temporary injunctions, on its own merits.

Authenticated copy of the order be given to the parties.

Petition allowed.