Industrial Investment Bank Of India Ltd vs Marshal'S Power & Telecom (I) Ltd.& Anr

1. Defendant No.1 in C.S. No. 644 of 2003 filed on the Original Side of the High Court of Madras is the appellant. The appeal challenges the grant of an interim injunction by the Division Bench of the High Court in favour of the plaintiff, respondent No.1 herein, pending the suit. The suit was filed by the plaintiff for a mandatory injunction restraining defendants 1 and 2 jointly or severally from taking possession of or interfering with the use of or exercising any right of lien, charge or from issuing notice in any form or from creating any kind of disturbance or from attaching otherwise or raising a claim in respect of certain capacitor banks systems allegedly supplied by the plaintiff and installed at various substations of Transmission Corporation for Andhra Pradesh (for short, 'APTRANSCO') and for award of the costs of the suit. In that suit, the plaintiff filed O.A. No. 806 of 2003 under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure seeking an interim injunction along the same lines to enure during the suit. The suit was filed when defendant No. 1 issued a notice to the plaintiff and defendant No. 2 in the suit seeking repayment of the amounts advanced by the first defendant to the second defendant, the repayment of which was secured by hypothecation and charge created by the plaintiff.

3. The trial court granted an ad interim ex parte order of injunction after entertaining the suit. Meanwhile, the first defendant filed its claim for recovery of the amounts allegedly due to it from defendants 1 and 2 before the Debts Recovery Tribunal. The first defendant also appeared in the suit filed by the plaintiff and in addition to filing an objection to the interim application for injunction also filed Application No. 4726 of 2003 praying for vacating the interim order of injunction granted by the court. The first defendant pleaded that substantial amounts were due to it; that certain assets had been hypothecated to it and a charge created for securing the loan by the plaintiff and that the charge and the hypothecation were legally enforceable and there was no ground for granting an interim order of injunction as sought for. It was also submitted that the plaintiff had no cause of action for filing such a suit and it was for the plaintiff to put forward its case or its defence before the Debts Recovery Tribunal.

4. The learned single judge after hearing both sides vacated the interim order of injunction earlier granted. Thus, he allowed the application filed by the first defendant for vacating the injunction and dismissed the application filed by the plaintiff for interim injunction. The learned single judge essentially took the view that since the first defendant had initiated a proper proceeding for enforcement of its rights before a Tribunal exclusively competent to deal with such a claim, it was not for the Civil Court to intervene with an interim order of injunction as sought for by the plaintiff. The plaintiff filed an appeal before the Division Bench. The Division Bench of the High Court allowed the appeal taking the view that the suit in the Civil Court was maintainable and since the suit was filed earlier, the court was competent to entertain the suit and grant an interim order of injunction. Without properly considering whether on the facts and in the circumstances of the case and the nature of the suit filed by the plaintiff an interim order of injunction was warranted or justified, it granted an order of injunction presumably as prayed for by the plaintiff but clarifying that the deed of hypothecation executed on the subject matter in question shall be in force and the proceedings before the Debts Recovery Tribunal may go on, but restraining the execution of any order that may be passed by the Debts Recovery Tribunal. Feeling aggrieved, the first defendant has filed this appeal.

8. In the result, we allow the appeal and setting aside the order of the Division Bench, restore the order of the learned single judge dismissing the application for interim injunction. We make it clear that it is open to the plaintiff to put forward all its contentions before the Debts Recovery Tribunal and if it is thought appropriate, to get the suit filed by it transferred to the Debts Recovery Tribunal to be tried as a cross suit or counter claim against the claim of the first defendant before the Debts Recovery Tribunal. The first defendant appellant, would be entitled to its costs in this Court.