Where properties are alleged to have been acquired using proceeds traceable to shareholding procured by undue influence, does the availability of a subsequent money decree adequately compensate the plaintiff, such that an interlocutory injunction restraining alienation should be refused?
Coram: Alok Aradhe; Pamidighantam Sri Narasimha
No. Loss of controlling shareholding in family companies, or the creation of third-party rights in properties acquired with the proceeds of disputed transfers, is an injury that a subsequent decree cannot unwind and is not mere financial loss capable of computation and recovery from a solvent party; properties traceable to and standing in the place of the impugned shareholding and proceeds must, for the present, be preserved along with them pending trial.
Code of Civil Procedure, 1908 — Order XLIII Rule 1(r) — Appellate interference with discretionary injunction — Temporary injunction — Trinity test — Prima facie case — Balance of convenience — Irreparable injury — Vice of the mini-trial — Code of Civil Procedure, 1908 — Order XLIII Rule 1(r) — Limited scope of appellate interference — Held: An order on an application for temporary injunction is discretionary, and an appellate court does not undertake a fresh reconsideration of the entire matter or substitute its own view merely because it might have arrived at a different conclusion on the same material; interference is warranted only where the discretion has been exercised arbitrarily, capriciously, perversely, mala fide, upon an irrelevant or extraneous consideration, or contrary to settled legal principles, the guiding test being whether a reasonable person could have reached the same conclusion on the material before the trial court. (¶13, 36, 39) Temporary injunction — Trinity test — Prima facie case, balance of convenience and irreparable injury — Held further: The grant of a temporary injunction rests on three coexisting conditions: a prima facie case, meaning a substantial question raised bona fide requiring investigation and not a case proved to the hilt; a balance of convenience requiring the court to weigh the injury to the plaintiff against the corresponding injury to the defendant were the uncertainty to be resolved against each; and an irreparable injury which cannot be adequately compensated in damages; where these three conditions coexist, as found by the court of first instance on the material before it, its exercise of discretion cannot be faulted merely because an appellate court would have weighed the same material differently. (¶24, 28, 31, 35) Temporary injunction — Interlocutory stage — Vice of the mini-trial — Held further: The scope of examination on an application for interim injunction, and equally of an appeal against an order made on such an application, is confined to the limited and threshold question whether the plaintiff has shown a serious dispute meriting investigation at trial; it does not extend to an examination of the final effect, probative value or ultimate merits of the documents annexed to the pleadings, and courts must confine such orders to recording, with reasons, their findings on the three settled conditions without embarking upon what is, in substance, a mini-trial upon affidavits and documents that properly await the leading of evidence. (¶37, 38, 40)
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