FAO (OS) No.280/2008 Page 1 of 51 * HIGH COURT OF DELHI : NEW DELHI + FAO (OS) No.280/2008 Judgment Reserved on : 7th November, 2008 % Judgment pronounced on : 14th November, 2008 Magotteaux Industries Pvt. Ltd. & Ors. ...Appellants Through : Dr. Abhishek Manu Singhvi, Sr. Adv. With Mr. Prem Sewak and Ms. Shefali Sewak, Advocates Versus AIA Engineering Ltd. ....Respondent Through : Mr. C.A. Sundaram, Sr. Adv. with Ms. Roshini Musa, Mr. Abhishek K. Gupta and Mr. Sanjeev Tiwari, Advocates Coram: HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE MANMOHAN SINGH 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes MANMOHAN SINGH, J. 1. The respondent/plaintiff has filed a suit for anti suit injunction, damages and other reliefs. An application under Order 39 Rules 1 & 2 CPC seeking issuance of an ex parte ad interim injunction being I.A. No. 5854/08 has also been filed. An ex-parte ad-interim injunction was issued on 13th May 2008 restraining the Appellants, their agents and representatives from proceeding further with the complaint pending on the file of the United States International Trade FAO (OS) No.280/2008 Page 2 of 51 Commission, Washington DC, USA ( hereinafter referred to as ‗USITC‘) under Section 337 of the United States Trade Tariff Act. 2. Against the said ex-parte ad-interim order present Appeal under Section 10(1) of Delhi High Court Act, 1966 read with Order 41 Rule 1(r) of CPC has been filed. 3. While granting the ex parte ad interim injunction the learned single Judge in Para 12 of the impugned order has given the following reasons:- ―In the present case, the plaintiff, in addition to disclosing a prima facie case has been able to satisfy this court that unless ex parte injunctive relief is granted at this stage it would be put to substantial hardship. Such material in the form of notices furnished to it and the copy of the complaint discloses that the proceedings before the Commission are summary in nature. Besides that obvious inconvenience the plaintiff would be put to in entering upon defence, it is doubtful whether the plaintiff would be given the kind of opportunity that it would require to prove its case concerning its authority – as claimed in terms of Indian law, before the Commission having regard to the summary nature of the proceedings and the time schedule within which it has to be completed.‖ 4. Considering the nature of the injunction passed by the learned Single Judge restraining the appellants herein from continuing to proceed with the proceedings pending in the US Tribunal/Court, we have entertained this appeal because of its urgent nature. Such kind of anti-suit injunction and powers vested in the Court are to be used sparingly as directed by the Hon‘ble Supreme Court of India and with utmost diligence. The injunction in anti suit is not merely inconvenient to the parties to the proceedings but also amounts to interference with the process of administration of justice of the foreign court. 5. Under these circumstances, there is no option for this court FAO (OS) No.280/2008 Page 3 of 51 except to dispose of this appeal as otherwise, the same may lead to consequences like lapse of the proceedings in the US Court which otherwise ought not to have happened. It is in the ordinary course and as a matter of practice, we may have insisted the parties to go before the learned single Judge to argue the matter on merits. But, given the extra ordinary circumstances of the present case, since the injunction application has so far not been disposed of and considering the urgency of the matter and nature of injunction which is passed by the learned single judge, we have heard the main appeal itself. 6. Whether merits of this appeal are required to be gone into or not, would depend upon the answer to the preliminary objection raised by the respondent i.e. regarding the maintainability of the Appeal itself against an ex-parte ad-interim order when application is still pending. It was also argued that even if the appeal is maintainable the ex parte ad interim order passed by the learned single judge should not be interfered with at this stage as not only the same is a well reasoned and speaking order but also that the submissions of the appellants can only be considered by the learned single Judge who has passed the impugned order in the pending application. Re. : MAINTAINABILITY 7. In support of his first submission on the maintainability of the appeal the learned senior counsel for the respondent has strongly relied upon the judgments in the case of M/s. Digital Filing System Inc. vs. Akhilesh Agarwal & Another, AIR 2005 Delhi 282; Gautam Adani vs. Container Corporation of India & Ors, 150(2008) DLT FAO (OS) No.280/2008 Page 4 of 51 281 (DB) and Shah Babulal Khimji vs. Jayaben, AIR 1981 SC 1786. 8. Mr. Sundaram fairly made the submission that in case this court comes to the conclusion that the impugned order was passed in the application under Order 39 Rules 1 & 2 and the same is appealable, then the reliance on the case of Shah Babulal Khimji’s case (supra) would be irrelevant, as when the statutory remedy is available to the Appellants then this court may not discuss the maintainability of the appeal on the question of Letters Patent. The contention of the learned senior counsel for the respondent is that in fact the impugned order has been passed under Section 151 of Code of Civil Procedure (CPC) by the trial court exercising its inherent power for issuance of anti suit injunction and the impugned order has not been passed under Order 39 Rules 1 & 2 CPC. In support of his submission he has relied upon Paras 7 and 10 of M/s. Digital Filing System Inc’s case (supra) . The same are reproduced below:- ―7. Appellants' plea that the Civil Court had no power to injunct a person from pursuing his legal remedy appears attractive on the face of it because there is no express power provision in the CPC which empowers a Civil Court to injunct a person from pursuing a lawfully instituted remedy. Order 39 CPC also does not authorise issuance of such injunction. But the matter would not rest at that because the Civil Court was competent to grant a temporary injunction in appropriate cases in exercise of its inherent power in cases not covered by Order 39 CPC to promote the interests of justice. 10. The position, therefore, that emerges is that a Court of Record/Civil Court would be competent to injunct a party before it from pursuing the proceedings in a foreign Court in exercise of its inherent power, saved by Section 151 CPC and by doing so it was not staying the proceedings of the foreign Court, which it had no jurisdiction to do but was only injuncting a party before it.‖ FAO (OS) No.280/2008 Page 5 of 51 9. The learned senior counsel for the respondent has also relied upon Paras 11, 12 and 13 of the judgment passed in Gautam Adani’s case (supra). The same are also reproduced below:- ―11. The restricted interpretation placed upon the term 'Judgment' in Hafiz Mohd. case (supra) did not find favor with the Supreme Court in Jugal Kishore Paliwal v. S. Sat Jit Singh MANU/SC/0004/1982. That was a case where an amendment to the written statement was sought and allowed at the time of framing of issues. An appeal preferred against the said order was dismissed by a Division Bench of this Court holding that the same was not maintainable in view of the full bench decision in Hafiz Mohd. Case (supra). In a further appeal before the Supreme Court, their Lordships held that the decision in Hafiz Mohd.'s case was no longer good law in view of the decision of the Supreme Court in Shah Babu Lal Khimji's case........ Counsel for both the parties are present and we have heard them at length. The High Court was clearly wrong in refusing to go into the merits of the case on the ground that appeal was not maintainable in view of the full bench decision in University of Delhi v. Hafiz Mohd. Said. This decision is no longer good law in view of our decision in the case of Shah Babulal Khimji v. Jayaben D. Kania where we have laid down various parameters and conditions under which an appeal can lie from a single Judge to the division bench. 12. In the light of the above pronouncement, it is no longer possible to hold that since the order impugned in the present appeal was passed under the Code of Civil Procedure, the right to appeal against the same must also be available under the Code itself. The argument that in order to maintain an appeal against an interlocutory order, the same must either tantamount to a decree within the meaning of Section 2 of the CPC or be an appealable order under Order 43 Rule 1 read with Section 104 of the CPC must therefore be rejected. It follows that even when an interlocutory order may not tantamount to a decree or be appealable under Order 43 of the CPC, an appeal would be maintainable if the same tantamount to a judgment within the meaning of Section 10(1) of the Delhi High Court Act and Clause 10 of the Letters Patent as applicable to this High Court. 13. What then is the true test to be applied for determining whether an order is a judgment within the meaning of the Lahore High Court Letters Patent as applicable to the High Court of Delhi and Section 10 of the Delhi High Court Act can be answered authoritatively only by reference to the decision FAO (OS) No.280/2008 Page 6 of 51 of the apex Court in Shah Babulal Khimji's case (supra) The Court had in that case recognized three distinct kinds of judgments, namely: (i) A final judgment which decides all the questions or issues in controversy so far as the Trial Judge is concerned and leaves nothing else to be decided; (ii) A preliminary judgment where the Trial Court by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or where the Trial Judge passes an order after hearing a preliminary objection raised by the defendant relating to the maintainability of the suit such as bar of jurisdiction, res judicata etc.; and (iii) An intermediatery or interlocutory judgment which include orders specified in Order 43 Rule 1 and even those which are not included in the said provision but which possesses the characteristics and trappings of finality in that the orders adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding.‖ 10. The learned senior counsel for the respondent also referred to the case of Shah Babulal Khimji’s case (supra) extensively. 11. Mr. Sundaram thus argued that as the impugned order has been passed under Section 151 CPC, the appeal filed by the Appellants is not maintainable as under the provisions of Order 43 Rule 1(r) orders passed under Section 151 are not appealable. 12. Mr. Singhvi, appearing for the appellants on the other hand strongly rebutted the argument of the respondent that the impugned order has been passed in the application under Section 151 CPC and contended the same has been granted under the provision of Order 39 Rules 1 & 2. It was argued that none of the judgments cited by the learned senior counsel for the respondent is applicable to the facts and circumstances of the present case for the following reasons:- FAO (OS) No.280/2008 Page 7 of 51 1) That the respondent has itself filed the application for anti-suit injunction invoking the provisions of Order 39 Rules 1 & 2 CPC. 2) That the impugned order has been passed by the learned single Judge in the application under Order 39 Rules 1 & 2. In the impugned order the learned single Judge has relied upon the case of Independent News Service Pvt. Ltd vs. India Broadcast Live LLC & Ors reported in 2007 (35) PTC 177. The said order itself was passed under Order 39 Rules 1, 2 and 4. 3) That in the impugned order passed by the learned single Judge, reference has been made to the aspects of prima facie case, balance of convenience, substantial hardship and other ingredients of Order 39 Rules 1 & 2 CPC. 4) That while passing the order the learned trial Court directed that provisions of Order 39 Rule 3 would be complied with. 5) It was also directed while granting the order under Order 39 Rules 1 & 2 that process server would serve the notice of injunction application to the Appellants. 13. To support his contention on the maintainability of the appeal, the learned senior counsel for the appellants has cited decision in Zila Parishad, Budaun and Ors. vs. Brahma Rishi Sharma; AIR1970 All 376. The Allahabad High Court in paras 15, 16 and 18 of the abovesaid judgment held as under : ―15. An injunction Interferes with substantial and substantive rights of a person. The object of Rule l(r) of Order 43 is to provide a remedy for improper or invalid interference with his rights. If we restrict this rule to only final orders of injunction, the object of the rule will not be fully achieved. For instance, where a grievance of the party affected by the ex parte interim injunction is that the court granting it has also acted from bias against him it is meaningless to force him to go to that very Court in the first instance. It shall only prolong the suspension FAO (OS) No.280/2008 Page 8 of 51 of his valuable rights. In many cases he may get no relief in the end. Similarly, where the order of injunction is founded on an Act challenged as unconstitutional, appeal may yield quicker relief. 16. The language and the object of Rule 1(r) of Order 43 and the scheme ot Rules 1 to 4 of Order 39 show that an appeal also lies against the ex parte order of injunction. As soon as an interim injunction is issued and the party affected thereby is apprised of it, he has two remedies: (1) he can either get the ex parte injunction order discharged or varied or set aside under Rule 4 of Order 39 and if unsuccessful avail the right of appeal as provided for under Order 43, Rule 1 (r), or (2) straightway file an appeal under Order 43, Rule 1 (r) against the injunction order passed under Rules 1 and 2 of Order 39. C.P.C. It is not unusual to provide for alternative remedies. For instance, when an ex parte decree is passed against a person, he has two remedies: either he may go up in appeal against the ex parte decree or he may seek to get the ex parte decree set aside by the same court. 18. We are unable to accept this submission of the learned senior counsel for the respondents. As already discussed above, once the Court, after perusing the application and affidavit, comes to the conclusion that the case is a fit one in which temporary injunction should be issued ex parte the Court takes a final decision in the matter for the time being and the expression of this decision in our opinion is a final order for the duration it is passed. Such an order is contemplated by Rules 1 and 2 of Order 39, C.P.C. We have looked into the authorities referred to above, but they are not applicable to the facts of this case and they have little bearing on the precise point raised by the learned senior counsel for the respondents.‖ 14. Another case relied upon by the appellants is of Nisha Raj and Anr. Vs. Pratap K. Kaula and Ors.; 57(1995) DLT4 90, this Court in paras 3, and 4 observed :- ―(3) So far as the first aspect of the matter is concerned we find that under Order 43 Rule l(r) of the Civil Procedure Code an appeal lies only against "an order" passed under Order 39 rule I, Rule 2 or Rule 2A, Rule 4 or Rule 10. An 'order' under Order 43 Rule l(r) could be one either granting the petitioner relief under Rules 1,2,2A, 4 or 10 of Order 39 or refusing the same or granting the order conditionally. The provision in Order 39 Rule I is not attracted to a case of 'notice' in as much as the grant of 'notice' is specifically covered by Order 39 Rule 3. When such a specific sub-rule covers the case of 'notice', it FAO (OS) No.280/2008 Page 9 of 51 cannot be .contended that an order ordering notice is also 'an order' under Order 39 Rule 1 CPC. thereforee, the order of the learned Judge is clearly one under Order 39 Rule 3 Civil Procedure Code and if that be so, no appeal is provided in Order 43 Rule 1 (r) Civil Procedure Code against an order under Order 39 Rule 3 CPC. Such a view has been taken by the Allahabad, Madhya Pradesh, Mysore, Andhra Pradesh, Punjab High Courts. (Lakhai vs. Ram Niwas and Ors MANU/UP/0206/1987, H. Bevis Co. vs. Ram Behari MANU/UP/0287/1950, Khusi Lal vs. Gorelal MANU/MP/0014/1986; Hamumaga vs. Anjanappa (1973 (2) Mys. Lj 96; Madhava Rao vs. N. Sankara Reddi (1983 (1) Alt 340) and Iqbal Singh vs. Chanan Singh MANU/PH/0230/1965. We agree with this view. We respectfully dissent from the judgment of the Sikkim High Court in Ashok Trading Lama vs. Tshering Wangdi (AIR 1982 Sikkim 20). If the Patna High Court in Shyam Behari Singh vs. B. Biseswar Dayal Singh (AIR 1924. Pat 712), has said that an appeal lies under Order 43 Rule l(r) against an order of 'notice', we respectfully dissent from the same also. This is the position under Order 43 Rule l(r) whether the order ordering 'notice' is passed by a Court subordinate to the High Court or by a learned Single Judge of the High Court. (4) The more important question, however, is whether the order directing 'notice' passed by the learned Single Judge is a 'judgment' within Section 10 of the Delhi High Court Act,1966. The position in regard to the same is basically governed by what is laid down by the Supreme Court in Shah ' Babulal Khimji vs. Jayaben D. Kama MANU/SC/0036/1981. There the Supreme Court held that an order passed by the trial Judge refusing to appoint a receiver or to grant "interim injunction" is a judgment within Clause 15 of the Letters Patent (Bombay), which is similar to Section 10 of the Delhi High Court Act. It was observed (see para 113) that the word 'judgment' as defined in the Civil Procedure Code in Section 2(2) is narrow and refers to 'adjudication' and that for purposes of Clause 15 of the Letters Patent, a wider an more liberal meaning is to be given to the word 'judgment'. But at the same time every order passed by the Single Judge cannot be said to be appealable. The word 'judgment' has undoubtedly a concept of finality in a broader and not a narrower sense. The Court then considered what is a 'final judgment', a 'preliminary judgment' and an 'intermediary or interlocutory judgment'. Most of the interlocutory orders in Order 43 Rule (l)(a) to (w) have the 'quality of finality' and are judgments under Clause 15 of the Letters Patent, their Lordships stated. Then they observed (para 112(3): "There FAO (OS) No.280/2008 Page 10 of 51 may also be interlocutory orders which are not covered by Order 43 Rule I, but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding." Their Lordships explained: "Before such an order can be a judgment, the adverse effect on the party concerned must be direct and immediate rather than indirect and remote." While dealing with orders passed in the course of trial, the Supreme Court pointed out (see para 114) that orders exercising discretion in respect of procedural matters are purely interlocutory and cannot be judgments because it will be open to the aggrieved party to make a grievance in respect of the order when appeal is carried against the final judgment. In para 116, the Supreme Court referred to certain other types of interlocutory orders passed at the discretion of the Judge which might amount to 'judgments' when a vested right is taken away or rendered negatory. The learned senior counsel for the Appellants has also pointed out that though the respondent has filed the reply in the appeal, it was nowhere stated in the reply that the appeal is not maintainable on the ground that the impugned order is passed under Section 151 and not under Order 39 Rules 1 & 2 CPC. 15. The Bombay High Court in Brooke Bond India Ltd. Vs. Dinkar Landge; [1984] 56 Comp Cas 1(Bom) relying upon the judgments of Zila Parishad case (supra) and Sk. Jusa v. Ganpat Dagdu Gire; AIR 1976 Bom 222 held that an order granting ad interim ex parte injunction is appealable. 16. Also in the case of Rajesh Batra vs. Grandlay Electricals India; 1997 I AD (Del) 377 relied upon by respondent, it was clearly laid down in para 9 by this Court as under :- ―(9) Looking to the trend of judicial opinion, we are of the opinion that :- (I) An order of injunction whether ex-parte or bye- parte is appealable under Order 39 Rule 1 (r) of the CPC; (II) The scope of hearing in such an appeal is limited. Ordinarily FAO (OS) No.280/2008 Page 11 of 51 the appellate Court would not take into consideration any new material. The hearing would be confined to finding out whether the original Court was justified or not in granting the ex-parte order of injunction on the material available before it. (III) If the appellate Court may concur with the view taken by the original Court then the appeal would be dismissed leaving it open to the appellant to contest the ex-parte order of injunction before the original Court. If the appellate Court may form an opinion that on the material available before original court, the grant of injunction ex-parte cannot be sustained then the appellate court would set aside the ex- parte order of injunction leaving it open to the parties to appear before original court and have a hearing by parte on the grant or otherwise of the order of injunction. (IV) If the appellate Court forms an opinion that on the material available on record of the suit before the original court an injunction not in the form granted by the original court but in a different form could only have been granted ex parte then it may substitute its own order in place of the original order (under appeal) leaving it open to the opposite party to contest the issue as to grant of injunction by parte before the original Court.‖ 17. Similar observations were made in the case of E. Mangamma v. A. Muniswamy Naidu; AIR 1983 Andhra Pradesh 128, in para 1. 18. In the case of A. Venkatasubbiah Naidu v. S. Challappan and Ors.; AIR 2000 SC 3032 at para 10, the Supreme Court held that :- ―10. It cannot be contended that the power to pass interim ex-parte orders of injunction does not emanate from the said Rule. In fact, the said rule is the repository of the power to grant orders of temporary injunction with