Summary
The Supreme Court restored a trial court's temporary injunction restraining dealings with a family property pending a suit to cancel a sale deed executed under a power of attorney, holding that the High Court, in an appeal under Order 43 CPC, substituted its own view without finding the trial court's discretion perverse, arbitrary or contrary to settled principles, and relied on extraneous matters such as other litigation between the parties.
Issues
- What is the scope of an appellate court's interference under Order 43 Rule 1(r) CPC with a discretionary order granting a temporary injunction under Order 39.
- Whether the High Court rightly vacated the trial court's injunction without finding perversity in it.
- Whether the doctrine of lis pendens under Section 52 of the Transfer of Property Act makes an injunction against pendente lite transfer unnecessary.
Provisions considered
- Order XLIII Rule 1(r), Code of Civil Procedure, 1908An appeal lies against orders under Order 39 Rules 1, 2, 2A, 4 and 10, but the appellate court only tests the validity of the discretionary order on settled principles and must not assume unlimited jurisdiction or reassess the material to reach a different view. (¶¶ 20, 32, 38)
- Order XXXIX Rules 1 and 2, Code of Civil Procedure, 1908A temporary injunction needs a prima facie case, irreparable injury and balance of convenience; Rule 1 expressly provides for restraining alienation of suit property, showing that an injunction against pendente lite transfers may be granted in a fit case despite lis pendens. (¶¶ 34, 38, 45)
- Section 52, Transfer of Property Act, 1882Lis pendens covers pendente lite transfers but may not fully protect a plaintiff; the trial court will decide whether the transfer made after the High Court's order is hit by lis pendens, and any further transfer pending the suit was declared subject to it whether or not the lis pendens was registered. (¶¶ 44, 45, 50)
Held
- Following Wander Ltd. v. Antox India, an appellate court will not substitute its discretion for the trial court's in an injunction matter unless the discretion was exercised arbitrarily, capriciously or perversely or in disregard of settled principles; that the appellate court would have taken a different view is not enough. (¶¶ 21, 22, 26, 29, 32)
- The test has become more stringent over time, with the emphasis on perversity rather than mere error of fact or law; a finding is perverse only if it rests on a complete misreading of evidence or on conjecture, and inadequacy of evidence or a different reading is not perversity. (¶¶ 27, 28, 35, 37)
- No mini-trial is to be held at the interim stage; the plaintiff must show a prima facie case (a bona fide substantial question needing trial, not prima facie title), irreparable injury not adequately compensable in damages, and balance of convenience in his favour. (¶¶ 33, 34)
- The High Court overstepped its Order 43 jurisdiction by setting aside the injunction without any finding of perversity, arbitrariness, mala fides or ignorance of settled principles, and by relying on extraneous matters such as other pending civil and criminal proceedings and alleged harassment while the suit was pending; it effectively accepted the defence wholesale without reasons for rejecting the plaintiffs' prima facie case. (¶¶ 38, 39, 41, 42)
- The High Court's refusal to stay its order despite a request, which enabled a third-party transaction on the suit property, illustrated how casual exercise of appellate jurisdiction prolongs litigation. (¶ 43)
- Section 52 of the Transfer of Property Act does not make an injunction against pendente lite transfers redundant; such transfers may create equities in favour of bona fide purchasers, and Order 39 Rule 1 itself provides for restraining alienation, so an injunction may be granted in a fit case. (¶¶ 45, 46)
Result
Appeal allowed; High Court's order set aside; respondents to maintain status quo and create no further encumbrance on the suit property; any further transfer pending the suit is subject to Section 52 of the Transfer of Property Act whether or not the lis pendens is registered; trial court to decide whether the earlier transfer is hit by lis pendens.