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CHAPTER IV
REFLECTIONS OF EQUITY IN THE GRANT OF INJUNCTIONS
The next instrumentality by which the adaptation of law to social wants is carried on I call equity, meaning by that word any body of rules existing by the side of the original civil law, founded on distinct principles and claiming incidentally to supersede the civil law in virtue of a superior sanctity inherent in those principles. The Equity whether of the Roman Praetors or of the English chancellors, differs from the fictions which in each case preceded it, in that the interference with law is open and avowed.
-Henry Summer Maine, Ancient Law (New York: Henry Holt and Company,
1888), p. 27.
4.1 INTRODUCTION
The law of permanent and mandatory injunction in India is contained in the
Specific Relief Act, 1963 which is based on the New York Code. The original
New York Code of Civil Procedure, which proposed to bring about a fusion of
common law and equity, contained no specific provision relating to equitable
defenses which led to various attempts at fusion by way of amendments. The goal
to fuse common law and equity has been attained in India to a large extent as the
system of administration of these two systems is similar ever since the abolition
of jury trial. In order to understand the blending of common law and equity law
into a single, harmonious, and self-consistent system, it is absolutely essential to
undertake a holistic study of the subject.
The exercise of equitable jurisdiction in rendering injunctions has grown over the
years. Injunction has become a common and widely used equitable remedy
because of its ability to fine-tune the requirements of private conduct in a
complex, modern society. Recognizing the importance of equity in grant of
injunctions, this chapter will explore the meaning, nuances and principles of
equity, the functions it performs and its application in grant of injunctive relief.
4.2 MEANING OF EQUITY
Equity, in ordinary parlance, refers to rules of natural justice which operate
independent of the statute and yet hold binding force on the courts. The
expression ‘equity’ refers to the set of legal principles that supplement strict rules
197
of law where their application would operate harshly. In civil legal systems, broad
"general clauses" allow judges to have similar leeway in applying the code.1
Equity is commonly said to "mitigate the rigor of common law", allowing courts
to use their discretion and apply justice in accordance with natural law.
It is interesting that definitions of equity are with reference to its administration,
which appears, to the common man, to be suffering from the fallacy of putting the
cart before the horse. Referring to its institutional history, F.W. Maitland thus
wrote in his classic Equity: A Course of Lectures (1909):
“I intend to speak of equity as of an existing body of rules administered by our
courts of justice. But for reasons which you will easily understand a brief
historical prelude seems necessary. For suppose that we ask the question – What
is equity? We can only answer it by giving some short account of certain courts of
justice which were abolished over thirty years ago. In the year 1875 we might
have said ‘Equity is that body of rules which is administered only by those Courts
which are known as Courts of Equity’. The definition of course would not have
been satisfactory, but now-a-days we are cut off even from this unsatisfactory
definition. We have no longer any courts which are merely courts of equity. Thus
we are driven to say that Equity now is that body of rules administered by our
English courts of justice which, were it not for the operation of the Judicature
Acts, would be administered only by those courts which would be known as
Courts of Equity. This, you may well say, is but a poor thing to call a definition.
Equity is a certain portion of our existing substantive law, and yet in order that we
may describe this portion and mark it off from other portions we have to make
reference to courts that are no longer in existence. Still I fear that nothing better
than this is possible. The only alternative would be to make a list of the equitable
rules and say that Equity consists of those rules. This, I say, would be the only
alternative, for if we were to inquire what it is that all these rules have in common
and what it is that marks them off from all other rules administered by our courts,
we should by way of answer find nothing but this, that these rules were until
lately administered, and administered only, by our courts of equity.”
1 Glendon MA et al. (2008). Comparative Legal Traditions In a Nutshell, 3rd edition, pp. 142–
143. Thomson-West. For example, Glendon et al. Article 138 of the German Civil Code states that "a transaction that offends good morals (guten Sitten) is void".
198
Sir Victor Windeyer approached “the meaning of Equity” by quoting the
observations of Maitland. He described “Procedure in Equity” by quoting Story’s
influential Commentaries on Equity Jurisprudence2, at the same time noting that
Story closely followed Blackstone. Book III of Blackstone’s Commentaries dealt
with Equity (under the rubric of “Private Wrongs”) focussing on the following:
“wherein (it may be asked) does the essential difference between Law and Equity
consist? It principally consists in the different modes of administering justice in
each; in the mode of proof, the mode of trial, and the mode of relief. Upon these,
and upon two other accidental grounds of jurisdiction, which were formerly
driven into those courts by narrow decisions of the courts of law, - viz. the true
construction of securities for money lent, and the form and effect of a trust or
second use; upon these main pillars hath been gradually erected that structure of
jurisprudence, which prevails in our courts of equity, and is inwardly bottomed
upon the same substantial foundations as the legal system which hath hitherto
been delineated in these commentaries; however different they may appear in
their outward form, from the different taste of their architects.”
The above descriptions were rejected by English judges. The reasons for this were
explained by Holdsworth who wrote:
“The passage from Blackstone [based on Mansfield] which has just been cited
shows the fallacy of the premises upon which the views of Mansfield were based.
In the first place, both Mansfield and Blackstone ignored the fundamental
difference between the point of view of the courts of law and the courts of equity,
which is apparent from the very earliest period in the history of the equity
administered by the court of Chancery. Equity, from the first, has always acted in
personam. It always took all the circumstances of the case and the conduct of the
parties into consideration; and its remedies were, for that reason, always
discretionary. The courts of law gave, as they were bound to give, the judgment to
which the parties were entitled, taking into consideration only the facts pleaded
and proved by the evidence. They could not travel out of the record. In the second
place, both Mansfield and Blackstone underrated the effect upon substantive rules
of the working, for several centuries, of the differences ‘in the mode of proof, the
mode of trial, and the mode of relief’. These procedural differences had 2 First published in America in 1836, with an English edition published in 1884.
199
accentuated the fundamental difference between law and equity. They had thus
given rise to many substantial differences, which tended to grow more
fundamental as the variant effects of the two procedures were worked out in
detail”.
From the views of the above named eminent jurists, it follows that “Equity” is
not capable of precise definition and is to be explained with reference to its
history, application and underlying philosophy. Suturing these views together
Holdsworth wrote:
“Just as considerations of conscience made for the flexibility of the principles of
equity and their capacity for expansion, so one particular effect of this element of
conscience has had the effect of giving to the court of Chancery a wider
jurisdiction in respect of foreign land than that possessed by courts of law. From
the first equity had acted upon the conscience of the defendant, in order to purge
and rectify it. It therefore acted in personam; and though the methods by which
the court enforced its decrees were no longer wholly personal, though it could
sequester or deliver possession of the property of the defendant as well as
imprison him for disobedience to its process, it did not cease to adhere to its
original idea that it could proceed against the person of anyone who was within its
jurisdiction, and order him to fulfil his equitable obligations.”
Underplaying the distinction between law and equity, Maitland stated in his
Equity Lectures of 1909 that Law and Equity are not in opposition and that
“Equity came not to destroy the common law but to fulfil it”.
The effect of equity can be best understood in a contextual manner. It surfaces in
the form of maxims3 that guide the application of equity.
4
4.3 JURISDICTIONS OF ADMINISTRATION
Equity has grown by absorption of new ideas to reflect the demands of an
evolving society. It however maintained connection with the basic equitable
principles established in formative years. These principles found voice through
3 Hudson A., Equity and Trusts, Routledge-Cavendish, (2009).
4 Hudson states that these are primarily "culled from Snell's Equity, 4th edition.
200
various channels. Equity was administered through the following kinds of
jurisdictions:
a. Exclusive Jurisdiction; b. Concurrent Jurisdiction; and c. Auxiliary Jurisdiction.
1. Exclusive Jurisdiction
For matters falling beyond the purview of early common law, equity assumed
charge and became the sole basis of adjudication. The rigidity of the system did
not allow adaption to different circumstances and thus equity had to intervene5.
The idea was to “sacrifice the particular to the general and sacrifice justice to
certainty”6. Equity rose to protect interests falling outside the scope of traditional
remedies. The trust is recognized as the “greatest contribution to the substantive
law which has ever been set down to the credit of Chancery”7
2. Concurrent Jurisdiction
Equity developed concurrent jurisdiction in cases where the strict enforcement of
the law was contrary to equity, for eg. Cases involving fraud, forgery and
coercion. This concerned cases where equity gave relief due to the inadequacy of
common law remedies8. Equity supplemented the existing range of legal
remedies.9
3. Auxiliary Jurisdiction
Equity also intervened where remedies which existed at common law were not
effectively administered. One of the deficiencies of the common law was that
plaintiffs were believed to be denied justice due to the wealth, power and
influence of certain defendants10
. This perversion was sought to be avoided by
recourse to equity. Individuals felt that the Court of Chancery “possessed the
confidence of the King and could therefore not be easily influenced by threats or
5 Perell, The Fusion of Law and Equity (Canada: Butterworths, 1990) at 4.
6 Smith, “The Stages of Equity” (1933) 11 L.Q.R. 308 at 310.
7 Holmes, “Early English Equity” (1885) 1 L.Q.R. 162.
8 Ashburner, Principles of Equity, 2nd ed. (London: Butterworths, 1933).
9 Paul S Davies, Graham Virgo and E H Burn, Equity & Trusts : Text, Cases, and Materials,
Oxford University Press, 2013. 10
Jill Martin, ed, “Hanburry and Martin's Modern Equity” 14th ed. (London : Sweet & Maxwell, 1993) at 296.
201
bribes”.11
In other cases, equity intervened in adjectival mattes to strengthen
remedies say by ordering discovery.12
The administrative inefficiency of the common law system gave impetus to
equity. Williams, in the 15th
century lawsuit of Babington v. Venour stated that
development of equity in the later part of the century was “not only desirable but
inevitable” since “the inefficiency of the common law during that period stands
out as clearly as does the development of the equitable jurisdiction of chancery”13
.
4.4 FUNCTIONS OF EQUITY
Equity is remedial in focus, aiming to administer practical and contextual justice.
Equity grasps an alluring origination of a "remedy" to be specific, a determination
to fulfill a wronged party's requirements, constrained by even minded and
approach contemplations. The wide topics of equity uncover an attractive way to
deal with remedies and must shape remedial law in the cutting edge way. Along
these lines “equity remains as vital and fruitful a source of principle as it ever has
been because the fundamental notions of equity are universal applications of
principle to continually recurring problems; they may develop but cannot age or
wither.”14
The courts have used equitable doctrines in a number of areas as “a means for
injecting flexibility demanded by modern conditions and standards into our
system of legal redress for civil wrongs”.
When equity’s application to cases is analyzed, it is found to have tremendous
utility. Firstly, it assesses whether the plaintiff is eligible for relief, for example,
whether the plaintiff's case suffers from laches, clean hands, estoppel, adequate
remedy at law, or proof of irreparable harm. Secondly, equity helps in
ascertaining which conduct can be permitted to continue and which will yield or,
in other words, whether defendant is to be held liable. Thirdly, equity aids in
11
Smith, Case Comment (1995) Can. Bar.Rev. 730. 12
Meagher, Gummow and Lehane, Equity – Doctrine and Remedies, 3rd ed. (Sydney: Butterworths, 1992).
13 Mc Lachlin “The Place of Equitable Doctrines in the Contemporary Common Law World : A
Canadian Perspective” in Waters, Equity, Fiduciaries and Trusts (Carswell, 1993) at 55. 14
Meagher, Gummow and Lehane, Equity - Doctrine and Remedies, 3rd
Edn. (Sydney: Butterworths, 1992).
202
fashioning different kinds of reliefs. These remedies are tailor made to suit facts
of each case.15
Injunction is a relief founded on equity. Temporary injunction is an extraordinary
relief and cannot be granted except in exceptional circumstances. Every filing of
plaint along with application Order 39 Rule 1 and 2 of Code of Civil Procedure
does not by itself entitle the plaintiff to obtain automatically obtain temporary
injunction. There are equitable considerations, for example the conduct of the
applicant and the delay in filing the application which have to be carefully
weighed before issuing temporary injunction.16
The power to grant or refuse injunction essentially lies in the realm of discretion
of the court. The power however has to be exercised with the greatest care,
caution and circumspection. The court is required to consider the question of
grant or refusal of preliminary injunction at the initial stage of the proceedings.17
4.5 CHARACTERISTICS OF EQUITY
Equity was originally founded on the Lord Chancellor's discretion, which was
exercised with reference to his conscience. As a result, equity is traditionally
characterized jurisdiction, which is grounded on unconscionability. The two
elements of discretion and unconscionability which constitute essential attributes
of equity deserve separate analysis.
4.5.1 Discretion
Equity is a discretionary domain that is aimed at securing a just and fair result,
irrespective of identifiable rules which may produce certainty and predictability.18
However, modern developments have overturned this trend. In Re Diplock,19
the
Court of Appeal recognized that:
15
Daniel Mach, Rules Without Reasons: The Diminishing Role of Statutory Policy and Equitable Discretion in the Law of Nepa Remedies, Harvard Environmental Law Review, Volume no. 35, Page no. 205, Issue no. 1, 2011.
16 Radhey Shyam Nigam v. Jyoti Shrivastav (2001) AIHC 3708 (MP)
17 Arvind Goyanka v.. Sushila Devi Tiberwala AIR 1988 Ker 291.
18 Comments of Seldon, Chapter 1.1(a), p. 4, in Pollock (ed.), Table Talk of John Selden
(London: Selden Society, 1927), p. 43. 19
[1948] Ch 465, 481.
203
“If a claim in equity exists, it must be shown to have an ancestry founded in
history and in the practice and precedents of courts administering equity
jurisdiction. It is not sufficient that because we may think that the 'justice' of the
present case requires it, we should invent such a jurisdiction for the first time.”
Lord Denning, writing extra-judicially, noted that:20
“the Courts of Chancery are no longer courts of equity. They are as fixed and
immutable as the Courts of law ever were.”
But this does not imply that equity cannot be altered. Sir George Jessel MR
recognized in Re Hallett's Estate21
that:
“the rules of Courts of Equity are not, like the rules of the Common Law,
supposed to have been established from time immemorial. It is perfectly well
known that they have been established from time to time – altered, improved, and
refined from time to time.... in cases of this kind, the older precedents in Equity
are of very little value. The doctrines are progressive, refined, and if we want to
know what the rules of Equity are, we must look, of course, rather to the more
modern than the more ancient cases.”
There continues to be a significant role for discretion within equity. The award of
equitable remedies lies in the discretion of the court, and it is entirely appropriate
that questions of justice and fairness are taken into account when determining the
nature and extent of any remedy that is awarded. Equity is thus based on rules,
principles and doctrines that are strictly interpreted, but their application and the
award of remedies can be modulated by the exercise of judicial discretion to
secure a just and fair result.22
4.5.2 Conscience
Unconscionability is one of the most important equitable principles. In
Westdeutsche Landesbank Girozentrale v Islington LBC,23
The leading
20
Denning, 'The Need for a New Equity' (1952) 5 CLP 8. 21
(1880) 13 Ch D 696, 710. 22
Paul S Davies, Graham Virgo and E H Burn, Equity & Trusts : Text, Cases, and Materials, Oxford University Press, 2013.
23 [1996] AC 669.
204
justification for recognition of a trust, which is equity's most significant creation,
was that 'equity operates on the conscience of the owner of the legal interest'.24
The essential function of equity is that it restrains injustice by opposing
unconscionable conduct.25
The fundamental problem being faced is regarding determination of
conscionability. 'Conscience' at one point was referred to as:26
“the judge's and the defendant's private knowledge of facts which could not be
proved at common law because of medieval common law conceptions of
documentary evidence and of trial of jury.”
Unconscionability has been referred to as a guiding principle. In Winkworth v
Edward Baron Development Co. Ltd,27
Lord Templeman held:
“Equity is not a computer. Equity operates on conscience.”
4.6 EQUITY IN MODERN CONTEXT
In the nineteenth century, equity related to death, succession and debts. In modern
times, however, its application has changed. Equity and its principles are relevant,
both for explaining long-established doctrines and for for providing new solutions
to contemporary problems. As Lord Denning MR noted in Eves v Eves, 'Equity is
not past the age of child bearing.'28
Equity has made a profound contribution to many areas of the law, especially as
regards the identification of rights and the development of important remedies.
For instance, it is applied to protect against exploitative transactions, or abuse of
fiduciary relationships.29
It lays foundation of an action for breach of
confidence.30
It prescribes liability for invasion of privacy.31
The most important
contribution of Equity is creation of the trust. The essence of the trust is that
24
[1996] AC 669, 705. 25
Evershed, 'Registration on the Fusions of Law and Equity after Seventy-five Years' ()1954 LQR 326, 329.
26 Macnair, 'Equity and Conscience' (2007) OJLS 659.
27 [1986] 1 WLR 1512, 1516.
28 [1975] 1 WLR 1338, 1341.
29 Royal Bank of Scotland plc v Etridge (No. 2) [2002] 2 AC 773.
30 Coco v AN Clark (Engineers) Ltd [1969] RPC 41.
31 OBG Ltd v Allan [2007] UKHL 21; [2008] AC 1, [255] (Lord Nicholls), and [272] (Lord
Walker).
205
property is held by one person for the benefit of another. This is recognized
through the division of property rights.32
4.7 REASON FOR THE GROWING IMPORTANCE OF EQUITY
There has been an era of legal transformation in which we have been treading
towards a time which assigns greater emphasis to equity and natural law than it
does to strict law. There are two primarily two rationales that can be given for
this. Firstly, with the growth and evolution of society, old forms of law have been
rendered insufficient and incapable of tackling modern conflicts and the courts
thereby have taken to equitable remedies. Secondly, the perception of the masses
regarding justice in general has changed - a development which has in the long
run has reverberated in the courts. Equitable compensation as a remedy in the
context of fiduciary law has fulfilled the task of introducing a standard of morality
in commercial dealings and appropriately compensates parties who suffered
injustice.
The strength and flexibility of equity as a tool to drive injunctions makes them
attractive as the remedy of choice in many cases. Equity courts shape injunctions
in multifarious forms and also serve tactical ends. They can be wielded to drag a
rambunctiously recalcitrant defendant into compliance, to tighten the reins on
slipshod defendants whose compliance efforts may be sloppy, or merely to add a
final reassuring level of certainty to a good faith defendant’s compliance. In short,
“the plastic remedies of the chancery are moulded to the needs of justice.”33
The spirit of equity may innovate and create various permutations and
combinations of remedies having distinctive characteristics. Experience has
shown that relying on equitable principles judges are imposing some conditions
that are facilitating creative, fair, and just outcomes, though the orders may not
subscribe to the traditional sources of judicial authority. Such practices may be
illustrative exercises of judicial authority that are tolerated if not also desired. For
example, no matter the political resistance and prevailing case law, judges must,
or at least will, craft creative, dramatic forms of injunctive relief to remedy certain
32
Paul S Davies, Graham Virgo and E H Burn, Equity & Trusts : Text, Cases, and Materials, Oxford University Press, 2013.
33 Zygmunt Plater, Statutory Violations and Equitable Discretion, 70 California Law Review 524,
(1982).
206
wrongs. And regardless of the procedural infrastructure, judges with unusual
demands of case management (as is particularly plaguing the Indian judicial
system) will undoubtedly try to deviate from those rules. Although some exercises
of this authority could be challenged or even reversed on appeal, others may never
be reviewed by an appellate court. Or appellate courts, too, may recognize that
some judicial actions are useful or beneficial even without formal authority. For
example, in many appeals in cases where conditional orders were issued, neither
the parties nor the court even questioned the propriety of the condition. One such
instance which is very common in Indian Courts is in cases where there is a
dispute between a landlord and a tenant. The landlord, being the registered
consumer of electricity and water connections gets the said connections
disconnected. Since the owner cannot be compelled to restore his connection
against his wish, and he may also not co-operate for this, the courts ordinarily
rope in the supplier of electricity or water and may direct the said authorities to
issue a fresh connection in the name of the tenant so that he is not at the mercy of
the landlord and is not subject to the whims of the landlord in wholesome
enjoyment of his lawful possession of the premises.
Equity is a natural precursor to the law's innovations, and thus, the dissonance
between form and practice could be viewed in a very positive light.34
Codified
discretion is an inadequate substitute for equity. Equity can play an important role
in the growth of the law, and without that engine, "our law will be moribund, or
worse."35
A merged system of law and equity could (and in fact presently does)
tolerate this practice through benign neglect. But accusations of judicial activism
are forthcoming which shows that courts have to be cautious in not encroaching
upon the turf of the executive and of the legislature.
4.8 PRINCIPLES AND MAXIMS OF EQUITY
We have seen above that two legal institutions developed in England during the
Middle Ages to which plaintiffs could turn to assert their rights - the courts of law
and the Court of the Chancery. The latter originally stemmed from the residual
34
Goldwin Smith, A Constitutional and Legal History of England 209 (1955) (crediting Sir Henry Sumner Maine for famous dictum that there are three methods by which law has sought to meet changing conditions: (1) fictions, (2) legislative amendment, and (3) equity); Melvin M. Johnson, Jr., The Spirit of Equity, 16 B.U. L. Rev. 345, 352-55 (1936) (listing equity as one of three ways the law deals with societal changes).
35 Percy Bordwell, The Resurgence of Equity, 1 U. Chi. L. Rev. 741, 749 (1934).
207
judicial power retained by the King. The courts of law became limited by the
formalism arising out of the use of writs and forms of action. Despite the
perception that judges in the common law system act freely, the historical reality
was that it took decades for new forms of action to be judicially accepted. Even
these new forms were extremely formalistic and form-bound with no room for
judicial interpretation.
A body of case law gradually evolved within the Court of the Chancery
addressing situations in which there was no form of action or the remedy at law
was insufficient. The legal institution of equity developed as a result of this
bifurcation in the English legal system, along the same lines as articulated by
Aristotle: “This is the essential nature of the equitable: it is a rectification of law
where law is defective because of its generality: it is because there are some cases
for which it is impossible to lay down a law, so that a special ordinance becomes
necessary.”
At first glance, the Latin expression of a maxim makes it appear to be
complicated, but they may be capable of lucid understanding. Sometimes there
are difficulties in identifying which of the several equitable maxims apply to an
action. Courts are often perplexed by these questions while adjudicating rival
claims in several cases. It is therefore essential to understand the meaning,
content, and characteristic of a maxim as a distinct equitable theme.
Loosely, a maxim is defined as general truth or rule of truth of conduct explained
in a sentence.36
The word maxim originated from the medieval Latin maxima
(propositio). Thus, a maxim of equity refers to a general truth or a rule of conduct
about the operation of equity. An illustration may be aptly cited.37
Suppose two
robbers agree to share the proceeds of crime in equal halves. One robber is not
given his agreed share. He approaches the court and sues the other to obtain his
due share. The court will not render assistance to the plaintiff to enforce the
agreement since the crime is illegal. This proposition is based on maxim: ex turpi
causa non oritur actio, which means “out of an illegal contract no action can lie”.
This is a maxim of law. It is not a maxim of equity since it operates in the sphere
of law. It is the law that prescribes whether a contract is legal or illegal.
36
Oxford Compact English Dictionary, 1996. 37
Richard Clements & Ademola Abass, equity & Trusts: text, cases and materials, 2002.
208
Equity, on the other hand, is an exclusive branch which does not deal with issues
of whether or not an action lies to enforce an agreement. The function of equity is
not to replace the law but to prevent an unfair operation of the law. If the plaintiff
robber would be allowed to share the booty, that would tantamount to aiding the
overriding of law. Equitable maxims are clearly distinguishable from legal
maxims although both are based on principles or rules. Maxims of equity have
been described by various eminent authors.
Sarah Wilson38
stated “As equity became more formalized a framework emerged
within which its development could be shaped. These principles became
embodied in the form of equitable maxims. The maxims are not rules to be
construed like statutes, but rather a general basis around which much of the law of
equity has formed. They frequently appear as part of the reasoning of judgments.”
Alastair Hudson39
remarked, “Equity is based on a series of fundamental
principles. As drafted, they are a collection of vague ethical statements, some
more lyrical than others. At first blush, it is obvious that they are too vague to be
meaningful in the abstract. They do not assert any particular view of the world
other than that people should behave reasonably towards one another-hardly an
alarming proposition in itself. They are capable of many interpretations and they
constitute moral prescriptions for the values according to which people should
behave. But they are not to be dismissed as merely lyrical pronouncements,
because they are still applied by the courts.”
Robert Pearce and John Stevens40
stated: “The maxims of equity are an attempt to
formulate in short pithy phrases key principles which underline the exercise of the
equitable jurisdiction. They are not binding rules, nor do they provide guidance
for every situation in which equity operates. Nevertheless, they provide useful
illustrations of some of the principal recurrent themes, which can be identified
within the corpus of the rules of equity”.
The common maxims of equity are as follows:
a) He who comes to equity must come with clean hands.
38
Textbook on Trusts 7th
Edition, Oxford University Press, 2005 at 9. 39
Equity and Trusts 4th
Edition, London : Cavendish Publishing, 2005) at 24. 40
The Law of Trusts and Equitable Obligations (3rd
Edition, London: LexisNexis Butterworths, 2002) at 18.
209
b) Equity follows the law.
c) Equity does not suffer a wrong without a remedy.
d) Equity does not aid the volunteer.
e) When equities are equals the first in time prevails.
f) Equity looks at the substance not the form.
g) He who comes to equity must do equity.
h) Equity regards as done that which ought to be done.
i) Equity regards as done that which ought to be done.
j) Delay defeats equity.
k) One should not profit by intentional misdeeds.
l) Equality is equity.
The maxims epitomize the very essence of equity as equity essentially means
fairness. The maxims are briefly explained hereinafter.
4.8.1 He who comes to equity must come with clean hands
The foremost principle of equity is that to be granted equitable relief, the plaintiff
must come to the court with clean hands i.e. without fault. A plaintiff at equity is
seeking to invoke the coercive power of the court to obtain a specific action such
as an order for specific performance, as opposed to petitioning for monetary
damages. Equitable relief is more discretionary than a remedy at law. It is within
the judge’s discretion to not award an equitable remedy even if the case is proven.
This maxim has been described as “a principle of justice designed to prevent
those guilty of serious misconduct from securing a discretionary remedy, such as
an injunction.”41
In Dering v Earl of Winchelsea, 42
Eyre CB said that the principle of coming to
equity with clean hands “does not mean a general depravity: it must have an
immediate and necessary relation to the equity sued for; it must be a depravity in
a legal as well as in a moral sense.”
It follows that the improper conduct must relate to the relief that is sought in some
way. Just because the claimant's general conduct is unacceptable does not mean
41
Dunbar v Plant [1998] Ch 412 (Mummery LJ). 42
(1787) 1 Cox Eq Cas 318, 319.
210
that Equity will deny relief to the claimant.
The clean hands maxim will not deny relief where it is not necessary for the
claimant to rely on improper conduct to establish an equitable claim. In Tinsley v
Milligan, 43
one party was able to assert an equitable right to property that was
registered in the name of her partner, even though the purpose of the arrangement
had been to enable her to perpetrate a fraud. It was held that she could assert an
equitable property right, because she did not need to rely on her illegality to do so.
The operation of the 'clean hands' maxim was justified by Murphy J in the High
Court of Australia in Time-Life International (Nederlands) BV v Interstate Parcel
Express Co Pty Ltd44
as follows:
“It is far more than a mere benality. It is a self-imposed ordinance that closes the
doors of equity to one tainted with inequitableness or bad faith relative to the
matter in which he seeks relief, however improper may have been the behaviour
of the defendant. That doctrine is rooted in the historical concept of a court as a
vehicle for affirmatively enforcing the requirements of conscience and good
faith.”
This maxim is clearly based upon the historical origins of Equity as being
founded on conscience. This was considered by Pettit:45
“Unconscionability is perhaps the common factor. The clean hands doctrine is
perhaps no more than a background principle from which have developed
particular equitable defences-innocent misrepresentation, equitable fraud, laches
and acquiescence and unfairness and hardship. Most cases where the clean hands
maxim is found in fact involve one or other of these defences and the reference to
clean hands is otiose. There remain exceptional cases which do not readily fall
into any of these categories yet where the courts have taken the view that it would
be unconscionable for the plaintiff to succeed, and these cases can be regarded as
applications of a clean hands doctrine. They include cases where the plaintiff has
been seeking to further a deception of the public,46
where the plaintiff is shown to
43
[1994] 1 AC 340. 44
(1978) FSR 215. 45
'He Who Comes into Equity Must Come with Clean Hands' [1990] Conv 416, 435. 46
Leather Cloth Co Ltd v American Leather Cloth Co Ltd (1863) 4 De GJ & S 137.
211
have materially misled the court or to have abused its process47
where a tenant
notoriously using the premises as a disorderly house sought relief against
forfeiture.”48
Hence, this doctrine is linked to the defence of the unconscionability of contracts.
At law, the parties are viewed as having freely negotiated the terms of a contract
so that the contract per se is not seen as unfair. At equity, the court is free to take
into consideration the fact that certain contracts, depending upon the bargaining
positions of the parties, can be grossly unfair, in other words, unconscionable.
Thus, a person who wishes to bring a case in a court of equity to challenge what
could otherwise be a valid legal principle or judgment will have to show that he
has acted reasonably and fairly, that is, that his hands are clean. To have clean
hands means to have done nothing or taken any action that could degrade or
tarnish an applicant's claim in the court. Thus, a claimant whose conduct has been
unfair in the past cannot invoke this maxim.
In the case of Cross v. Cross,49
J. Wood held, “He who comes to equity must
come with clean hands and any conduct of the plaintiff, which would make a
grant of specific performance inequitable, can prove a bar”.
This maxim is mainly concerned with the specific, and not the general conduct of
a claimant. The court may consider the past conduct of the claimant only in so far
as it affects the specific issue at hand. The court cannot prevent a person from
invoking this maxim simply because he is of a generally bad character.
It is worthy to note the limit on the clean hands doctrine where public records are
at stake. In Seagirt Realty Corp. v. Chazanof,50
the New York Court of Appeals
held that the unclean hands doctrine would not apply, even if some earlier land
transactions were inequitable, where the plaintiff is suing for a new deed to
replace a lost one from those transactions. Even a voluntary reconveyance to a
fraudulent grantor is good as between the parties, and moreover the accuracy of
the land records is at stake. The Court placed great weight on Chafee’s views on
47
Armstrong v Sheppard & Short Ltd (1959) 2 QB 384. 48
Gill v Lewis [1956] 2 QB 1. 49
(1983) 4 FLR 235. 50
96 N.E.2d 254 (N.Y. 1963).
212
this conflict between clean hands and the land records. It must also be
remembered that moral indignation against the plaintiff must operate, not in a
vacuum, but in harmony with other important purposes and functions of the
substantive law involved.51
4.8.2 Equity follows the law
This maxim, also expressed as Aequitas sequitur legem means more fully that
"equity will not allow a remedy that is contrary to law.”
The Court of Chancery never claimed to override the courts of common law. Story
states "where a rule, either of the common or the statute law is direct, and governs
the case with all its circumstances, or the particular point, a court of equity is as
much bound by it as a court of law, and can as little justify a departure from it."52
According to Edmund Henry Turner Snell, “It is only when there is some
important circumstance disregarded by the common law rules that equity
interferes.”53
Cardozo wrote in his dissent in Graf v. Hope Building Corporation,54
"Equity
works as a supplement for law and does not supersede the prevailing law."
Maitland says, “We ought not to think of common law and equity as of two rival
systems. Equity had come not to destroy the law, but to fulfil it. Every jot and
every title of law was to be obeyed, but when all this had been done yet something
might be needful, something that equity would require."55
The goal of law and equity was the same but due to historical reason they chose a
different path. Equity respected every word of law and every right at law but where
the law was defective, in those cases, equity provides equitable right and remedies.
51
Henry Smith, Economic Analysis of Law versus Equity, Unpublished Manuscript, 22.10.2010 available at http://Maitland, Equity-A Course of Lectures (Cambridge : University Press, 1936) at 7.www.law.yale.edu/documents/pdf/ LEO/HSmith_LawVersusEquity7.pdf visited on 2.7.2012.
52 Story, Joseph; Randell, Alfred Edward (1920). Story on Equity (third English ed.).
Sweet & Maxwell. p. 34. 53
Snell, Edmund Henry Turner (1929). Snell's Principles of Equity (20 ed.). London: Sweet & Maxwell. p. 24. quoted in Williams, James (1932). The Statute of Frauds, p. 166.
54 254 N.Y 1 at 9 (1930).
55 Maitland, Frederic William (1932). Equity; Also the Forms of Action at Common
Law: Two Courses of Lectures, p. 19.
213
This maxim is crucial to the relationship between equity and common law in
general. Equity developed in response to the inadequacies and inflexibility of the
common law, not because the principles of common law are not sound or that
common law ingredients are not based on sound legal reasoning. Equity was
developed simply to give a human face to the sometimes draconian application of
common law. Hence equity follows the law. For instance, equity cannot take a less
flexible attitude to illegality than common law, otherwise, as Lord Goff stated in
Tinsley v. Milligan,56
that ' 'would constitute a remarkable reversal of the
traditional functions of law and equity'.
Although the maxim that Equity follows the law has long been recognized, its
meaning is ambiguous. It is certainly the case that equity recognizes legal rules, but
if equity were to have followed the law absolutely, there would have been no scope
for the development of separate equitable doctrines. It is for this reason that the
American judge Cardozo J recognized that 'Equity follows the law, but not
slavishly nor always.'57
One example of Equity following the law arose where two parties owned a house
that was registered in their joint names. It was recognized in Jones v Kernott58
that:
“The starting point is that equity follows the law and they are joint tenants both in
law and in equity.”
Equity will consequently presume that the beneficial interest in the property
corresponds to their legal interest, so that they will share the beneficial interest
equally, although this presumption can be rebutted by a contrary intention.
4.8.3 Equity does not suffer a wrong without a remedy
When seeking an equitable relief, the one that has been wronged has the stronger
hand. The stronger hand is the one that has the capacity to ask for a legal remedy
(judicial relief). In equity, this form of remedy is usually one of specific
performance or an injunction (injunctive relief). These are superior remedies to
those administered at common law such as damages.
56
[1994] 1 AC 340. 57
Graf v Hope Building Corpn; (1920) 254 NY 1, 9. 58
Jones v Kernott [2011] UKSC 53; [2012] 1 AC 776, [51](1) (Lady Hale and Lord Walker).
214
The Latin legal maxim is ubi jus ibi remedium ("where there is a right, there must
be a remedy").
The maxim is necessarily subordinate to positive principles and cannot be applied
either to subvert established rules of law or to give the courts a jurisdiction hitherto
unknown, and it is only in a general not in a literal sense that the maxim has force.
Case law dealing with principle of this maxim at law include Ashby v White59
and
Bivens v. Six Unknown Named Agents.60
In Ashby v. White case a qualified voter was not allowed to vote. He therefore
sued the returning officer. It was held that if the law gives a man a right, he must
have a means to maintain it, and a remedy, if he is injured in the enjoyment of it.
The Bivens’ case represents a situation where there is an unquestionable right, yet
the court’s power to construct a remedy is not so clear. Defining a remedy is an
exercise of judgment and discretion. In Bivens’ case, a cause of action for
damages was created. It confirmed a citizen’s right to bring a suit against the
government for violation of their constitutional rights by federal agencies.
This was a case in which the US Supreme Court ruled that an implied cause of
action existed for an individual whose Fourth Amendment freedom from
unreasonable search and seizures had been violated by federal agents. The victim
of such a deprivation could sue for the violation of the Amendment itself, despite
the lack of any federal statute authorizing such a suit.
The facts were that the Federal Bureau of Narcotics agents searched the house of
the plaintiff, Webster Bivens, and arrested him without a warrant. Drug charges
were filed but were later dismissed by a U.S. Commissioner. Bivens filed a lawsuit
alleging the violation of his Fourth Amendment freedom from unreasonable search
and seizure. The government claimed that the violation allowed for only a state law
claim for invasion of privacy and that the Fourth Amendment provides no cause of
action but only a rebuttable defense for the FBN agents. The District Court agreed
and dismissed the suit for lack of subject-matter jurisdiction, and also for Bivens's
failure to state a claim upon which relief can be granted. The Second Circuit
59
(1703) 92 ER 126. 60
403 U.S. 388 (1971).
215
affirmed. The U.S. Supreme Court granted certiorari on that issue of whether a
plaintiff can bring a claim in federal court based solely on an alleged violation of
his Fourth Amendment rights.
It was thus held that the existence of a remedy for the violation was implied from
the importance of the right violated.
4.8.4 Equity does not aid the volunteer
A 'volunteer' is somebody who has not provided consideration for a particular
transaction, such as the recipient of a gift. Where a donor purports to make a gift
but it is not effective at law, equity will not perfect an imperfect gift,61
this being
founded on the principle that equity will not assist a volunteer.
So, if a settlor fails to transfer property to a trustee, equity will not intervene to
perfect the transfer. This maxim is, however, subject to a number of exceptions,
where equity will assist a volunteer and will perfect an imperfect gift, such as
where the transferor has done everything necessary to transfer title. Importantly,
once a trust has been fully constituted, then a beneficiary will be able to enforce
the trust, even if that beneficiary has provided no consideration.
As Lord Browne-Wilkinson said in T Choithram International SA v Pagarani:62
“Until comparatively recently the great majority of trusts were voluntary
settlements under which beneficiaries were volunteers having given no value. Yet
beneficiaries under a trust, although volunteers, can enforce the trust against the
trustees. Once a trust relationship is established between trustee and beneficiary,
the fact that a beneficiary has given no value is irrelevant.”
Equity cannot be used to take back a benefit that was voluntarily but mistakenly
conferred without consultation of the receiver. This maxim protects the doctrine of
choice.
This maxim is very important in restitution. Restitution developed as a series of
writs called special assumpsit, which were later additions in the courts of law, and
61
Milroy v Lord (1862) 4 De GF & J 264, 275 (Turner LJ). 62
[2001] 1 WLR 1, 12.
216
were more flexible tools of recovery, based on equity. Restitution could provide
means of recovery when people bestowed benefits on one another (such as giving
money or providing services) according to contracts that would have been legally
unenforceable.
However, pursuant to the equitable maxim, restitution does not allow a volunteer
or "officious intermeddler" to recover. A volunteer is not merely someone who acts
selflessly. In the legal (and equitable) context, it refers to someone who provides a
benefit regardless of whether the recipient wants it. For example, when someone
mistakenly builds an improvement on a home, neither equity nor restitution will
allow the improver to recover from the home owner.
An exception to this maxim can be seen in cases where the doctrine of estoppel
applies.
4.8.5 When equities are equals the first in time prevails
Like equality, priority is a focal point, and in many situations, but not all, it is not
open to manipulation. So prior in time wins, as long as there is no imbalance of
equities.
Equitable interests usually rank in the order in which they were created. So where
there are two competing equitable interests in property, the usual rule is that the
interest that was created first will have priority over the interest that was created
later.
As Millet J said in Macmillan Inc. v Bishopsgate Trust (No. 3):63
“In English law the order of priority between two competing interests in the same
property depends primarily on whether they are legal or merely equitable
interests. Where both interests are equitable – or both legal, for that matter – the
basic rule is that the two interests rank in the order of their creation. In the case of
equitable interests the order of priority may be reversed in special circumstances,
but 'where the equities are equal, the first in time prevails”.
An example of the 'special circumstances' to which Millett J referred arises where
63
[1995] 1 WLR 978, 999-1000.
217
an interest has been appropriately registered: registration ensures that an interest
has priority over an unregistered interest.
It is important to appreciate that this rule of 'first in time' only applies regarding
two equitable interests. A subsequently acquired legal interest may have priority
over a previously created equitable interest if the legal interest was acquired by a
bona fide purchaser for value without notice. In such a situation, the legal interest
has priority over the equitable interest in both Equity and at Law.64
4.8.6 Equity looks at the substance not the form
Common law was very rigid and inflexible. It could not respond favourably to the
demand of time. It regarded the form of a transaction to be more important than
its substance. It looked to the very letter of the agreement and not the intention
behind it. On the other hand, Equity looks to the spirit not to the letter, it looks to
the intention of parties and not to the words.
In Parkin v Thorold,65
Lord Romilly MR recognized that:
“Courts of Equity make a distinction in all cases between that which is matter of
substance and that which is matter of form: and if they do find that by insisting on
the form, the substance will be defeated, they hold it to be inequitable to allow a
person to insist on such form, and thereby defeat the substance.”
This provides the basis for the equitable remedy of rectification. Where the words
of a contract do not reflect the common intention of the parties, equity is willing
to rewrite the document to reflect those intentions.66
Similarly, where it is possible to identify an obligation that the recipient of
property holds that property for somebody else, equity will recognize that a trust
has been created, even though the settlor has not explicitly stated that he or she
intended to create a trust. At the other extreme are circumstances in which the
settlor has purported to create a trust, but equity, having regard to the substance of
the transaction, concludes that the trust is a sham.
64
Pilcher v Rawlines (1872) LR 7 Ch. App, 259; Macmillan Inc. v Bishopsgate Trust (No. 3) [1995] 1 WLR 978, 1000 (Millett J).
65 (1852) 16 Beav 59, 66.
66 The Olympic Pride [1980] 2 Lloyds Rep 67.
218
In case of sale of land, if a party fails to complete it within the fixed for it, he is at
Common Law, in breach of the contract, but equity does not take this rigid
attitude. It allows a reasonable time to the party to complete it.
The application of this maxim can be seen in the following instances-
i) Relief against penalties and forfeitures;
ii) Relief in regard to precatory trust;
iii)Relief in regard to mortgages, the doctrine of equity of redemption and the
doctrine of clogs on redemptions; and
iv) Attitude in regard to statute of frauds.
The maxim is statutorily recognized in the Contract Act that lays down that if
time is the essence of the contract, and it is not performed within the stipulated
time, the contract or part of it which is unperformed would be voidable. If time is
not the essence, the contract will not be voidable but entitles the promisee to
damages. Also, only reasonable compensation can be claimed for breach of
contract.
4.8.7 He who seeks equity must do equity
When a judge decides whether it is appropriate to award an equitable remedy, one
relevant consideration is whether the claimant is willing to act fairly to the
defendant in the future.
In Chappell v Times Newspaper Ltd.,67
an injunction was denied to employees
who wished to restrain their employer from dismissing them because they had
refused to undertake that they would not strike in the future. Megarray J68
said:
“Instead of looking to the past, I would look to the future. There is general
principle which lies enshrined in the maxim 'He who seeks equity must do equity.'
That maxim, like the other maxims of equity, is not to be construed or enforced as
if it were a section in an Act of Parliament; but it expresses in concise form one
67
[1975] 1 WLR 482. 68
Ibid, 495.
219
approach made by the court when the discretionary remedy of an injunction is
sought. If the plaintiff asks for an injunction to restrain a breach of contract to
which he is a party, and he is seeking to uphold that contract I all its parts, he is,
in relation to that contract, ready to do equity. If on the other hand he seeks the
injunction but in the same breath is constrained to say that he is ready and willing
himself to commit grave breaches of the contract at the behest of a body or person
(whether his union or not) engaged in an active campaign of organizing the
repeated commission of such breaches, then it seems to me that the plaintiff
cannot very well contend that in relation to that contract he is ready to do equity.
One may leave on one side any technicalities of law or equity and simply say, in
the language of childhood, that he is trying to have it both ways; he is saying 'You
must not break our contract but I remain free to do so.”
Points of distinction between the maxims: ‘He who seeks equity must do equity’
and ‘He who comes into equity must come with clean hands’ are as follows:
He who seeks equity must do equity He who comes into equity must come
with clean hands
i) It is applicable when both the
plaintiff and the defendant have
claims of equitable relief against each
other.
i) It is applicable when the defendant
has no separate claim to relief and the
plaintiff’s conduct is unfair.
ii) It exposes the condition subsequent
to the relief sought.
ii) It is a condition precedent to seeking
equitable relief.
iii) It refers to the plaintiff’s conduct
as the court thinks it ought to be, after
he comes to the court.
iii) It refers to the plaitiff’s conduct
before he approaches the court.
iv) The plaintiff has to mould his
behavior according to the impositions
by the court.
iv) If the plaintiff’s conduct is unfair, it
would not entitle him to the relief
sought.
v) The plaintiff has an option or a
choice before him either to submit to
the conditions put by the court, or to
get out of the court.
v) The conduct of the plaintiff snatched
his choice from him. His equitable right
therefore neither be recognized nor
enforced.
vi) This maxim looks to the future. vi) This maxim looks at the past.
220
4.8.8 Equity regards as done that which ought to be done
This maxim has been particularly significant in the development of equity,69
but
there is a tendency to rely on it too readily without regard to its rationale. The
maxim has proved to be particularly significant where the parties have entered
into a contract that is specifically enforceable; for then equity will treat the
contract as having been performed.
This was recognized by Lindley LJ in Re Anstis70
in the following words:
“Equity, no doubt, looks on that as done which ought to be done: but this rule,
although usually expressed in general terms, is by no means universally true.
Where the obligation to do what ought to be done is not an absolute duty, but only
an obligation arising from contract, that which ought to be done is only treated as
done in favour of some person entitled to enforce the contract as against the
person liable to perform it.”
For example, where the defendant has agreed to sell land to the claimant but has
not done so, the defendant will still own the land at law, but equity will treat the
land as having been transferred to the claimant so the vendor will hold the land on
constructive trust for the purchaser.71
The maxim was applied in Walsh v Lonsdale,72
in which Equity treated a person
who had entered into a specifically enforceable agreement to take a lease as
though that person was a lessee of the property. Sir George Jessel MR said:73
“There is an agreement for a lease under which possession has been given. Now
since the Judicature Act the possession is held under the agreement. There are not
two estates as there were formerly, one estate at common law by reason of the
payment of the rent from year to year, and an estate in equity under the
agreement. There is only one Court, and the equity rules prevail in it. The tenant
holds under an agreement for a lease. He holds, therefore, under the same terms in
equity as if a lease had been granted, it being a case in which both parties admit
69
Banks v Sutton (1732) 2 P Wms 700, 715. 70
(1886) 31 Ch D 596, 695 (Lindley LJ). 71
Rayner v Preston (1881) 18 Ch D. 1. 72
(1882) 21 Ch D 9. 73
Ibid, 14.
221
that relief is capable of being given by specific performance. That being so, he
cannot complain of the exercise by the landlord of the same rights as the landlord
would have had if a lease had been granted.”
There have, however, been cases in which the maxim has been applied outside the
context of specifically enforceable contracts. In such circumstances, the use of the
maxim has been much more difficult to justify. It has been applied, for example,
where a donor has failed to make an effective gift of law.
In Attorney-General for Hong Kong v Reid,74
the Privy Council relied on the
maxim to conclude that a fiduciary who had been bribed to act in breach of his
fiduciary duty held that bribe on constructive trust for the principal to whom the
duties were owed. Lord Templeman said:75
“As soon as the bribe was received it should have been paid or transferred
instantly to the person who suffered from the breach of duty. Equity considers as
done that which ought to have been done. As soon as the bribe was received,
whether in cash or in kind, the false fiduciary held the bribe on a constructive trust
for the person injured.”
This was a very different application of the maxim from its usual operation in the
context of specifically enforceable contracts: there was no contract in Reid that
was being enforced. The conclusion in that case was rejected by the Court of
Appeal in Sinclair Investments (UK) Ltd. v Versailles Trade Finance Ltd,76
primarily because it was not appropriate as a matter of principle or policy to
convert the personal liability to account for the value of the bribe into a
proprietary claim. The approach of Lord Templeman in Reid was considered to
'beg the question, or to assume what it asserts'.77
Thus, if someone undertakes an obligation for the other, equity courts look on it
as done and as producing the same results as if the obligation had been actually
performed. Equity courts therefore look to the acts of the person bound by his
74
[1994]1 AC 324. 75
Ibid, 331. 76
[2011] EWCA Civ 347: [2012] Ch 453. 77
Ibid, [78] (Neuberger LJ).
222
conscience and interpret and construe them in such a way that they amount to
what ought to be done.
The working of this maxim can be seen in the doctrine of conversion, executory
contracts and the doctrine of part performance.
4.8.9 Delay defeats equity
A Latin term in this regard is “Vigilantibus, non dormentibus, jura subvenient.”
which means “Equity aids the vigilant and not the indolent”. So, if one sleeps on
his rights, his rights will slip away from him. Legal claims are barred by statutes
of limitation and equitable claims may be barred not only by limitation law but
also by unreasonable delay, called laches. Like unclean hands, this maxim is
related to a defense.
Laches proposes that a plaintiff should not "sleep on his or her rights" that is, if
the plaintiff knows of the defendant's harmful actions but delays in bringing suit,
and the delay works against the rights of the defendant, the plaintiff risks
dismissal of the case. Under modern law, such defenses are available in any civil
case. They are nevertheless considered equitable because they invoke notions of
fairness; are not provided in statutes; and are decided only by a judge, not by a
jury.
The maxim does not apply to cases which are governed by statutes of limitation
either expressly or by analogy.
4.8.10 One should not profit by intentional misdeeds
The principle is sometimes referred to as a policy of the common law and the
“anti-slayer” rule has sometimes been codified.78
In the classic case of Riggs v. Palmer,79
the court held that a grandson may not
profit from his own wrong by getting any share of his grandfather’s estate after
the grandson murdered his grandfather in order to prevent him from changing his
will. The court applied principles of equity both to the interpretation of the wills
78
Jesse Dukeminier, Robert H. Sitkoff, & James Lindgren, Wills, Trusts, and Estates 149-51 (8th ed. 2009).
79 22 N.E. 188 (N.Y. 1889).
223
statute and to the will itself, and resoundingly stated that “no one shall be
permitted to profit by his own fraud, or to take advantage of his own wrong, or to
found any claim upon his own iniquity, or to acquire property by his own crime.”
The problem here is not just that the grandson committed an evil act but that he
did so with a view to take advantage of the laws of wills and inheritance.80
The
standard for the maxim to apply to avoid the straightforward application of the
wills act is absurdity or manifest unreasonableness. Equity is not supposed to be
used for borderline policy calls, which dovetails with the focus on
disproportionate hardship. Interestingly, Ronald Dworkin used Riggs case as a
springboard for critiquing positivism and for developing a theory of law based on
moral principles that would in principle yield right answers.81
4.8.11 Equality is equity
This maxim is founded on fairness. Equality is a major focal point and has been
shown in psychological studies to exert a gravitational pull.
Plato defined that “If you cannot find any other, equality is the proper basis.” This
maxim is also explained as “equity delighteth in equality”, which means that as
far as possible equity would put the litigating parties on an equal level so far as
their rights and responsibilities are concerned.
Justice Fry said, “When I say equality, I do not mean equality in its simplest form,
but which has been sometimes called proportionate equity.”
The maxim means that where there are equitable interests in property, equity
presumes that they are equal interests. For example, where the trustees have a
power to appoint to a charitable purpose and a non-charitable purpose, if the
power is not exercised the court will allocate half of the fund for charitable
purposes and half for non-charitable purposes.82
The maxim will not be applied,
however, where it is not considered to reflect the intention of the parties.
80
By contrast, where the evil act is done without such advantage in view and where the advantaged party did not commit the act there is no scope for the principle to apply. Thus in a later New York case in which a husband killed his wife, the husband’s parents were allowed to take under the residuary clause of the son’s will. In re Covert, 761 N.E.2d 571 (N.Y. 2001).
81 Ronald Dworkin, Taking Rights Seriously 17-45 (1977).
82 Hoare v Osborne [1866] LR 1 Eq 585.
224
In McPhail v Doulton,83
the trustees had a discretion to appoint property amongst
a large class of beneficiaries, but the Court thought it would be inappropriate to
apply the maxim that 'Equity is equality' in that context. Lord Wilberforce said:84
“As a matter of reasons, to hold that a principle of equal division applies to trusts
such as the present is certainly paradoxical. Equal division is surely the last thing
the settlor ever intended equal division among all may, probably would, produce a
result beneficial to none. Why suppose that the court would lend itself to a
whimsical execution? And as regards authority, I do not find that the nature of the
trust, and of the court's powers over trusts, calls for any such rigid rule. Equal
division may be sensible and has been decreed, in cases if family trusts, for a
limited class, here there is life in the maxim 'equality is equity', but the cases
provide numerous examples where this has not been so, and a different type of
execution has been ordered, appropriate to the circumstances.”
On the facts of Mcphail v Doulton,85
if the trust property had been distributed
according to the maxim that 'Equity is equality', each beneficiary would have
received very little indeed, given the large number of beneficiaries in the class.
This would not have been a sensible result, so the maxim was not applied.
However, the maxim that equity is equality was applied literally in Re Bower's
Settlement Trusts.86
A settlement provided that if one of the beneficiaries were to
die, his share should accrue to the other beneficiaries. One of the beneficiaries had
died and Morton J applied for equitable maxim so that the deceased beneficiary's
share was distributed equally between the other beneficiaries, rather than
proportionately in accordance with their existing share of the residue. Whether
this literal application of the maxim was appropriate was considered in Re Steel.87
In that case, legacies of different amounts were left in a will, which also contained
a clause stating: 'Any residue remaining to be divided between those beneficiaries
who have only received small amounts.' In interpreting this clause, Megarry V.C.
applied the maxim and divided the residue equally among the beneficiaries. But
he considered the interpretation of the maxim more generally, in the following
83
Mcphail v Doulton [1971] AC 424. 84
Ibid, at 451. 85
Ibid. 86
[1942] Ch 197. 87
[1979] Ch 218.
225
words:88
“There is then the question of what is to be basis of division. There were two rival
contentions on this. One was that the residue should be divided equally between
all the legatees whose legacies had not lapsed, irrespective of the size of those
legacies. The other was that the residue should be divided proportionately among
those legatees, in proportion to the size of each legacy, so that, for instance, a UK
Pound 200 legatee would get twice the share of residue of a UK Pound 100
legatee. In support of equal division, it could be said by the UK Pound 100
legatee to the UK Pound 200 legatee. 'You were intended to get UK Pound 100
more than me, and if we each get an equal share of residue, you will still get UK
Pound 100 more than me.' The riposte of the UK Pound 200 legatee is: 'I was
intended to get twice as much as you: equal division of the residue will alter that
proportion, and so to carry out the proportions originally intended, the residue
should be divided proportionately to our respective legacies. In favour of equal
division there is the maxim 'equality is equity', and in Re Bower's Settlement
Trusts [1942] Ch 197-in that case the property was settled in terms of shares,
rather than fixed amounts. It can therefore be said that the natural form of
comparison in that case was on a proportionate basis, and that there was not the
same freedom to choose between a comparison of proportions and a comparison
of amounts, such as that one legatee is getting UK Pound 100 more than another,
as there is in this case.
Thus far, the concept of equality may be said to be in the ascendant. But does
equality in this context necessarily mean a simple mathematical equality?
When the maxim 'equality is equity' comes to be applied, it often, and I think
usually, will mean mathematical equality, in that no other basis of equality can be
discerned: but given suitable circumstances a true equality of treatment may
require the application of a mathematical inequality, and instead a proportionate
equality. So far as can be judged from the short report, this consideration was not
put before Morton J. in Re Bower's Settlement Trusts.
The subject is one on which I feel considerable doubt. With all the respect due to
a great equity lawyer, I might well, I think, have reached the opposite conclusion
88
Ibid, 225.
226
had the facts of in Re Bower's Settlement Trusts come before me without the
benefit of the decision of Morton J. But there stands the decision. Further, I think
that it would be easier to support the cause of proportionate division on the facts
of that case than it is on the facts of the case now before me. There seems to me to
be a real difference between shares of a fund on the one hand and legacies of
fixed amounts on the other hand: one moves in a world of proportion, and the
other in a world of determinate sums. I find it difficult, too, to see why in dividing
the residue the intention should be treated as being to preserve the proportions
rather than the gaps in amount, instead of being the opposite. In the end, I think
that on the whole, in a case of real doubt and as a matter of last resort, the
simplicity of mathematical equality is to be preferred to any process of
proportionate division.”
This maxim applies to the following:
i) Equity’s dislike for joint tenancy and presumption of tenancy-in-common;
ii) Equal distribution of joint funds and joint purchases;
iii)Contribution between co-trustees, co-sureties and co-contractors;
iv) Rateable distribution of legacies;
v) Marshalling of assets.
4.9 COMMON LAW AND EQUITY
There is a crucial division in the lawful framework between law that is made by the
legislature and law that is made by the judges. This judge-made law is known as
the 'common law'. Yet, 'Common law' is utilized as a part of another, more
particular sense, to demonstrate that assemblage of law which was made and
created by the judges in the Common Law Courts, rather than that group of law
which was made and created by the judges in the Chancery Courts. As has, it is
this recent assortment of law that is called 'equity'.
"Equity" has notable qualities that recognize it from the Common Law and that get
227
from the recorded inceptions of the equitable jurisdiction.89
From medieval times,
the Common Law was a formalistic collection of guidelines, which were
deciphered entirely. Where the Common Law did not give a remedy or where the
outcome came to by the Common Law was unjust, it was conceivable to appeal to
the King, and later the Lord Chancellor was petitioned. A large number of petitions
went to the Chancellor and it was felt important to establish a different court,
known as the Court of Chancery, to manage them and the law that was
administered by this Court got to be known as Equity.
There built up a battle between the Common Law and Chancery courts, with every
considering that its methodology ought to override the other. This battle reached a
critical stage in the Earl of Oxford's case,90
in which Equity prevailed. Lord
Chancellor Ellesmere in that case recognized that Equity's function was 'to soften
and mollify the extremity of the law'.
Later, Lord Chancellor Cowper summarized the relationship between Common
Law and Equity well when he said:91
“Equity is no part of the law, but a moral virtue which qualifies, moderates and
reforms the rigour, hardness and edge of the law.”
Such modification was based upon ideas of morality and justice. But, ultimately,
the intervention of the Lord Chancellor depended upon the exercise of the Lord
Chancellor's own conscience. This inherently discretionary approach meant that it
was difficult to predict the outcome of any petition to the Lord Chancellor. In the
seventeenth century, John Seldon wrote that:92
“Equity is a roguish thing. For Law we have a measure, know what to trust to;
Equity is according to the conscience of him that is Chancellor, and as that is larger
or narrower, so is Equity. 'Tis all one as if they should make the standard for the
measure we call a 'foot' a Chancellor's foot; what an uncertain measure would this
be! One Chancellor has a long foot, another a short foot, a third an indifferent foot.
89
Baker, Introduction to Legal History (4th edn) (Oxford: Oxford University Press, 2002), pp. 97-116.
90 (1615) 1 Ch Rep 1. Also see Ibbetson, 'The Earl of Oxford’s case', in Landmark Cases in
Equity (eds Mitchell and Mitchell) (Oxford: Hart, 2012), ch. 1. 91
Lord Dudley v Lady Dudley (1705) Prec Ch 241, 244. 92
Pollock (ed.), Table Talk of John Selden (Selden Society, 1927) p. 43.
228
'Tis the same thing in the Chancellor's conscience.”
Thus, for some time it was thought that 'Equity varies with the length of the
Chancellor's foot.' Be that as it may, throughout the years, Equity turned out to be
more rule based and principled, with identifiable precepts being perceived.
Equity is said to operate on the conscience of the defendant, so an equitable
remedy is always directed at a particular person, and that person's knowledge, state
of mind and motives may be relevant to whether a remedy should be granted or
not.
4.10 EQUITABLE DEFENCES
Equity is prescriptive of certain defences that operate to disentitle the plaintiff from
obtaining relief notwithstanding existence of a substantive right in his favour.
These embargoes stem from the multifarious principles and doctrines of equity,
and contribute to discretion of the court to refuse injunction and other equitable
remedies.
Relief of injunction being an equitable remedy it is to conform to the well known
maxim of the law of equity which states that 'he who seeks equity must do equity'.
Therefore, a plaintiff who asks for an injunction must be able to satisfy the Court
that his own acts and dealings in the matter have been fair, honest93
and free from
any taint, fraud or illegality94
and that if, in dealing with the person against whom
he seeks the relief, he has acted in an unfair or inequitable manner, he cannot have
this relief.95
The doctrine of clean hands holds that the plaintiff in an equity claim
should be innocent of any wrongdoing or risk dismissal of the case. Laches
requires that a plaintiff should not "sleep on his or her rights", that is, if the
plaintiff knows of the defendant's harmful actions but delays in bringing suit, he
risks dismissal of the case. Under modern law, such defenses are available in any
civil case. They are considered equitable because they are predicated on notions of
fairness. These are not prescribed in any enactment and are laid down in
judgments.
93
Ganesh Panigarhi v. Jura Sahu (1973) 39 Cut LT 243. 94
Basheshar Nath v. Municipal Committee, Moga AIR 1940 Lah 69. 95
State of Bihar v. Ganesh Pd Dubey 1969 PLJR 177.
229
In Mahadeo Savlaram Shelke vs. Pune Municipal Corpn.,96
it was held, after
referring to works of a number of acclaimed jurists and academicians, that a person
who is a trespasser in possession cannot seek injunction against the true owner. In
that context Supreme Court quoted Shiv Kumar Chadha vs. Municipal Corpn. Of
Delhi,97
wherein it was observed that injunction is discretionary and that:
“Judicial proceedings cannot be used to protect or to perpetuate a wrong
committed by a person who approaches the court.”98
Thus, the maxims “he who comes to equity must come with clean hands” and “he
who seeks equity must do equity” condition the discretion to refuse an injunction.
Where both parties indulge in misconduct the courts may still grant the injunction.
In the case of Meridian Communications v Eircell99
it was held that where there
has been misconduct by both parties the misconduct of the defendant may balance
that of the plaintiff. The Supreme Court held that since neither party was without
fault the court would not refuse the injunction sought.
Again the doctrines of delay or laches and acquiescence may deprive a plaintiff of
equitable relief. Delay of itself will not defeat an application for injunction. It must
be shown that the delay is both unreasonable and is such as to prejudice the
defendant.
In the case of Lennon v. Ganley100
the court declined to allow the offended party
an injunction. The offended party was looking to limit the respondents from going
on a rugby visit to South Africa amid the Apartheid period. The court declined the
directive on the grounds that the offended party had postponed in bringing the
application until days before the visit was because of leave and the visit had been
open information for a significant stretch of time. The court held that here the
postponement was outlandish and in perspective of the cash effectively spent
on the visit, allowing an order would have prejucided the respondents a great
deal.
96
(1995) 3 SCC 33. 97
(1993) 3 SCC 161. 98
Sopan Sukhdeo Sable vs. Assistant Charity Commissioner, (2004)3 SCC 137 at pp. 150-151. 99
[2001] IESC 42. 100
[1981] I.L.R.M. 84.
230
The question of unreasonable delay was considered in Newport Association
Football Club v Football Association of Wales (1995).101
The court in this case
considered that a deferral of two years in looking for an interlocutory order was not
nonsensical on account of alleviating elements. On the certainties, the offended
parties had not been 'standing still' for the two years, yet rather had been looking
for option methods for determining the issue. The court said that the offended
parties were not to be punished for picking suit if all else fails.
4.11 INTERPLAY BETWEEN LAW AND EQUITY IN RELATION TO
INJUNCTIONS
Equitable remedies are distinguished from "legal" remedies (which are available to
a successful claimant as of right) by the discretion of the court to grant them. In
common law jurisdictions, there are a variety of equitable remedies, but the
principal remedies are:
a. Injunction;
b. Specific performance;
c. Account of profits;
d. Rescission;
e. Declaratory relief;
f. Rectification;
g. Equitable estoppel;
h. Certain proprietary remedies, such as constructive trusts;
i. Subrogation;
j. Equitable lien;
k. Equitable compensation;
l. Appointment or removal of fiduciary;
m. Interpleader.
The two main equitable remedies are injunctions and specific performance, and in
ordinary legal parlance references to equitable remedies are often expressed as
referring to those two remedies alone. Equitable principles can limit the grant of
equitable remedies. This includes "he who comes to equity must come with clean
101
(1995) 2 All ER 87.
231
hands", laches, "equity will not assist a volunteer", and that equitable remedies are
not granted where damages are an adequate remedy.
The most important distinction between law and equity is the set of remedies each
offers.102
A court of law ordinarily awards monetary damages. Equity, however,
issues injunctions directing an act or forbearance. The latter is obviously more
valuable to a litigant, as one is promptly and suitable restituted and the damage is
largely undone.
Thomas Jefferson elucidated the primary restriction on the powers of a court of
equity thus:
"If the legislature means to enact an injustice, however palpable, the court of
Chancery is not the body with whom a correcting power is lodged. That it shall not
interpose in any case which does not come within a general description and admit
of redress by a general and practicable rule."103
The Courts have wide discretion to fashion relief in cases of equity. Explaining
this, in the case of Willard v. Tayloe,104
it was held, "relief is not a matter of
absolute right to either party; it is a matter resting in the discretion of the court, to
be exercised upon a consideration of all the circumstances of each particular case."
4.12 CONTRIBUTION OF EQUITY TO ADJUDGING INJUNCTION
CASES
Individualized justice is the theme of equity. Earlier, legal systems administered
justice through separate systems of law and equity. The law courts administered
justice by ensuring uniformity and predictability. On the other hand, Chancery
102
Unlike India, under American law, there is another distinction. This is the unavailability of a jury in equity: the judge is the trier of fact. In the American legal system, the right of jury trial in civil cases tried in federal court is guaranteed by the Seventh Amendment, but only "in Suits at common law," i.e. in cases that traditionally would have been handled by the law courts. The question of whether a case should be determined by a jury depends largely on the type of relief the plaintiff requests. If a plaintiff requests damages in the form of money or certain other forms of relief, such as the return of a specific item of property, the remedy is considered legal, and a jury is available as the fact-finder. On the other hand, if the plaintiff requests an injunction, declaratory judgment, specific performance, or modification of contract, or some other non-monetary relief, the claim would usually be one in equity.
103 Letter from Thomas Jefferson to Phillip Mazzei, November 1785.
104 75 U.S. 557 (1869).
232
tailored the relief to the exigencies of each case through equity.105
Within a merged
system of law and equity, the spirit of equity is reflected in injunctions through
doctrines and norms. By adhering to broad norms, we are departing away from
rules.106
The rules are now replaced by variable standards of conduct,107
balancing
tests,108
leeways of precedent,109
the acceptance of legal fictions,110
and broad
grants of discretionary authority.111
Conditional orders can "adjust at one stroke the
various interests of all parties concerned" and thus are part of this tradition that
favours the specific over the general.
A distinctive feature of the power of injunction emanating from equity is that it is a
discretionary relief. A plaintiff cannot claim it as a matter of right. The expression
'discretion' is not meant to connote 'an arbitrary or capricious discretion, dependent
on the mere pleasure of the Judge'.112
For a substantial period during the administration of the relief of injunction, the
area remaining unguided thus conferring unfettered and unbridled power to the
105
Ann Arbor & N. Mich. Ry. Co. v. Pa. Co., 54 F. 746, 751 (C.C.N.D. Ohio 1893) ("The powers of a court of equity are as vast, and its processes and procedure as elastic, as all the changing emergencies of increasingly complex relations and the protection of rights can demand." (quoting Chi., Rock Island & Pac. Ry. Co. v. Union Pac. Ry. Co., 47 F. 15, 26 (C.C.D. Neb. 1891)).
106 Frederick Schauer, Playing by the Rules: A Philosophical Examination of Rule-Based
Decision-Making in Law and in Life 158-62 (1991) (discussing how rules limit the power of judges or other decision makers).
107 Richard Danzig, A Comment on the Jurisprudence of the Uniform Commercial Code, 27 Stan.
L. Rev. 621 (1975). 108
T. Alexander Aleinikoff, Constitutional Law in the Age of Balancing, 96 Yale L.J. 943 (1987) (evaluating recent heightened use of balancing tests in judicial constitutional reasoning); Robert F. Nagel, Liberals and Balancing, 63 U. Colo. L. Rev. 319 (1992) (arguing against use of balancing tests in judicial proceedings); James G. Wilson, Surveying the Forms of Doctrine on the Bright Line-Balancing Test Continuum, 27 Ariz. St. L.J. 773 (1995) (providing thorough examination of multiple doctrines employed by Supreme Court).
109 Ruggero J. Aldisert, Precedent: What It Is and What It Isn't; When Do We Kiss It and When
Do We Kill It?, 17 Pepp. L. Rev. 605 (1990) (proposing and analyzing four different models of precedent); Michael J. Gerhardt, The Role of Precedent in Constitutional Decisionmaking and Theory, 60 Geo. Wash. L. Rev. 68 (1991) (examining operation of precedents in constitutional law as stabilizing influence and as source of indeterminacy).
110 Lon L. Fuller, Legal Fictions 9 (1967) (extending traditional definitions of legal fiction beyond
"a statement propounded with a complete or partial consciousness of its falsity" to include "a false statement recognized as having utility"); Henry Sumner Maine, Ancient Law 17-36 (Univ. of Ariz. Press 1986) (1864) (providing evolution of concept of legal fiction, as well as examples of its use); Louise Harmon, Falling Off the Vine: Legal Fictions and the Doctrine of Substituted Judgment, 100 Yale L.J. 1 (1990) (outlining historical background of legal fictions and arguing that doctrine of substituted judgment is dangerous legal fiction).
111 Alan Paterson, The Law Lords 123-24 (1982) (discussing conflict between justice and certainty
and providing quotations regarding conflict); P.S. Atiyah, From Principles to Pragmatism: Changes in the Function of the Judicial Process and the Law, 65 Iowa L. Rev. 1249, 1251-59 (1980) (outlining declining use of judicial discretion in eighteenth and nineteenth centuries, followed by heightened use of overt judicial discretion in modern times).
112 District Board of Farrukhabad v. Ikhlague Husain, AIR 1933 All. 86.
233
judges to grant or decline the remedy. A definite rule or principle guiding the
discretion of the Court was first evolved by the landmark decisions of the English
Court of Appeal in two epoch-making decisions.113
These decisions were followed
in India without demur.114
The rule deduced in these decisions was that if the
plaintiff establishes a case entitling him to considerable damages, an injunction
shall be given. But an exception to the rule is that where on comparison, it appears
that the injury which would be caused by an injunction to the defendant would be
very large, material and substantial, as compared with a very slight damage to the
plaintiff, then injunction shall not be granted.
In a merged system of law and equity, "conflict between the goals of certainty and
individual justice has created an ambivalent attitude in the law towards equity, to
which the law is attracted because of the identification of equity with a general
sense of justice, but which the law ultimately rejects because of the law's concern
for certainty."115
In form, equity is preserved and codified as discretion, which
reflects a shift toward fixed options and boundaries. In practice, however, the spirit
of equity may innovate and create, whether or not authorized. This dissonance
invites an exploration of both cause and cure. The discretion so conferred by equity
may be characterized as follows:
(a) It is “a judicial discretion exercised according to something like a settled
rule”, and in such a way as to prevent the defendant doing a wrongful act and
thinking that he could pay damages for it.116
(b) It is sound and reasonable discretion, to be prudently exercised.117
(c) It must have regard to all the circumstances of that particular case.118
(d) It is capable of correction by a court of appeal, for where a primary Judge
has discretionary powers, the Appellate Court has like discretion and like duty to
exercise it.119
But an Appellate Court will not interfere where the discretion of the
lower court has been properly exercised, and it is for the appellant to show that the
113
Martin v. Price L.R. (1894) 1 Ch. 276; Shelfer v. City of London Electric Lighting Co L.R. (1895) 1 Ch. 287.
114 Ghansham Nilkant v. Moroba Ramchandra Pai I.L.R. 18 Bom. 474.
115 Thomas O. Main, ADR: The New Equity, 74 U. Cin. L. Rev. 329, 330 (2005).
116 Smith v. Smith L.R. 20 Eq. 500.
117 Aynsley v. Glover L.R. 18 Eq. 544.
118 Greenwood v. Hoensey L.R. 33 Ch. Div. 471.
119 Davy v. Garret L.R. 7 Ch.Div. 473.
234
discretion was wrongly exercised.120
In India, the legislature has converted some of the English rules of discretion into
rules of jurisdiction, thereby increasing the requisites of jurisdiction and at the
same time limiting the sphere of injunction.121
The apparent significance of equity's legacy arises curiosity and it is often
cautioned to be not overused to the extent of activism. It is said that after all,
"judicial activism" is a boogeyman with whom few choose to associate.122
Critics
often state that judges cross their institutional limits by forsaking "neutral
principles". This theory holds that judges should decide cases based on general
principles that find application similar cases.123
It is also pointed out that judges are
creating policy in an area that should be left for the legislature,124
or by nullifying
legislation.125
It is urged that the judicial system is constituted just to decipher the
laws, not to make or implement them. The law should consequently be managed
inside of the expansive forms of jurisdiction styled by the guardian statutes
however powers may be utilized imaginatively. At the same time, it might be borne
as a main priority that the "rule of law" requests consistency and consistency from
the judiciary.126
An instance of equity at work in grant of injunction is that while determining as to
120
Martin, In re L.R. 20 Ch. Div. 365. 121
Nelson, Law of Injunctions, Law Publishers India Pvt. Ltd., 3rd
Ed. 1994, p.51. 122
Richard Lavioe, Activist or Automaton: The Institutional Need to Reach a Middle Ground in American Jurisprudence, 68 Alb. L. Rev. 611.
123 Mark V. Tushnet, Following the Rules Laid Down: A Critique of Intepretivism and Neutral
Principles, 96 Harv. L. Rev. 781, 804-24 (1983); Herbert Wechsler, Toward Neutral Principles of Constitutional Law, 73 Harv. L. Rev. 1, 34-35 (1959).
124 Alexander M. Bickel, The Supreme Court and the Idea of Progress 175-81 (1970) (arguing
against judicial policymaking in most cases); Kenneth M. Holland, Introduction to Judicial Activism in Comparative Perspective 1, 1 (Kenneth M. Holland ed., 1991) ("Judicial activism comes into existence when courts do not confine themselves to adjudication of legal conflicts but adventure to make social policies.").
125 C. Herman Pritchett, The Roosevelt Court 277-85 (1948) (stating that "most perplexing"
dilemma faced by Roosevelt Court was "determination of the degree of deference owed by a liberal bench to the legislative will"); Bradley C. Canon, A Framework for the Analysis of Judicial Activism, in Supreme Court Activism and Restraint 385, 385-86 (Stephen C. Halpern & Charles M. Lamb eds., 1982) ("Classic discussions of activism focused on the nullification of legislation - usually liberal in nature - by conservative justices.").
126 Dan T. Coenen, A Constitution of Collaboration: Protecting Fundamental Values with Second-
Look Rules of Interbranch Dialogue, 42 Wm. & Mary L. Rev. 1575, 1594 (2001) ("Central to the rule of law is the notion that judicial decision making must be marked by reason, integrity, and constituency."); Neil S. Siegel, State Sovereign Immunity and Stare Decisis: Solving the Prisoners' Dilemma Within the Court, 89 Cal. L. Rev. 1165, 1183-84 (2001) ("Replicability, stability and consistency in application are values that the ideal of the rule of law is intended to serve.").
235
whether a case is fit for grant of temporary injunction, the Court is required to
examine not only whether the facts fulfill the three conditions of prima facie case,
balance of convenience and irreparable injury but also as to whether the grant of
injunction would subserve public interest.127
Public interest has been held to be a
relevant factor while assessing the propriety of grant of temporary injunction.128
In
other words, the Court would not grant temporary injunction which would hamper
beneficial public purpose.129
For example, the Court refused to restrain
construction of tube well by the government for distribution of water to
cultivators.130
Where grant of injunction is likely to delay execution of public
projects thereby increasing financial burden on the state, the application for
injunction was disallowed.131
Where the suit land is being used as sullage farm for
drainage in the city, an application for injunction restraining the Nagar Nigam from
interfering with the plaintiff's possession was dismissed.132
Where Government had
granted lease of land for starting a college, an application restraining laying down
of foundation stone of the college was rejected.133
The Court should grant temporary injunction if the effect of non-granting such an
injunction will be to deprive the plaintiff forever the right claimed by him in the
suit. Where injunction application is refused, same relief at a later stage in the suit
would not be allowed.134
It is also settled law that in the absence of prayer for
perpetual injunction in the suit, no interim injunction can be granted.135
The equitable and discretionary relief of temporary injunction is not to be granted
as a rule or as a matter of course in a case where there are serious allegations of
committing theft of electricity and merely on the ground that in case of refusal of
injunction from restoration of electricity connection, consumer business would be
affected.136
The need to see that a prima facie case is made out before a court grants ad interim
injunction, cannot to be over emphasized. A ‘prima facie case’ should be such that 127
American President Lines Ltd. v. Board of Trustees, Bombay Port AIR 2004 Bom 162. 128
Bichharam v. Baldeo AIR 1940 All 241. 129
Bhagat v. Jagbir AIR 1941 Cal 670. 130
Sambhu Chandra v. State of West Bengal AIR 2004 NOC 146. 131
Padhya v. State of Orissa AIR 2003 NOC 386. 132
Nagar Nigam, Aligarh v. Udai Singh AIR 2003 All 34. 133
Jokin Kurkalang v. Governing Body, Upper Shilong College AIR 2002 NOC 90. 134
V.N. Shivaram v. B.M. Nagappa AIR 2003 Kant 18. 135
Jayantilal A. Khatri v. Bhagwandas 2001 AIHC 1461. 136
Gujarat Electricity Board V/s. Shiv Kripa Associates AIR 1999 Guj 333.
236
it appears on record that there is a bona fide contest between the parties and a
serious question is required to be tried. If the plaintiff has no right, title or interest
in the property, there is no question of granting equitable relief in his favour.137
The party invoking the jurisdiction of the Court has to show that he himself was
not at fault and that he himself was not responsible for bringing about the state of
things complained of and that he was not unfair and inequitable in his dealings
with the parties against whom he was seeking relief. His conduct should be fair and
honest.138
If any Court has no jurisdiction to entertain and try the suit, it cannot pass any
order accepting or rejecting the application for temporary injunction.139
In the case of National Airport Authority v. Vijay Dutt140
it was held that relief of
temporary injunction can be refused where there has been delay and the party
applying for the relief has not come with clean hands. Where petitioner had
suppressed material facts, the injunction was refused.
In the case of VT Thomas Hellia Toms v. Malayala Manorma Company Ltd.
Kochi,141
it was held that if scope of the suit and of the interim petition is
substantially the same and the controversy is in a narrow compass it is better that
the substantial issue is tackled in the suit.
In the case of Meghmala & Ors v. G. Narsimha Reddy & Ors.142
it was held that
the courts of law are meant for imparting justice between the parties and one who
comes to the Court, must come with clean hands. It was held that that a person
whose case is based on falsehood has no right to approach the Court.
In the cases of Phelps & Co. Vs. Shalimar Paints143
and Mahender Singh Vs.
Dharmender Singh,144
it was held that if the relief of interim application is the
same in nature as the relief in the main suit then it should not be granted.
137
Nago Rao V/s. Nagpur Important Trades AIR 2001 Bombay 402 (DB). 138
Gujarat Bottling Company V/s. Coca Cola Company AIR 1995 SC 2372. 139
Ajmer Kaur V/s. Punjab State AIR 1991 P & H 12. 140
AIR 1990 MP 326. 141
AIR 1988 Ker 291. 142
Civil Appeal Nos. 6656-6657 of 2010 decided by the Supreme Court on August 16, 2010. 143
1980 Rajdhani Law Reporter 646. 144
1981 Rajdhani Law Reporter (Note 56).
237
On concealment of material facts, in the case of M/s. Seemax Construction (P) Ltd.
v. State Bank of India and another,145
High Court of Delhi observed as under:
“The suppression of material fact by itself is a sufficient ground to decline the
discretionary relief of injunction. A party seeking discretionary relief has to
approach the court with clean hands and is required to disclose all material facts
which may, one way or the other affect the decision. A person deliberately
concealing material facts from court is not entitled to any discretionary relief. The
court can refuse to hear such person on merits. A person seeking relief of
injunction is required to make honest disclosure of all relevant statements of facts
otherwise it would amount to an abuse of the process of the court.”
4.13 DEMONSTRATIVE CASES ON IMPACT OF EQUITY IN
INJUNCTION DETERMINATION
Certain landmark cases in India have exemplified how equity has influenced and
even swayed the decision of courts in determining whether to grant an injunction.
These cases illustrate the effect of equitable principles in shaping the exercise of
jurisdiction by courts and together typify the element of discretion of courts.
1. Ramrameshwari Devi & Ors. v. Nirmala Devi & Ors.146
The discernible question which required adjudication in this case before the
Supreme Court seemed to be trivial and insignificant regarding imposition of costs.
However, the appeal raised several important questions of law of seminal
importance which the Apex Court dealt with. The case exhibited a classic example
of how civil litigation moves in courts and how unscrupulous litigants can, till
eternity, harass the respondents and their children by abusing the judicial system.
The facts of this case are that in the year 1952 the government allotted a residential
house bearing nos. 61-62, 2 I-Block, Lajpat Nagar-I, measuring 200 yards to Ram
Parshad. The Lease Deed was executed in his favour. On humane considerations of
shelter, Ram Parshad allowed his three younger brothers - Madan Lal, Krishan
Gopal and Manohar Lal to reside with him in the house. Later in 1977 these three
younger brothers filed a Civil Suit No. 993 of 1977 in the High Court of Delhi
claiming that this Lajpat Nagar property belonged to a joint Hindu Family and
145
AIR 1992 Delhi 197. 146
Civil Appeal nos. 4912-4913 of 2011 decided by Supreme Court on 4th
July, 2011.
238
sought partition of the property on that basis. The suit was dismissed by a
judgment by the learned Single Judge of the High Court of Delhi. The appellants
(younger brothers) of Ram Parshad, aggrieved by the said judgment preferred a
Regular First Appeal which was admitted to hearing in 1982. During the pendency
of the appeal, Ram Parshad on 15.01.1992 filed a suit against his three younger
brothers for mandatory injunction to remove them and for recovery of mesne
profits. In 1984 Ram Parshad sold western half (No.61) to an outsider. That matter
was no longer in dispute. In the events that followed litigation went on for 40
years.
In fact it was by now clear that appellant appeal was frivolous in nature. The court
stated that it is abundantly clear from the facts and circumstances of this case that
the appellants have seriously created obstacles at every stage during the course of
trial and virtually prevented the court from proceeding with the suit. This is a
typical example of how an ordinary suit moves in the courts. The court noted that
some cantankerous and unscrupulous litigants on one ground or the other do not
permit the courts to proceed further in the matter. The learned Amicus Curiae had
taken great pains in giving details of how the case has proceeded in the trial court
by reproducing the entire court orders of 1992 suit.
The court advised care in granting ad-interim ex-parte injunction. It held that if
injunction has been granted on the basis of false pleadings or forged documents,
then the concerned court must impose costs, grant realistic or actual mesne profits
and/or order prosecution. This must be done to discourage the dishonest and
unscrupulous litigants from abusing the judicial system. In substance, the court has
to remove the incentive or profit for the wrongdoer. While granting ad interim ex-
parte injunction or stay order the court must record undertaking from the plaintiff
or the petitioner that he will have to pay mesne profits at the market rate and costs
in the event of dismissal of interim application and the suit.
It was held that the trial court should have first examined the pleadings and then
not only granted leave to amend but directed amendment of the pleadings so that
the parties were confined to those pleas which still survived the High Court's
decision. Secondly, it should have directed discovery and production of documents
and their admission/denial. Thirdly, the civil judge should have questioned the
parties on their claims and assertions.
239
It was further stated that if an ex parte injunction order is granted, then in that case
an endeavour should be made to dispose of the application for injunction as
expeditiously as may be possible, preferably as soon as the defendant appears in
the court. Court went to add that it is also a matter of common experience that once
an ad interim injunction is granted, the plaintiff or the petitioner would make all
efforts to ensure that injunction continues indefinitely. The other appropriate order
as can be to limit the life of the ex-parte injunction or stay order for a week or so
because in such cases the usual tendency of unnecessarily prolonging the matters
by the plaintiffs or the petitioners after obtaining ex-parte injunction orders or stay
orders may not find encouragement. The court has to dispel the common
impression that a party by obtaining an injunction based on even false averments
and forged documents will tire out the true owner and ultimately the true owner
will have to give up to the wrongdoer his legitimate profit.
The court then dealt with the question of whether the prevailing delay in civil
litigation can be curbed? The court in its considered opinion stated that the existing
system can be drastically changed and improved if the following steps are taken by
the trial courts while dealing with the civil trials:
A. Pleadings are foundation of the claims of parties. Civil litigation is largely
based on documents. It is the bounden duty and obligation of the trial judge to
carefully scrutinize, check and verify the pleadings and the documents filed by the
parties. This must be done immediately after civil suits are filed.
B. Imposition of actual, realistic or proper costs and or ordering prosecution would
go a long way in controlling the tendency of introducing false pleadings and forged
and fabricated documents by the litigants. Imposition of heavy costs would also
control unnecessary adjournments by the parties. In appropriate cases the courts
may consider ordering prosecution otherwise it may not be possible to maintain
purity and sanctity of judicial
C. The courts should be extremely careful and cautious in granting ex-parte ad
interim injunctions or stay orders. Ordinarily short notice should be issued to the
defendants or respondents and only after hearing concerned parties appropriate
orders should be passed.
240
D. Litigants who obtained ex-parte ad interim injunction on the strength of false
pleadings and forged documents should be adequately punished. No one should be
allowed to abuse the process of the court.
E. The principle of restitution should be fully applied in a pragmatic manner in
order to do real and substantial justice.
F. Every case emanates from a human or a commercial problem and the Court
must make serious endeavour to resolve the problem within the framework of law
and in accordance with the well settled principles of law and justice.
G. If in a given case, ex parte injunction is granted, then the said application for
grant of injunction should be disposed of on merits, after hearing both sides as
expeditiously as may be possible on a priority basis and undue adjournments
should be avoided.
On consideration of totality of the facts and circumstances of this case, the court
did not find any infirmity in the impugned judgment. The appeals were dismissed
with costs which were quantified as Rupees Two Lakhs. The court held that it was
not imposing the costs out of anguish but by following the fundamental principle
that wrongdoers should not get benefit out of frivolous litigation.
2. Power Control Appliances v. Sumeet Machines Pvt. Ltd.147
The case was decided by the Apex Court. The facts of the case were that Mrs.
Madhuri Mathur was the sole proprietary of M/s. Power Control and Appliances
Company. She averred that she had been manufacturing power operated kitchen
mixies for domestic use since 1963. They were marketed since 1964 under the
brand name of 'Sumeet'. The mixies were packed in a cardboard box and at the top
the pictorial and photograph display of the appliance in different colours showing
the different purposes for which the mixy could be used. A booklet was enclosed
bearing the title 'Sumeet Domestic Mixer-Operating Instructions and Recipe
Book’. That consisted of 80 pages bound spirally in hard art paper cover. A
guarantee card was also issued. All these were devised, conceived and made by the
1st plaintiff in 1982 with the assistance of artists, photographers, printers and
147
Civil Appeal Nos. 2551-2552 and 2553 of 1993 decided by Supreme Court on 08.02.1994, reported as JT 1994 (2) SC 70.
241
executives employed by the 1st plaintiff for valuable considerations fully paid. As
such the 1st plaintiff was the owner of copyright with respect of all the above items
in terms of Section 17 of the Copyright Act, 1957. 'Sumeet' mixy came to be in
great demand in India and abroad. The business expanded. To cope up with the
demand, the 1st plaintiff had to float three more concerns for the manufacturing of
the same appliances. The companies are: i) Power Control and Appliances
(Bombay) Ltd., ii) Mathur Micro Motors and Appliances Ltd., iii) Power Control
Appliances (Kandla).
The first defendant was incorporated in 1984. It had been manufacturing and
selling mainly washing machines and vacuum cleaners from September/October
1991. It started manufacturing domestic mixies exactly similar to plaintiffs' mixer
with identical specifications except for power rating. The package and the pictorial
display were identical. Even the booklet was page wise reproduction including an
error with respect to Design No. 146781, a design number not belonging to the
plaintiffs. The contents of the guarantee card were also identical. The first
defendant was affixing in each of the appliances the registered trade mark 'Sumeet'
belonging to the second plaintiff in the same artistic manner in which it was
registered. On these allegations, it was urged that the first defendant had
committed infringement of the exclusive copyright of the first plaintiff in the
artistic material and trade literature displayed on the cardboard box and similarly,
the operating instructions and recipe book and the guarantee card issued by them.
The relief of injunction was not granted in view of acquiescence by the plaintiffs in
the honest and concurrent user of the first defendant. Thereafter the same was
appealed before the Division Bench which upheld the order.
The court in this case came to the principles in relation to the grant of interim
injunction. The court, taking note of the decision in K.E. Mohammed Aboobacker
v. Nanikram Maherchand and Anr.,148
stated that this case made a reference to the
case law and held at page 574-75 as under:
“The principles which should given the Court in granting or withholding a
temporary injunction in trade-mark infringement actions are well-settled. As a
temporary injunction is merely of a provisional nature and does not conclude the
148
1957 II Mad LJ 573.
242
rights of the parties in any way, the Court will exercise its discretion in favour of
the applicant only in strong cases. The plaintiff must make out a prima facie case
in support of his application for the ad interim injunction and must satisfy the
Court that his legal right has been infringed and in all probability will succeed
ultimately in the action. This does not mean, however, that the Court should
examine in detail the facts of the case and anticipate or prejudice the verdict which
might be pronounced after the hearing of the suit or that the plaintiff should make
out a case which would entitle him at all events to relief at the hearing.”
The court went on to state that the interlocutory remedy is intended to preserve in
status quo, the rights of parties which may appear on a prima facie case. Further,
the court while deciding plea of honest and concurrent user of acquiescence,
observed that as such there was no evidence of manufacture. It was further stated
that marketing may not advance the case of the first defendant-respondent. The
court further held that it did not think that either the criminal complaint or the
averment in the plaint would amount to implied consent, more so, when no oral
evidence had been let in, the parties had chosen to proceed on affidavit and counter
affidavit. Further in 1984 the first defendant-company came to be incorporated.
This was for the purpose of diversifying the industrial activity of the family group
for manufacturing other technical appliances like washing machines, vacuum
cleaners etc. But there was nothing on record to show that the first defendant was
manufacturing earlier than the alleged violation of trade mark, copyright and
design, as stated in the plaint. The court found considerable difficulty in
appreciating the conclusion of the Division Bench which had failed to note that the
proprietor of the trade mark was Sumeet Research and Holding Ltd. Again, the
complaint of infringement of trade mark was not against Ajay Mathur but against
Sumeet Machines Private Limited and M/s. Sekar and Sagar. The court held that it
is a settled principle of law relating to trade mark that there can be only one mark,
one source and one proprietor. It cannot have two origins. Where, the court said,
the first defendant-respondent had proclaimed himself as a rival of the plaintiffs
and as joint owner it was impermissible in law. The court stated that even then, the
joint proprietors must use the trade mark jointly for the benefit of all and it cannot
be used in rivalry and in competition with each other.
243
The court also held that the plea of quasi-partnership was never urged in the
pleading. The court noted as regards copyright that there was no plea of
assignment. The court further noted that the High Court had failed to note the plea
of honest and concurrent user as stated in Section 12(3) of 1958 Act for securing
the concurrent registration was not a valid defence for the infringement of
copyright. For all these reasons the court said it was unable to support the
judgments of the High Court under appeal and reiterated that on the material on
record the denial of injunction, once the infringement of trade mark, copyright and
design is established, cannot be supported. The court granted an injunction in
favour of the appellants (the plaintiffs).
3. The Municipal Corporation of Delhi Vs. Shri Suresh Chandra Jaipuria and
Anr.149
This case pertains to grant of injunction in a matter related to property and house
tax. The brief facts of the case were that the respondent had purchased a house in
South Extension, New Delhi as per a sale deed wherein it was explicitly laid down
that property shall be free from all “encumbrances, demands, or liabilities”. In a
previous suit it was decided that the respondent herein was absolved from the
liability to pay tax for a period before the purchase but shall be liable to pay the
same after the purchase. Thereafter, the Corporation had undertaken proceedings to
recover the dues. The suit that had been filed by the plaintiff was on the grounds
that the aforesaid assessment of tax had proceeded on an erroneous basis.
The parties had admitted that the house on which the house tax was levied had not
been let to any tenant since its construction. The trial court first granted the interim
injunction by provisionally accepting that the tax being sought was based on a
rateable value of Rs.37800/- per annum. But after hearing out both the parties had
vacated the same on the grounds that the plaintiff-respondent had failed to
establish a prima facie case. The Appellate court after considering all the questions
that were raised before it dismissed the appeal by holding that balance of
convenience is in favour of the defendant. The High Court agreed with the view of
the appellate court that balance of convenience was indeed in favour of granting
the interim injunction. The learned judge went on to observe that prima facie case
of erroneous assessment of tax deed exist therefore balance of convenience did not 149
AIR 1976 SC 2621.
244
apply herein. The high court therefore granted interim injunction. It is against this
impugned order that the appellants filed an appeal before the Apex Court. The
counsel on behalf of the appellants argued that the learned High court judge
himself misapprehended the law because the Dewan Daulat Ram case involved a
property that had been let but in this case the situation was not so. Moreover, both
the aforesaid sections of Delhi Rent Control Act dealt with residential and non-
residential properties that had been let out. These found no application in this case.
The court came to the conclusion that the counsel on behalf of the appellants was
right in contending that the lower courts had made no error in arriving at the
decision that no prima facie case existed. They also agreed with the counsel’s
contention that balance of conveniences cannot be ignored in cases like these.
The court further stated that the learned high court judge had not taken note of
section 41(h) of the Specific Relief Act, 1963 which lays down “that an injunction,
which is a discretionary equitable relief, cannot be granted when an equally
officious relief is obtainable in any other usual mode or proceeding except in cases
of breach of trust.” Learned Counsel for the appellant Corporation pointed out that
there was the ordinary machinery of appeal, under Section 169 of the Delhi
Municipal Corporation Act, 1957 open to the assessee respondent. It had not even
found that the respondent was unable to deposit the necessary amount before filing
the appeal. However, the court abstained from deciding the question, whether the
suit is barred or not on this ground. Consequently, the appeal was allowed and
injunction was not granted.
4. Purshottam Vishandas Raheja vs. Shrichand Vishandas150
This appeal by special leave by original defendants Nos. 1 and 2 sought to
challenge the Judgment and Order passed by a Division Bench of the Bombay
High Court allowing the Appeal against the order of a Single Judge in a suit filed
by respondent No. 1 (since deceased). The learned Single Judge had granted a
limited relief to respondent No. 1 (original plaintiff) whereas by the Order passed
by the Division Bench the Notice of Motion taken up by the original plaintiff had
been made absolute in terms of prayers (a), (b) and (c), and thereby granting full
interim relief which was sought by respondent No. 1 herein.
150
Civil Appeal no. 4005 of 2011 decided by Supreme Court on 6th
May, 2011.
245
In view of the demise of respondent No. 1, the heirs of respondent No. 1 came on
record of the appeal. Their case was that the interim relief as was sought, though in
the nature of mandatory relief, was necessary in the facts and circumstances of the
case. As against that, the submission on behalf of the appellants was that the
learned Single Judge had exercised his discretion appropriately and there was no
reason for the Division Bench to interfere therein. The appellants also contended
that the prayers in the Notice of Motion were the principal prayers in the plaint
and, therefore, it amounted to granting a decree at the interlocutory stage which
was not justified in this case. The question for determination was, whether in the
facts and circumstances of the case, the mandatory order as passed by the Division
Bench was justified, or whether the learned Single Judge having exercised his
discretion appropriately, the Division Bench erred in interfering therein.
The facts leading to this appeal are as follows: Respondent No.1 (the original
Plaintiff) was the elder brother of petitioner No.1 (defendant No.1 in the Suit).
Petitioner No. 2 was the son of petitioner No.1. The dispute between them was
about the rights to a property which was being developed and was situated at
Cadastral Survey No. 764, Mazgaon Division in Mumbai. The case of respondent
No. 1 was that he was the exclusive owner of that property whereas the appellants
very much disputed the same. It was the case of respondent No. 1 that he had
purchased the property from the original owners and necessary property entries
were in his name. He submitted that he had taken steps to develop that property
under the Development Control Rules by removing one old bungalow and several
chawls situated thereon.
The court in this case noted the submissions of both parties and stated that the
question which came up for our consideration was whether the learned Single
Judge exercised his discretion in such an arbitrary or perverse manner that the
Appellate Court ought to have interfered with it? The learned Single Judge had
passed a detailed order explaining as to why he was constrained to grant only the
limited interim relief. It was in the interest of both the parties and the flat
purchasers. The Order passed by the learned Single Judge was also on the basis
that anything beyond the limited protection given at that stage would deny the
opportunity to the appellants to establish their case at the trial when it was not in
dispute that appellant No. 1 contributed ninety percent of the purchase money to
246
the property and he took steps all throughout to develop the property.
The court stated that there are many inconsistencies in the stories that were put up
by both the parties, and an interlocutory stage was not the one where one can reach
at a definite conclusion one way or the other, particularly where the fact situation is
as above and it would result into non-suiting one party. As stated above, the
question came up whether the order passed by the Division Bench was necessary.
The learned counsel appearing for the respondents relied upon the Judgment of the
court in Dorab Cawasji Warden v. Coomi Warden151
in support.
The court held that as far as this judgment was concerned, it must be noted that it
was a suit by one joint owner of an undivided family house to restrain the other
joint owners/their heirs from transferring their share of the house and from parting
with possession to a third party/purchaser and restraining the purchaser from
entering into or remaining into possession of the suit property. This was on the
basis of the mandate of Section 44 of the Transfer of Property Act and particularly
its proviso. The court went into the question, whether interlocutory injunction of a
mandatory character as against the prohibitory injunction could be granted?
The counsel for the respondents pointed out that the mandatory injunctions were
essential to avoid greater risk of injustice being caused as held in Films Rover
International Ltd. v. Cannon Film Sales Ltd.152
. The court herein responded by
stating that there was no difficulty in accepting that the court did accept that test. It,
however, laid down the law in that behalf in paragraphs 16 and 17 as follows:
“The relief of interlocutory mandatory injunctions are thus granted generally to
preserve or restore the status quo of the last non-contested status which preceded
the pending controversy until the final hearing when full relief may be granted or
to compel the undoing of those acts that have been illegally done or the restoration
of that which was wrongfully taken from the party complaining. But since the
granting of such an injunction to a party who fails or would fail to establish his
right at the trial may cause great injustice or irreparable harm to the party against
whom it was granted or alternatively not granting of it to a party who succeeds or
would succeed may equally cause great injustice or irreparable harm, courts have
151
(1990) 2 SCC 117. 152
(1986) 3 All ER 687.
247
evolved certain guidelines. Generally stated these guidelines are:
(1) The plaintiff has a strong case for trial. That is, it shall be of a higher standard
than a prima facie case that is normally required for a prohibitory injunction.
(2) It is necessary to prevent irreparable or serious injury which normally cannot be
compensated in terms of money.
(3) The balance of convenience is in favour of the one seeking such relief.
Being essentially an equitable relief the grant or refusal of an interlocutory
mandatory injunction shall ultimately rest in the sound judicial discretion of the
court to be exercised in the light of the facts and circumstances in each case.
Though the above guidelines are neither exhaustive nor complete or absolute rules,
and there may be exceptional circumstances needing action, applying them as
prerequisite for the grant or refusal of such injunctions would be a sound exercise
of a judicial discretion.”
The court further noted that in Wander Ltd. and another vs. Antox India P. Ltd.153
,
a bench of three Judges of the court has laid down the law in this respect which has
been consistently followed.
A bench of Three Judge of the court laid down the law in this behalf in paragraph
14 of the judgment which is as follows:
“The appeals before the Division Bench were against the exercise of discretion by
the Single Judge. In such appeals, the appellate court will not interfere with the
exercise of discretion of the court of first instance and substitute its own discretion
except where the discretion has been shown to have been exercised arbitrarily, or
capriciously or perversely or where the court had ignored the settled principles of
law regulating grant or refusal of interlocutory injunctions. An appeal against
exercise of discretion is said to be an appeal on principle. Appellate court will not
reassess the material and seek to reach a conclusion different from the one reached
by the court below if the one reached by that court was reasonably possible on the
material. The appellate court would normally not be justified in interfering with the
exercise of discretion under appeal solely on the ground that if it had considered
153
1990 (Supp) SCC 727.
248
the matter at the trial stage it would have come to a contrary conclusion. If the
discretion has been exercised by the trial court reasonably and in a judicial manner
the fact that the appellate court would have taken a different view may not justify
interference with the trial court's exercise of discretion. After referring to these
principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan
Joseph154
held that “....These principles are well established, but as has been
observed by Viscount Simon in Charles Osenton & Co. v. Jhanaton '... the law as
to the reversal by a court of appeal of an order made by a judge below in the
exercise of his discretion is well established, and any difficulty that arises is due
only to the application of well settled principles in an individual case'. The
appellate judgment does not seem to defer to this principle.”
The court thereafter stated that the proposition laid down had been consistently
followed thereafter. Further it was held that for the reasons stated above this case
was not one where mandatory interim injunction, as sought by the respondents was
justified. The court stated that the learned Single Judge had passed a reasoned
order, and, in no way, it could be said that he had exercised the discretion in an
arbitrary, capricious or perverse manner, or had ignored the settled principles of
law regarding grant or refusal of interlocutory injunction. There was no reason for
the Appellate Bench to interfere and set aside that order.
This appeal was, therefore, allowed. The order passed by the Division Bench was
set aside and that of the learned Single Judge was restored.
5. Colgate Palmolive (India) Ltd v. Hindustan Lever Ltd155
In this case two appeals were filed under Section 55 of the Monopolies and
Restrictive Trade Practices Act (hereinafter referred to as the `MRTP Act') which
were directed against the order of the Monopolies and Trade Practices Commission
under Section 12A of the MRTP Act dated 30th
April, 1998. The matter pertains to
Colgate toothpaste, a product of Colgate Palmolive India Limited and by reason of
a complaint from M/s. Hindustan Lever Limited being the appellant in the 2nd
appeal. Whereas appellants appealed herein against the order of the Commission
containing an order of restraint as regards the display of the ring round the family
154
(1960) 3 SCR 713. 155
AIR 1999 SC 3105.
249
as "Suraksha Chakra" in Colgate Palmolive's hoardings, print advertisements and
T.V. commercials, the appeal filed by M/s. Hindustan Lever Limited was against
the order of refusal on the part of the Commission to put a total ban on the product
of the Colgate Palmolive as noticed above.
The court stated that the interlocutory remedy is intended to preserve in status quo,
the rights of parties which may appear on a prima facie case. The court also, in
restraining a defendant from exercising what he considers his legal right but what
the plaintiff would like to be prevented, puts into the scales, as a relevant
consideration whether the defendant has yet to commence his enterprise or whether
he has been doing so in which latter case considerations somewhat different from
those that apply to a case where the defendant is yet to commence his enterprise,
are attracted."
The court stated while dividing the plea that the considerations which ought to
weigh with the Court hearing the application or petition for the grant of injunctions
are as below:
a. Extent of damages being an adequate remedy;
b. Protect the plaintiff's interest for violation of his rights though however having
regard to the injury that may be suffered by the defendants by reason therefor;
c. The court while dealing with the matter ought not to ignore the factum of
strength of one party's case being stronger than the others;
d. No fixed rules or notions ought to be had in the matter of grant of injunction
but on the facts and circumstances of each case - the relief being kept flexible;
e. The issue is to be looked from the point of view as to whether on refusal of the
injunction the plaintiff would suffer irreparable loss and injury keeping in view
the strength of the parties case;
f. Balance of convenience or inconvenience ought to be considered as an
important requirement even if there is a serious question or prima facie case in
support of the grant;
g. Whether the grant or refusal of injunction will adversely affect the interest of
general public which can or cannot be compensated otherwise.
The court held that the fact that within a period of 10 days of the application by the
appellant herein before the Commission, the Respondent filed the instant
250
complaint with an application for an interim prayer - though, however, this
"Suraksha Chakra" admittedly was available in the commercial advertisement
since 1985 and in the visual advertisement in Hindi at least since 1987- there was
no lodgment of any protest or complaint in public interest but it only filed as a
back lash on the appellant's complaint as noticed above and the motive therein in
the court’s view cannot also be ruled out. Further, the court held that the appeal
preferred by the complainant as against the failure of the Commission to pass
orders on the other three elements of the advertisement at this stage cannot be
entertained and the court recorded concurrence with the finding of the Commission
that without going through the evidence, it is neither feasible not proper in any
event to pass any orders thereon at this juncture.
The court further stated that it was dismayed by the fact that after recording a
finding on that score as noticed above, the Commission passed an order of
injunction in regard to an issue without however any material on record. The court
observed that as a matter of fact there was no evidence of a single consumer being
misled and not a whisper as to what constitute an unfair trade practice pertaining to
"Suraksha Chakra". The Commission also thought it fit not to record any reason or
justification for the grant of an interim order of injunction in spite of finding as
above and before the matter is investigated and complaint is finally heard. The
court also said that the factum of non-availability of any explanation of more than
13 years delay had also not been delved into by the Commission at all. The court
held that in that view of the matter question of there being any order of injunction
at this stage of the proceeding on the face of the finding as passed by the
Commission itself did not and cannot arise. Therefore, appeal of the appellants was
allowed and that of the respondents stood dismissed.
6. Urban Improvement Trust, Jodhpur v. Smt. Sohni Devi and Anr.156
The case was filed in the High Court of Rajasthan under amended Section 115,
CPC against the order passed by Additional District Judge No. 3, Jodhpur granting
temporary injunction by reversing the order of Munsif and Judicial Magistrate,
Jodhpur City, Jodhpur.
Brief facts of this case are that the plaintiff-opposite parties sought permission for
156
AIR 1996 Raj 73.
251
raising residential construction over their land which was granted with necessary
amendment. The plaintiff-opposite parties had made substantial changes in the
permission granted to them and instead of constructing drawing room, bed room
and dining room they had constructed a big hall and in this hall a restaurant was
being run. When it was detected that instead of raising residential construction the
construction had been raised of commercial nature, a notice was issued to the
plaintiff-opposite parties. The Assistant Engineer was directed to make a report
after spot inspection and the case was fixed and arguments were heard. Thereafter,
the order was passed for demolition of illegal construction by defendant-revisionist
- Urban Improvement Trust, Jodhpur.
Aggrieved against the order of demolition the plaintiff-opposite parties filed a suit
for permanent injunction along with an application under Order 39, Rules 1 and 2,
CPC for temporary injunction. The learned trial court refused temporary injunction
on the ground that the plaintiff-opposite parties had no prima facie case in their
favour.
As regards the second contention raised by the learned counsel for the revisionist,
the court held that there was no quarrel with the proposition of law argued by him.
The court stated that a close scrutiny of the judgment given by the learned trial
court threw a flood of light that the learned trial court had arbitrarily and
perversely refused to grant temporary injunction which amounted to authorising
defendant revisionist to demolish the construction in question during the pendency
of the suit before its trial for which suit itself was filed before the trial court. Once
revisionist was allowed to demolish the construction in question nothing would
remain to be decided on merits and virtually it would amount to dismissal of suit
without its trial on merits.
The court held that the learned trial court was manifestly wrong when it gave a
finding that the injunction prayed for could not be granted as it falls outside the
scope of Order 39, Rule 1, CPC. A perusal of Rule 1 of Order 39 indicated that
damage threatened or likely to be caused to the property in suit can be restrained
by a proper injunction. If the construction in question for which a suit for
permanent injunction has been filed on various grounds itself is demolished during
the pendency of the suit decidedly nothing would remain to be decided in the suit,
therefore, temporary injunction could be granted under Order 39, Rule 1, CPC as it
252
falls within the definition of 'damage' contemplated under the said rule. The court
further stated that similarly, under Rule 2 of Order 39, CPC besides the injuries
specified in Rule 1 'other injury of any kind' could also be prevented by granting a
temporary injunction. Trial court was required to give widest interpretation to the
word 'injury' under Order 39, Rule 2, CPC for doing justice even if the injury
which the plaintiff may suffer was not an injury in the ordinary sense within the
meaning of Rule 22, therefore, the court noted the case was squarely covered under
Order 39, Rules 1 and 2, CPC and the learned trial court failed to exercise
jurisdiction vested in it and the learned lower appellate court has rightly interfered
with the order passed by the trial court by granting temporary injunction
restraining the defendant-revisionist from demolishing the disputed construction
during the pendency of suit.
The court held that there is ample evidence on record of actual danger of
demolition of the construction in question hence there is no factual or legal
infirmity in reversing the order passed by the trial court by the learned lower
appellate court. The court further stated that it was not understandable as to how
the demolition of the construction which itself was subject-matter of suit for
permanent injunction if not permitted to be demolished before trial of the suit on
merits would occasion failure of justice or would cause irreparable injury to the
defendant-revisionist.
Admittedly the defendant-revisionist had passed an order for demolition of the
construction in question on 27-3-89 and it had waited for more than five years than
it can further wait for a year till the disposal of the suit on merits. The court stated
it would be a sad day indeed if compulsions of equity and justice are sacrificed on
the basis of procedural law.
The court also said that irrespective of the rigidity of the rules and adherence to the
procedural law there is apparently considerable scope of discretion of civil courts
under CPC for granting or refusing injunction. The use of discretion is desirable
from the point of introducing an element of humanism which carries with it justice-
oriented approach without allowing the substantial justice either to escape or slide
on mere technicalities. Men of broad social vision pledged to the philosophy of
natural justice in CPC which provides to facilitate justice and further its ends. Too
technical construction of Order 39, Rules 1, 2 and 7, CPC read with Section 115,
253
CPC in granting or refusing temporary injunction that leaves no room for
reasonable elasticity is to be avoided. The court stated he who clings to the letter,
clings to dry and barren shell and misses the truth and substance of justice and fair
play; Whenever and wherever there is choice before the civil courts they are
expected to choose the meaning which accord with reasons and justice. The court
propounded that what is just and reasonable should always be treated to be lawful.
Thus, the court having critically gone through the impugned judgment given by the
learned lower appellate court stated that if the same was allowed to stand neither it
would occasion failure of justice nor it would cause irreparable injury to the
defendant-revisionist rather in the circumstances of this case it was eminently just
and proper to restrain the defendant-revisionist from demolishing the construction
in question till the disposal of the suit. Thus, the court held that the instant revision
was not entertainable within the meaning of amended Section 115, C.P.C. hence it
was dismissed in limine.
7. Raman Hosiery Factory, Delhi and Ors. Vs. J.K. Synthetics Ltd. and
Ors.157
This case was filed in the Delhi High Court. In this case the plaintiffs were three
partners in a partnership firm. Defendants 1 to 4 and defendants 6 and 8 to 14
entered into an agreement dated April 22, 1972 (hereinafter referred to as "the
April Agreement") whereby the selling prices of various deniers and specifications
of only nylon multi-filament yarn were fixed as the ceiling Prices and defendants 1
to 4 agreed to maintain tile pattern of their production to be able to meet the
requirements of the Actual Users Industry from time to time. On September 9,
1973, defendants 1 to 4 and 6 to 23 entered into another agreement (hereinafter
referred to as "the September Agreement") superseding the April Agreement. This
agreement purported to have been entered into to avoid hardship, to evolve a
voluntary system of production, a suitable voluntary system of pricing, a suitable
system of equitable distribution to Actual Users and to foster a spirit of co-
operation between the parties. A central Review Committee was set up under this
agreement to consider problems of distribution of nylon yarn manufactured by
defendants 1 to 4. The plaintiffs did not claim to be parties to either the April
Agreement or the September Agreement. They, however, felt aggrieved by the 157
AIR 1974 Delhi 207.
254
aforesaid defendants entering into the September Agreement. In consequence, the
plaintiffs filed the suit praying that the September Agreement be declared to be
void and/or illegal; that the defendants, their agents and servants be restrained by a
perpetual injunction from, in any, manner, direct, or indirectly distributing nylon
multifilament Yarn and/or nylon crimped and/or nylon crimped/dyed yarn under
the said Agreement dated September 9, 1973; and the said Agreement be ordered
to delivered up and be cancelled.
The court mentioned that at present the plaintiffs did appear to be entitled to reliefs
claimed in the plaint. First, the grant of these reliefs did not in any way seem to
benefit the plaintiffs. The annulment of the September Agreement cannot
guarantee supplies to the plaintiffs nor can a permanent injunction against the
defendants from acting on the September Agreement ensure supply of raw material
to the plaintiffs. Secondly, there was no cause of action to claim these reliefs. It
was urged that if the September Agreement was not acted upon the nylon yarn will
be available in free market. But all these were speculative matters and could not be
dealt with at this stage. The plaintiffs were certainly not entitled to claim delivery
and cancellation of the September Agreement as they were not party to the same.
The court stated that prima facie the plaintiffs had no case.
It is settled law that no interim injunction would be issued if the final relief cannot
be granted. The court relied on the following observations made in the case of K.
P. M. Aboobucker v. K. Kunhamoo158
:
"An interim relief is granted to a person on the footing that that person is prima
facie entitled to the right on which is based the claim for the main relief as well as
the interim relief. That relief is granted as an interim measure till the disposal of
the suit in which is to be investigated the validity of the claim or right that has been
put forward. If no such claim has been put forward in the suit, it means that there
can be no occasion for investigation of such a claim in the suit, there can be no
justification for the grant of an interim relief which will just lapse on the
termination of the suit, but which will leave the parties in the same position in
which they were before the institution of the suit in the course of which the interim
relief was sought and obtained. That is not the scope of O. 39, Rule 1."
158
AIR 1958 Mad 287.
255
The court found that the balance of convenience was in favor of the defendants. A
large number of people had gotten together, and those people were organizations to
further trade interests of both production and distribution. The plaintiffs had not
filed the suit in a representative capacity but on their own behalf. They were by all
standards small consumers. As against this the defendants would be dealing with
bulk of the production of the defendants 1 to 4. Even then a good portion of the
production of defendants 1 to 4 will go to the free market. The court observed that
in this view of the matter the trade of the defendants cannot be jeopardised just to
meet the possibility of the plaintiffs not getting supplies of raw material from
crimpers, who themselves are not complaining.
The court noted that as far as irreparable injury was concerned there again it had to
be weighed as to who would suffer more and whether the plaintiffs cannot be
compensated in money. It was held that it may be that on account of non-
availability of raw material the plaintiffs had to close down but then if there was
any private of contract between them and the defendants they can claim damages
for any loss that may be sustained. The court found the issue of a temporary
injunction would disturb a settled state of dealings between the defendants since
September, 1973. The court without prejudice to the case of the parties found no
justification to issue the temporary injunction asked for and dismissed the
plaintiff's application.
8. Digital Filing System Inc. v. Akhilesh Agarwal and Anr.159
In this case the question before the High Court of Delhi was whether an injunction
can be granted to restrain someone from pursuing a proceeding in a foreign court.
In the present appeal, review of an ex parte order had been sought wherein the
appellant was restricted by the learned trial judge from proceeding with a matter in
a district court in Michigan, USA. There was a dispute related to the infringement
of copyright in software under the name ‘DIGIFILE’. A suit was filed by the
appellant in USA for the cancellation of US copyright registration. At the same
time a suit was filed by the respondent under order 39, rules 1 and 2 CPC for the
grant of an interim injunction restraining any further proceeding in the US court.
Thereafter the appellant had agreed that he shall not pursue the matter any further
till the statement of one Harish Verma was recorded. But he went on to submit in 159
AIR 2005 Delhi 282.
256
the US court that the suit in the Indian court was disposed of and in regard to
which the US court went ahead with the proceedings. This brought forth a strong
reaction from the respondent who filed a contempt proceeding in the trial court that
went on to injunct the appellant from going ahead with the case in the US court. It
is this order that the appellant had challenged in the present case. The appellant
contended that the trial court has no power under CPC or for that matter under any
law in force in India to stop proceedings in a foreign court. However the counsel
on behalf of the respondent asserted that it was well within the power of the said
court to pass an order as mentioned earlier.
It was held that it is true that there exists no express provision in the CPC that
confers a power on the court to halt a proceeding in a foreign court. But in order to
cater to the need of imparting justice it was well within the jurisdiction of the court
to issue an order of such nature. The court relied on the fact that the prime
responsibility of the courts is to “promote the interests of justice”.
To further the need of substantial justice a Civil Court can, if it so deems fit, pass
an order “to remove and rectify and to undo any injustice”. The court cited the
Supreme Court judgment in ONGC v. Western Company of North America160
that
stated, “As we have pointed out earlier, it would be unfair to refuse the restraint
order in a case like the present one for the action in the foreign court would be
oppressive in the facts and circumstances of the case.”
The judgment also took note of paragraph 1039 of the Halsbury’s Laws of England
Vol. 24 at page 579 that stated, “With regard to foreign proceedings the court will
restrain a person within its jurisdiction from instituting or prosecuting proceedings
in a foreign court whenever the circumstances of the case make such an
interposition necessary or expedient.”
Thus the court in the present case came to the conclusion that it is well within the
competence of a civil court to injunct a party from proceeding further in a suit in a
foreign court if the nature of the case at hand is such. Moreover this power in India
is saved under section 151 of CPC.
160
AIR 1987 SC 674.
257
9. Goenka Institute of Education and Research Vs. Anjani Kumar Goenka
and Anr.161
The dispute in this appeal that came before the High Court of Delhi centred around
the use of the expression "Goenka" as a trademark and/or trade name. The
respondents claimed exclusive ownership/right to use the word "Goenka", whether
per se or with other words or initials, as their trademark/trade name with respect to
their educational institutions and which is disputed by the appellant. The learned
Single Judge agreed with the respondents/plaintiffs and allowed their injunction
application. Hence, this appeal was filed by the defendants/appellant.
In this present appeal, therefore, the court was called upon to basically decide the
following basic issues:
(i) In between the appellant and the respondents who is the prior user of the trade
mark "Goenka"?
(ii) If respondents are prior users of the trade mark "Goenka" can the same make
them owners of the trade mark "Goenka" per se as the word "Goenka" was only a
part of their name "G.D. Goenka Public School" and the word "Goenka" per se has
never been used independently? Related to the above question is whether the
"Goenka" is an essential feature/prominent part/predominant part of their trade
mark/trade name and has it achieved distinctiveness independently so as to enable
the respondents to claim ownership rights in the name of "Goenka" in itself?
(iii) Even if as between the appellant and the respondents, the respondents are prior
users of the word "Goenka", what would be the effect of others using the word
"Goenka" in the names of their institutions much prior to the adoption and user of
"Goenka" by the respondents? Will this make the trade mark "Goenka" either lose
distinctiveness or that it cannot achieve distinctiveness, more so as the same is a
surname commonly used in India? Is the surname "Goenka" publici juris?
(iv) Is not the appellant entitled to use the word "Goenka" on account of being an
honest concurrent user?
(v) Are the respondents entitled to claim infringement of their registered trade
161
AIR 2009 Delhi 139.
258
mark "Goenka"? Is there passing off of the name "G.D. Goenka Public School"
when the appellant uses the word "Goenka" in their institutions "Goenka Public
School" and "Goenka College of Pharmacy"?
(vi) What is the effect of delay in filing the suit in 2008 when the appellant is using
the word "Goenka" in "Goenka Public School" since the year 2000 and since 1995
in "Mohini Devi Goenka Mahila Mahavidyalaya" and in whose favour is balance
of convenience and who will be caused irreparable injury?
The court held that it was of the view that the balance of convenience is in favour
of the appellant and against the respondents. Irreparable injury which cannot be
compensated in money will be caused to the appellant if the injunction as granted
by the learned Single Judge is not vacated and the respondents can be compensated
monetarily in case they finally succeed. The appellant is running its educational
institution being "Goenka Public School" from the year 2000 and the suit has been
filed only in the year 2008. Object of an injunction is to be looked at differently
when a business is about to start and as against a business which has been going on
from a long time. The court stated that in the latter category of cases injunction is
not ordinarily granted whereas in the case of the former where the business is
about to start or has just recently started, the court favourably considers the grant
of pendent lite injunction. Furthermore several students are studying in the school
run by the appellant and it would cause serious inconvenience and undue trouble to
the appellant if so necessitated by the order of the learned Single Judge. The object
of an injunction is not to create a new state of affairs but to maintain status quo
with regard to the position emerging for a long time before filing of the suit.
In view of the above, the court came up with the following conclusions:
(i) The respondent cannot successfully contend infringement of its trade mark
"Goenka" because the trade mark has been registered w.e.f. 2003, but the appellant
have used the trademark "Goenka" per se w.e.f. 2000 when it started its "Goenka
Public School". Mere registration cannot confer right on the respondents as
registration without user is of no effect and respondents have never used the trade
marks "Goenka" in itself.
(ii) The respondents can be said to be prior user of the trademark "Goenka" as
259
against the appellant on the ground that the word "Goenka" forms a prominent part
of its name "G.D.Goenka Public School" on their establishing
distinctiveness/secondary meaning after trial of the case but as of today no
injunction can be granted to the respondents because the two trademarks are not
identical and when the tests for deceptive similarity are applied there is enough
material to hold that there is no deceptive similarity especially because, whereas
the appellant is based in Sikar, Rajasthan, the respondents are based in Delhi and
both the parties have started using the word "Goenka" as part of the name of their
institutions near about each other so that it can be said that the appellant is an
honest concurrent user of a word "Goenka", because since 1995 it was using
"Goenka" as part of "Mohini Devi Goenka Public School" and for which it had a
bona fide reason to adopt because the surname of its trustees was "Goenka".
Directions have however been issued by the court as stated above so as to ensure
that there is no confusion between the names of the separate institutions using their
trademarks/trade names.
(iii) Though the appellant is correct that a common surname like "Goenka" cannot
easily achieve distinctiveness but this can be established in a given case. The court
found that this issue in the facts of the present case need not be pronounced upon
by it for the present inasmuch as it has permitted the respondent to use the name
"Goenka Public School" with certain minor restrictions as stated above. Similarly,
the court did not hold one way or the other with respect to whether the word
"Goenka" is publici juris and which is left for decision after the trial in the case.
(iv) On account of the appellant's running its institution as "Goenka Public School"
from the year 2000 i.e. 8 years before filing of the suit, the relief of injunction on
the ground of passing off is to be declined on the ground of delay also, because the
balance of convenience is in favour for the appellant whose institutions having
several students were not just recently established before filing of the suit in 2008
or were to be established after filing of the suit.
(v) It is doubtful that the respondents can claim to be exclusive and sole owners of
the word "Goenka" because third parties have been using the word "Goenka" as
part of their trademark/trade name in the name of their institutions much prior to
the user of the word "Goenka" by the respondent.
260
Accordingly, the court allowed the appeal and vacated the injunction order granted
by the learned Single Judge in the impugned judgment.
10. T.V. Venogopal vs Ushodaya Enterprises Ltd. & Anr. 162
The brief facts of this case are that the appellant was the sole proprietor of a firm
carrying on business inter alia as manufacturers of and dealers in incense sticks
(agarbathis) in the name and style of Ashika Incense Incorporated at Bangalore.
The appellant started his business in the year 1988 and adopted the mark `Ashika's
Eenadu'. According to the appellant the word `Eenadu' in Kannada language meant
`this land'. In Malayalam and Tamil language it conveyed the same meaning. In
Telugu language it meant `today'. In consonance with the above meaning the
appellant devised an artistic label comprising a rectangular carton in bottle green
background with sky-blue border and in the centre, in an oval tricolour, the word
`Eenadu' was written. According to the appellant, in the year 1993 he honestly
adopted the trade mark `Eenadu' meaning `this land' in Kannada.
The respondent company therein claimed that they have been in the business of
publishing a newspaper, broadcasting, financing and developing a film city. It was
contended by the respondent company that the use of the word `Eenadu' by the
appellant amounted to infringement of their copyright and passing-off in trade
mark. According to the respondent company, the business of the appellant and the
respondent company was different and there was no commonality or casual
connection between the two businesses.
The Second Additional Chief Judge, City Civil Court, Hyderabad had granted an
ex-parte ad interim injunction restraining the appellant from using the expression
`Eenadu'.
The appellant, aggrieved by the order of the City Civil Judge filed an appeal before
the High Court of Andhra Pradesh. The respondent company also filed an appeal
against the order of City Civil Judge praying that the order of injunction to be
made absolute and not be confined to the State of Andhra Pradesh. The learned
Single Judge disposed of both the appeals by a common judgment/order. The
appeal filed by the respondent company was dismissed and the appeal filed by the
162
Civil Appeal Nos.6314-15 of 2001 decided by the Supreme Court on 3rd
March, 2011.
261
appellant was allowed.
Finally the case reached the Apex Court. On consideration of the totality of facts
and circumstances of the case, the court arrived at the following findings and
conclusions:
“a) The respondent company's mark `Eenadu' had acquired extraordinary
reputation and goodwill in the State of Andhra Pradesh. The respondent company's
products and services were correlated, identified and associated with the word
`Eenadu' in the entire State of Andhra Pradesh. `Eenadu' meant literally the
products or services provided by the respondent company in the State of Andhra
Pradesh. In this background the appellant cannot be referred or termed as an honest
concurrent user of the mark `Eenadu';
b) The adoption of the words `Eenadu' was ex facie fraudulent and mala fide from
the very inception. By adopting the mark `Eenadu' in the State of Andhra Pradesh,
the appellant clearly wanted to ride on the reputation and goodwill of the
respondent company;
c) Permitting the appellant to carry on his business would in fact be putting a seal
of approval of the court on the dishonest, illegal and clandestine conduct of the
appellant;
d) Permitting the appellant to sell his product with the mark `Eenadu' in the State
of Andhra Pradesh would definitely create confusion in the minds of the
consumers because the appellant is selling Agarbathies marked `Eenadu' as to be
designed or calculated to lead purchasers to believe that its product Agarbathies are
in fact the products of the respondent company. In other words, the appellant wants
to ride on the reputation and goodwill of the respondent company. In such a
situation, it was the bounden duty and obligation of the court not only to protect
the goodwill and reputation of the respondent company but also to protect the
interest of the consumers;
e) Permitting the appellant to sell its product in the State of Andhra Pradesh would
amount to encouraging the appellant to practise fraud on the consumers;
f) Permitting the appellant to carry on his business in the name of `Eenadu' in the
262
State of Andhra Pradesh would lead to eroding extra- ordinary reputation and
goodwill acquired by the respondent company over a passage of time;
g) Appellant's deliberate misrepresentation has the potentiality of creating serious
confusion and deception for the public at large and the consumers have to be saved
from such fraudulent and deceitful conduct of the appellant.
h) Permitting the appellant to sell his product with the mark `Eenadu' would be
encroaching on the reputation and goodwill of the respondent company and this
would constitute invasion of proprietary rights vested with the respondent
company.
i) Honesty and fair play ought to be the basis of the policies in the world of trade
and business. The law is consistent that no one can be permitted to encroach upon
the reputation and goodwill of other parties. This approach according to the court
is in consonance with protecting proprietary rights of the respondent company.”
Consequently, the appeals were dismissed.
4.14 RESTITUTION - AN EQUITY DRIVEN SPECIE OF INJUNCTION
Restitution is the law of gains-based recovery, as opposed to the law of
compensation which is the law of loss-based recovery. When a court orders
restitution it orders the defendant to give up his/her gains to the claimant. When a
court orders compensation it orders the defendant to pay the claimant for his or her
loss. This type of damages restores the benefit conferred to the non-breaching
party. Simply put, the plaintiff will get the value of whatever was conferred to the
defendant when there was a contract. There are two general limits to recovery,
which is that a complete breach of contract is needed, and the damages will be
capped at the contract price if the restitution damages exceed it.
The orthodox view is that the law of restitution is founded solely on the equitable
principle of unjust enrichment. However, the latest view is that restitution, like
other legal responses, can be triggered by any one of a variety of causative events,
like unjust enrichment, wrongs (breach of contract, tort, etc.), and the vindication
of property rights with which the defendant has interfered. It is arguable that other
types of causative events can also trigger an obligation to make restitution.
263
In Attorney General v Blake,163
an English court found itself faced with the
following claim. The defendant had made a profit of about £60,000 as a direct
result of breaching his contract with the claimant. The claimant was undoubtedly
entitled to claim compensatory damages but had suffered little or no identifiable
loss. It therefore decided to seek restitution for the wrong of breach of contract.
The claimant won the case and the defendant was ordered to pay over his profits to
the claimant. However, the court was careful to point out that the normal legal
response to a breach of contract is to award compensation. An order to make
restitution was said to be available only in exceptional circumstances.
Another proposition of equity that supports an injunction is that no one shall suffer
by an act of the court. This is not a rule confined to an erroneous act of the court.
The expression 'act of the court' embraces within its sweep all such acts as to
which the court may form an opinion in any legal proceedings that the court would
not have so acted had it been correctly apprised of the facts and the law. The factor
attracting applicability of restitution is not the act of the Court being wrongful or a
mistake or error committed by the Court; the test is whether an act of the party
persuading the Court to pass an order held at the end as not sustainable, has
resulted in one party gaining an advantage which it would not have otherwise
cornered, or the other party has suffered an impoverishment which it would not
have suffered but for the order of the Court. The quantum of restitution, depending
on the facts and circumstances of a given case, may take into consideration not
only what the party excluded would have made but also what the party under
obligation has or might reasonably have made. There is nothing wrong in the
parties demanding being placed in the same position in which they would have
been had the court not intervened by its interim order when at the end of the
proceedings the court pronounces its judicial verdict which does not match with
and countenance its own interim verdict. Whenever called upon to adjudicate, the
court would act in conjunction with what is the real and substantial justice. The
injury, if any, caused by the act of the court shall be undone and the gain which the
party would have earned unless it was interdicted by the order of the court would
be restored to or conferred on the party by suitably commanding the party liable to
do so. Any opinion to the contrary would lead to unjust if not disastrous
consequences. Litigation may turn into a fruitful industry. Though litigation is not
163
[2001] 1 AC 268.
264
gambling yet there is an element of chance in every litigation. Unscrupulous
litigants may feel encouraged to approach the Courts, persuading the court to pass
interlocutory orders favourable to them by making out a prima facie case when the
issues are yet to be heard and determined on merits and if the concept of restitution
is excluded from application to interim orders, then the litigant would stand to gain
by swallowing the benefits yielding out of the interim order even though the battle
has been lost at the end.164
On the aspect of a mistake of the court, it has been held in Jang Singh Vs. Brij Lal
& Ors.165
as follows:
“There is no higher principle for the guidance of the Court than the one that no act
of Courts should harm a litigant and it is the bounden duty of Courts to see that if
a person is harmed by a mistake of the Court he should be restored to the position
he would have occupied but for that mistake. This is aptly summed up in the
maxim: 'Actus curiae neminem gravabit'.”
This principle was reiterated by the Supreme Court in Johri Singh Vs. Sukh Pal
Singh & Ors.166
, wherein the court held that it would extend the time fixed to do
any act by the court when it finds that the mistake or the failure to do the same
within the stipulated period is bona fide, and was not an act indicative of
negligence or inaction and when it finds that the mistake was the result of, or
induced by an action of the court applying the maxim “actus curiae neminem
gravabit” i.e. an act of the court shall prejudice no man.
On the same issue, in Karnataka Rare Earth and Anr. Vs. Senior Geologist,
Department of Mines & Geology & Anr.167
, the Supreme Court observed as
follows:-
“The doctrine of actus curiae neminem gravabit is not confined in its application
only to such acts of the Court which are erroneous; the doctrine is applicable to
all such acts as to which it can be held that the Court would not have so acted had
it been correctly apprised of the facts and the law.”
164
South Eastern Coalfields Ltd. Vs. State of M.P. & Ors AIR 2003 SC 4482. 165
AIR 1966 SC 1631. 166
(1989) 4 SCC 403. 167
2004 (2) SCC 783.
265
Thus restitution has developed as an equitable injunctive remedy founded on sound
principles. The principle has been statutorily recognized in India by Section 144 of
the Code of Civil Procedure.168
Halsbury’s Laws of England underlined the
importance of restitution in the following words:
“Any civilized system of law is bound to provide remedies for cases of what has
been called unjust enrichment or unjust benefit, that is, to prevent a man from
retaining the money of, or some benefit derived from, another which it is against
conscience that he should keep.”
4.15 INJUNCTION IN WRITS : EQUITY AT WORK
Article 32 and Article 226 of the Constitution of India vest power in the Supreme
Court and the High Courts respectively to issue directions, orders or writs. The
scope of Article 32 is limited and is available to a person who has suffered
infraction of his fundamental rights.169
The power to issue directions, orders or
writs is wider and more comprehensive under Article 226 as compared to that
under Article 32 since an action can be maintained in the former for enforcement
of a legal right other than a fundamental right.170
It is noteworthy that the
entitlement to approach Supreme Court under Article 32 for enforcement of one's
168
Section 144 reads as follows: “(1) Where and in so far as a decree or an order is varied or reversed in any appeal,
revision or other proceeding or is set aside or modified ii any suit instituted for the purpose, the court which passed the decree or order shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree or order or such part thereof as has been varied, reversed, set aside or modified and, for this purpose, the court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are property consequential on such variation; reversal, setting aside or modification of the decree of the decree or order. Explanation: For the purposes of sub-section (1), the expression “court which passed the decree or order” shall be deemed to include,— (a) where the decree or order has been varied or reversed in exercise of appellate or revisional jurisdiction, the court of first instance; (b) where the decree or order has been set aside by a separate suit, the court of first instance which passed such decree or order;
(c) where the court of first instance has ceased to exist or has ceased to have jurisdiction to execute it, the court which, if the suit wherein the decree or order was passed were instituted at the time of making the application for restitution under this section, would have jurisdiction to try such suit.
(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub-section (1).”
169 Roop Chand v. State of Punjab AIR 1963 SC 1570.
170 Tilakchand v. Munshi AIR 1970 SC 898.
266
fundamental rights is itself a fundamental right.171
The power to issue a writ is an
unqualified power and such power is not subject to any restriction imposed by any
other provision of the Constitution or other law.172
In addition, Article 227 of the
Constitution confers supervisory jurisdiction in the High Court over all Courts and
Tribunals within its territory. For instance, in a case, an interim injunction was
granted restraining manager of a college from acting as such and fresh elections
were held in which another person was elected as manager whose application for
impleadment was rejected. Yet the interim injunction was continued. It was held
that this is a fit case for interference under Article 227 of the Constitution of
India.173
Article 227 is of limited applicability and where effective remedy of
appeal is available against an order of injunction, a petition under Article 227 of
the Constitution is not maintainable.174
4.15.1 Injunction as Prerogative Writ
Though the writ of injunction is not, in the strict sense, a prerogative writ, at
certain times, it may be issued to prevent public nuisance on behalf of state or
sovereign175
or to prevent abuse of trust powers.176
An injunction is a direction
framed according to the circumstances of the case commanding an act which the
Court regards as essential for delivering justice or restraining an act which it
esteems contrary to equity and good conscience. It is an equitable remedy and has
been held the principal and the most important process issued by Courts of Equity.
The function or purpose of an injunction is to restrain action or interference of
some kind, to furnish preventive relief against irreparable mischief or injury, or to
preserve the status quo.
4.15.2 Injunction and Writ of Prohibition
The writ of prohibition resembles an injunction in that its issue depends upon
judicial discretion and is an extraordinary remedy which will not be granted where
an adequate remedy can be had by an ordinary process of the Court.177
The writ of
171
Gopalan v. State of Punjab AIR 1954 SC 362. 172
Apabi Singh v. Imphal Muncipal Board AIR 1962 Manipur 28. 173
Committee of Management v. Sri Ratan Muni Jain intermediates AIR 197 All 163. 174
Ganesan v. Chanderbose AIR 1997 Mad 190. 175
State v. Lord 43 p. 471. 176
Corpus Juris Secundum Vol. 13 p. 405. 177
Joyce, Injunction, 1st Edn., Sec. 9A.
267
prohibition resembles in some respects the equitable remedy of injunction. Yet
there are important distinguishing features between them. Injunction never
questions the jurisdiction nor is addressed to the Court, it only lies against the
parties. Prohibition on the contrary takes no notice of the parties, ignoring for the
most part any interest they may have in the matter forming the subject of the
grievance and goes directly against the Court. An injunction against proceedings is
directed only to parties as litigants, without in any manner interfering with the
Court, while a prohibition is directed to the Court itself commanding it to cease
from the exercise of a jurisdiction to which it has no legal claim.178
Injunction may
issue from a Court of coordinate jurisdiction but prohibition can only be addressed
by a superior Court. A 'Prohibition' is a remedy against an encroachment of
jurisdiction. It is granted on the suggestion that the Court to which it is directed has
no legal cognizance of the cause. It is directed to the judge of the inferior Court, as
well as to the parties to the cause. If the thing be already done, it is manifest that
the writ of prohibition cannot end it, for that would require an affirmative act, and
the only effect of a writ of prohibition is to suspend all action, and to prevent
further proceeding in the prohibited direction. On this principle, a writ prohibiting
the trial of a cause will not be issued where judgment has been regularly rendered,
though it has not been formally entered. The remedy by prohibition is distinct from
and independent of, though collateral to, the proceeding sought to be prohibited.179
An injunction, on the other hand, where its object is to restrain proceedings in
another Court, is directed only to the parties. It neither assumes any superiority
over the Court in which they are proceeding nor does it deny its jurisdiction. It is
granted on the sole ground that from certain equitable circumstances, of which the
Court that issues it has cognizance, it is against conscience for the party to proceed
in the cause.180
Prohibition lies not only for excess or absence of jurisdiction but also for
contravention of statute or principles of common law. It does not however lie to
correct the course, practice or procedure of an inferior tribunal or a wrong decision
on the merits of proceedings.181
Where the defect or want of jurisdiction of an
inferior Court is apparent, a writ of prohibition can be granted as a matter of
178
State v Tracy 237 M.O. 109. 179
Spelling, Injunctions , 3rd
Edn., pp 1716-20. 180
Eden, Injunction, 1st Edn., p 4.
181 Halsbury, Laws of England, Vol ix., 2003.
268
right.182
A writ of prohibition cannot be issued to control executive, administrative
or ministerial acts, but can be issued to prevent a judicial or quasi-judicial tribunal
from exceeding its jurisdiction or violating principles of natural justice. A writ of
prohibition cannot be issued merely on the ground that an erroneous decision was
made either by receiving improper evidence or in the absence of evidence. Writ of
prohibition can be issued only to a judicial or quasi-judicial authority regarding the
proceedings pending before such authority and cannot be issued against private
individuals since no question of breach of public or statutory duty will be involved
in such a case; the writ will not lie even against a public authority acting purely in
executive or administrative capacity. Where the question of want of jurisdiction is
not patent, a writ of prohibition will not lie as a matter of course.183
Mere citing of
a wrong provision of law in notice or order may not be sufficient to maintain a writ
of prohibition.184
The petitioner is expected to demonstrate total absence of
jurisdiction on the part of the officer or authority complained against.185
The defect
of jurisdiction must be either a wrong assumption of jurisdiction or a palpable
excess in the exercise of that jurisdiction.186
4.15.3 Injunction and Writ of Certiorari
The jurisdiction to issue a writ of certiorari under Article 226 of the Constitution is
a supervisory jurisdiction. The Court exercises it not as an appellate court.187
The
findings of fact reached by an inferior court or tribunal as a result of the
appreciation of evidence are not re-opened or questioned in writ proceedings.188
An error of law which is apparent on the face of the record can be corrected by a
writ, but not an error of fact, however grave it may appear to be.189
In regard to a
finding of fact recorded by a tribunal, a writ can be issued if it is shown that in
recording the said finding, the Tribunal had erroneously refused to admit
admissible and material evidence, or had erroneously admitted inadmissible
evidence which has influenced the impugned finding. Again if a finding of fact is
based on no evidence, that would be regarded as an error of law which can be
182
C. Sastrulu v. Govt. of A.P. AIR 1969 A.P. 59. 183
S. C. Sarkar, Code of Civil Procedure, Wadhwa and Co., 11th
Edn., 2006. 184
C.M. Row, Law on Injunctions, (Ed. K. Swami), Lexis Nexis Butterworths, 8th
Edn., 2003. 185
Story, Equity Jurisprudence, 12th
Edn. 186
Pomeroy, Equity Jurisprudence, 4th
Edn. 187
Babu v. Deputy Director of Consolidation (1981) 4 SCC 246. 188
Mohd. Maqbool v. Chairman, District Recruitment Board AIR 1981 J&K 27. 189
New Prakash Transport Company v. Suwarna Transport Company Ltd. AIR 1957 SC 232.
269
corrected by a writ of certiorari.190
A finding of fact recorded by the Tribunal
cannot be challenged on the ground that the relevant and material evidence
adduced before the Tribunal is insufficient or inadequate to sustain a finding. The
adequacy or sufficiency of evidence led on a point and the inference of fact to be
drawn from the said finding are within the exclusive jurisdiction of the Tribunal.191
Certiorari is employed in the following instances:192
a. For correcting errors of jurisdiction, that is when an inferior Court or Tribunal
acts without jurisdiction or in excess of it or refuses to exercise it.
b. Where the Court or Tribunal acts illegally in the exercise of its undoubted
jurisdiction, e.g. when it decides without giving opportunity to the parties to be
heard, or when the Court or Tribunal violates the principles of natural justice.
c. When the order of inferior tribunal is shown to suffer from an error which is
apparent on the face of the record. The High Court in issuing a writ of certiorari
acts in exercise of supervisory, and not appellate jurisdiction.
The High Court does not review or reweigh the evidence upon which the
determination of the inferior tribunal purports to be based.193
The Court demolishes
the order which it considers to be without jurisdiction or palpably erroneous, but
does not substitute its own view for those of the inferior tribunal.194
One of the
principles on which certiorari is issued is where the Court acts illegally and there is
error on the face of record. If the Court usurps the jurisdiction, the record is
corrected by certiorari. Where the judgment is illegal and in clear violation of law
the High Court should issue a writ of certiorari to quash the judgment and not
direct the party to file a suit for declaration that the decree is null and void.195
In a petition seeking a writ of certiorari, injunction may be granted so as to stay the
operation of the Court order. Upon grant of such injunction, the applicability of the
order is suspended alongwith all necessary consequences including
disqualifications arising therefrom. For instance where a Government Servant has
been convicted for an offence, but the order of conviction has been stayed by the
190
A.K. Kraipak v. Union of India AIR 1970 SC 150. 191
Syed Yakoob v. K.S. Radhakrishnana AIR 1964 SC 477. 192
Gullapalli Nageswara Rao v. A.P. State Road Transport Corporation AIR 1959 SC 308. 193
Narendra Singh Shekhawat v. S.T.A.T., Jaipur AIR 1981 Raj 93. 194
M.P. State Road Transport Corporation v. Industrial Court, MP (1978) MPLJ 34. 195
State of Madhya Pradesh v. Babu Lal AIR 1977 SC 1718.
270
appellate court, the conviction cannot manifest into deemed suspension under
Service Rules.196
The court seized of a matter praying for a writ of certiorari may
also exercise the power of an interim injunction like any other civil court.197
An
order of injunction may also be issued in place of a writ of certiorari.198
4.15.4 Injunction and Writ of Mandamus
Mandamus is the most valuable and essential remedy in the administration of
justice but it can only be resorted to in the absence of some more appropriate
ordinary remedy. The relief of injunction is essentially a preventive remedy
whereas the writ of mandamus is a remedial one.199
A writ of mandamus will not
be issued in a case where there is an equally efficacious and beneficial remedy and
this remedy is a discretionary one. A writ of mandamus will not lie in respect of a
mere money claim.200
The term 'injunction' and 'mandamus' present several well-defined points of
difference. Mandamus is strictly a legal remedy, while the remedy of injunction is
solely equitable and cognizable in no other forum than a Court of equity.
Mandamus is a remedy to compel action, while injunction is a remedy to prevent
action.201
Mandamus is not the proper remedy where the petitioner does not ask
that the defendant be compelled to do an act, but demands on the contrary, that he
be forbidden to do certain acts, and that mandamus cannot be made to perform the
office of an injunction. On the other hand, mandamus and not injunction is
ordinarily the proper remedy where nothing is sought but the enforcement of a
legal duty, although under some circumstances, a mandatory injunction will issue
to compel the performance of a duty of this character, if for any reason mandamus
is not available.202
At the same time, in some cases, a mandatory injunction has
been held equivalent to mandamus and is governed by like consideration.203
196
Rama Reddy v. Chairman, Sircilla Co-operative Agricultural Dev. Bank AIR 1982 AP 20. 197
Brojendra Nath Biswas v. State of West Bengal AIR 1981 Cal. 220. 198
Baby v. Nathi AIR 1982 Karn. 262. 199
Snell, Principles of Equity, 27th Edn.
200 Anand and Iyer, The Specific Relief Act, 1963, Delhi Law House, 11
th Edn. 2004.
201 Kerr, Injunctions, 6
th Edn.
202 Trivedi, J.T. and Trivedi, Himanshu J. “Abuse of the process of injunction”, Gujarat Law
Herald, Feb-Mar 1994, Vol. 14 p.11. 203
Rao, V. Tirumala, “Injunction as a judicial process”, Andhra Law Times, 2004, Vol. 4 p. 13.
271
4.16 THE PUBLIC INTEREST DOCTRINE OF EQUITY (IMPACT ON
THIRD PARTIES)
4.16.1 Notion of Public Interest
The concept of ‘public interest’ is easier described that defined. It refers to the
"common well-being" or "general welfare." The Random House Dictionary
describes public interest as "1. the welfare or well-being of the general public;
commonwealth. 2. appeal or relevance to the general populace: a news story of
public interest." Economist Lok Sang Ho has argued204
that public interest must be
assessed impartially and therefore defines public interest as the "ex ante welfare of
the representative individual." Under a thought experiment, assuming that there is
an equal chance for one to be anyone in society, and thus could benefit or suffer
from a change, public interest is by definition enhanced whenever that change is
preferred to the status quo ex ante. This approach is "ex ante" in the sense that the
change is not evaluated after the fact, but assessed before the fact without knowing
whether one would actually benefit or suffer from it. This approach follows the
"veil of ignorance" approach, which was first proposed by John Harsanyi but
popularized by John Rawls in his treatise Theory of Justice.205
The evolution of
this approach can be traced to John Stuart Mill, who in his letter to George Grote,
explained: “human happiness, even one’s own, is in general more successfully
pursued by acting on general rules, than by measuring the consequences of each
act; and this is still more the case with the general happiness, since any other plan
would not only leave everybody uncertain what to expect, but would involve
perpetual quarrelling.”206
The definitions of public interest based on the ex post or consequential approach
have been widely discussed. Disparate views have been expressed on the number
of persons who must benefit from a proposed action for it to be declared to be in
the public interest: at one extreme, an action has to benefit every single member of
society in order to be truly in the public interest; at the other extreme, any action
can be in the public interest as long as it benefits some of the population and harms
204
Ho, Lok Sang, Public Policy and the Public Interest, Routledge, 2011. 205
Rawls, John (1971) A Theory of Justice, Cambridge: Harvard University Press. 206
Francis E.Mineka and Dwight N.Lindley, The Collected Works of John Stuart Mill, Volume XIV - The Later Letters of John Stuart Mill 1849-1873 Part I, Toronto: University of Toronto Press, London: Routledge and Kegan Paul,Published 1972, Vol. XV, p.762, 1862.
272
none. Undoubtedly, none of these views are accepted from a pragmatic viewpoint,
since most proposed acts involve some people benefitting and some not. Nicholas
Kaldor and John Hicks offer two alternative but related ways to resolve the
problem. They advocate that the underlying idea is that the gainers must gain more
than the losers lose. Kaldor states that the gainers must be able to compensate all
the losers and still go along with the change, if the change is in public interest. But
it ought to be manifestly clear that some acts in public interest may not benefit
some individuals. Yet, unarguably, some interests are unique to the public. These
are matters in which the community at large has some pecuniary interest, or some
interest by which their legal rights or liabilities are affected. It is the interest shared
by the citizens generally in affairs of local, State or national government. The
concept of ‘public interest’ is central to policy debates, politics, democracy and the
nature of government itself. The question however is whether public interest has
any concern with the judicial arm of the State too.
4.16.2 Relevance of Public Interest in determination of Private Disputes
Civil courts are empowered to decide disputes of civil nature presented to it in the
form of suits.207
These suits may relate to either the status of a person or thing or
its disposition. The inter se rights of the parties to the suit are determined and
declared by the Court. Injunction, being an equitably remedy, 'acts in personam'208
.
The order is binding on the parties to the suit and their representatives, unless
reversed. There has been considerable debate as to whether the court should take
into account the effect that an injunction might have on third parties. It is often
argued that while deciding cases, courts are required to examine only the merits of
the rival parties in the backdrop of the prevailing law. Courts are not supposed to
examine the potential impact of its decision on entities who are not parties to the
lis. It is widely believed that Courts should dispassionately render their decisions
without being swayed by the interest of third parties including the public at large.
In other words, it is argued that public interest ought to have no bearing on the
decision of the Court. The contrary view expressed by some jurists209
is that it is
obligatory for the Court to consider the injury or inconvenience which may be
207
Section 9 of Code of Civil Procedure, 1908. 208
Desouza v British South Africa Co (1892) 2 QB 358: Hawthorne, Graham, v Massey 23 Ch D 743; Mahadeo v Ramchandra ILR 46 Bom 108; Arunachela v Mathiali 23 Mad LJ 679.
209 Woodroffes on Injunctions, 1964, s 19, p 48; Pomeroy's Equity Jurisprudence, s 134.
273
caused to the public in case injunction is granted.210
It is argued that the
discretionary nature of the courts’ jurisdiction to grant an injunction entitles the
court to take into account all relevant matters in deciding whether to grant an
injunction. It is artificial not to take such matters into account where an injunction
is going to have an obvious wider impact than simply the plaintiff and the
defendant. This debate invokes equitable considerations and must be examined.
Civil courts undertake complex legal work in dealing with disputes between
persons and other bodies. Civil litigation may encompass class actions in which
the resolution of the dispute would aid a group of similar consumers. On occasion
this litigation may involve suits for injunctive action by the government or private
interests broadly affecting the public or test suits where the immediate private
interest may be small but potential impact is larger for the general public. This is
where the power of injunction steps in.
The grounds for grant or refusal of a preliminary injunction in India have
traditionally been the following:
(1) that the plaintiff has a prima facie case and has prima facie evidence that there
has been an infringement;
(2) that balance of convenience is in favour of the plaintiff; and
(3) the injury must be irreparable and it must be continuous.
"Public interest" did not figure as a relevant factor to influence the decision of the
court. This position has however undergone a paradigm shift, as will be
demonstrated hereinafter through recent decisions.
4.16.3 Judicial Pronouncements
On interim injunctions, in the case of Shiv Kumar Chadha Vs. Municipal
Corporation of Delhi211
the Supreme Court observed:
"Under the changed circumstance with so many cases pending in Courts, once an
interim order of injunction is passed, in many cases, such interim orders continue
210
This view was taken in the case of Blienkopf v Desmonies L Ins Co 160 Iowa 629. 211
(1993) 3 SCC 161.
274
for months; if not for years. At final hearing while vacating such interim orders of
injunction in many cases, it has been discovered that while protecting the plaintiffs
from suffering the alleged injury, more serious injury has been caused to the
defendants due to continuance of interim orders of injunction without final
hearing. It is a matter of common knowledge that on many occasions even public
interest also suffers in view of such interim orders of injunction, because persons
in whose favour such orders are passed are interested in perpetuating the
contraventions made by them by delaying the final disposal of such applications.
The Court should be always willing to extend its hand to protect a citizen who is
being wronged or is being deprived of a property without any authority in law or
without following the procedure which are fundamental and vital in nature. But at
the same time the judicial proceedings cannot be used to protect or to perpetuate a
wrong committed by a person who approaches the Court."
The Supreme Court in Ramniklal N. Bhutta v. State of Maharashtra212
held as
under:
"It is, however, recognised on all hands that the infrastructure necessary for
sustaining such a pace of progress is woefully lacking in our country. The means
of transportation, power and communications are in dire need of substantial
improvement, expansion and modernisation. These things very often call for
acquisition of land and that too without any delay. It is, however, natural that in
most of these cases, the persons affected challenge the acquisition proceedings in
courts. These challenges are generally in the shape of writ petitions filed in High
Courts. Invariably, stay of acquisition is asked for and in some cases, orders by
way of stay or injunction are also made. Whatever may have been the practices in
the past, a time has come where the courts should keep the larger public interest in
mind while exercising their power of granting stay/injunction. The power under
Article 226 is discretionary. It will be exercised only in furtherance of interests of
justice and not merely on the making out of a legal point. And in the matter of land
acquisition for public purposes, the interests of justice and the public interest
coalesce. They are very often one and the same. Even in a civil suit, granting of
injunction or other similar orders, more particularly of an interlocutory nature, is
equally discretionary. The courts have to weigh the public interest vis-à-vis the
212
AIR 1997 SC 1236.
275
private interest while exercising the power under Article 226 indeed any of their
discretionary powers. It may even be open to the High Court to direct, in case it
finds finally that the acquisition was vitiated on account of non-compliance with
some legal requirement that the persons interested shall also be entitled to a
particular amount of damages to be awarded as a lumpsum or calculated at a
certain percentage of compensation payable."
In the case of Mahadeo Savlaram Shelke v. Pune Municipal Corporation213
the
Supreme Court again emphasized that public interest must not be sacrificed at the
altar of private benefit. It observed:
“It is common experience that injunction normally is asked for and granted to
prevent the public authorities or the respondents to proceed with execution of or
implementing scheme of public utility or granted contracts for execution thereof.
Public interest is, therefore, one of the material and relevant considerations in
either exercising or refusing to grant ad interim injunction. While exercising the
discretionary power, the court should also adopt the procedure of calling upon the
plaintiff to file a bond to the satisfaction of the court that in the event of his failing
in the suit to obtain the relief asked for in the plaint, he would adequately
compensate the defendant for the loss ensued due to the order of injunction
granted in favour of the plaintiff. Even otherwise the court while exercising its
equity jurisdiction in granting injunction has also jurisdiction and power to grant
adequate compensation to mitigate the damages caused to the defendant by grant
of injunction restraining the defendant to proceed with the execution of the work
etc., which is retrained by an order of injunction made by the court. The pecuniary
award of damages is consequential to the adjudication of the dispute and the result
therein is incidental to the determination of the case by the court. The pecuniary
jurisdiction of the court of first instance should not impede nor be a bar to award
damages beyond it pecuniary jurisdiction. In this behalf, the grant or refusal of
damages is not founded upon the original cause of action but the consequences of
the adjudication by the conduct of the parties, the court gets inherent jurisdiction
in doing ex debito justitiae mitigating the damage suffered by the defendant by the
act of the court in granting injunction restraining the defendant from proceeding
with the action complained of in the suit It is common knowledge that injunction is
213
(1995) 3 SCC 33.
276
invariably sought for in laying the suit in a court of lowest pecuniary jurisdiction
even when the claims are much larger than the pecuniary jurisdiction of the court
of first instance, may be, for diverse reasons..
Public purpose of removing traffic congestion was sought to be served by
acquiring the building for widening the road. By orders of injunction, for 24 years
the public purpose, was delayed. As a consequence execution of the project has
been delayed and the costs now stand mounted. The courts in the cases where
injunction are to be granted should necessarily consider the effect on public
purpose thereof and also suitably mould the relief. In the event of the plaintiffs
losing the suit ultimately, they should necessarily bear the consequences, namely,
escalation of the cost or the damages the Corporation suffered on account of
injunction issued by the courts. Appellate court had not adverted to any of the
material aspects of the matter. Therefore, the High Court has rightly, though for
different reasons, dissolved the order of ad interim injunction. Under these
circumstances, in the event of the suit to be dismissed while disposing of the suit
the trial court is directed to assess the damages and pass a decree for recovering
the same at pro rata against the appellants."
In the case of Hoffmann-La Roche Ltd. & Anr. v. Cipla Ltd.,214
the Delhi High
Court denied a temporary injunction on a cancer drug (erlotinig) that Cipla was
manufacturing despite the existence of a patent owned by OSI (and licensed to
Roche). The judge’s decision for the first time in Indian courts extrapolated the
public interest consideration in determining the grant or denial of an interim
injunction. Roche filed a suit alleging that Cipla had infringed the patent of its drug
Tarceva. It was denied interim injunction. The Court found Roche to have a prima
facie and an arguable case in its favour. The court then took into consideration the
pricing of the life saving drug, that Cipla’s drug Erlocip was priced at one-third the
price of Roche’s Tarceva. In light of this, the Court invoked the aspect of public
interest to determine the balance of convenience. This tilted the scales in favour of
Cipla. The Appellate Court concurred with the Single Judge on the aspect of access
to public at large. It noted that as patent litigation gains pace, the course that
interim injunctions shall take cannot be ignored. It was observed:
“Undoubtedly, India entered into the TRIPS regime, and amended her laws to
214
2009 (159) DLT 243.
277
fulfill her international obligations, yet the court has to proceed and apply the laws
of this country, which oblige it to weigh all relevant factors. In this background the
Court cannot be unmindful of the right of the general public to access life saving
drugs which are available and for which such access would be denied if the
injunction were granted….Another way of viewing it is that if the injunction in the
case of a life saving drug were to be granted, the Court would in effect be stifling
Article 21 [right to life] so far as those would have or could have access to are
concerned.”
The Roche-Cipla215
litigation is indeed a reflection of the judicious application of
the tenets governing the grant of an injunction, as evolved and practiced among
Indian courts.
In Colgate Palmolive (India) Ltd. Vs. Hindustan Lever Ltd.,216
the Supreme Court
delineated the considerations which ought to weigh with the Court hearing the
application for grant of injunction as below:
a) Extent of damages being an adequate remedy;
b) Protection of the plaintiff’s interest for violation of his rights however having
regard to the injury that may be suffered by the defendants by reason therefor ;
c) The court while dealing with the matter ought not to ignore the factum of
strength of one party’s case being more than other’s;
d) No fixed rules or notions ought to be had in the matter of grant of injunction but
on the facts and circumstances of each case- the relief being kept flexible;
e) Whether on refusal of the injunction the plaintiff would suffer irreparable loss
and injury keeping in view the strength of the parties’ case;
f) Balance of convenience or inconvenience ought to be considered as an
important requirement even if there is a serious question or prima facie case in
support of the grant;
g) Whether the grant or refusal of injunction will adversely affect the interest of
general public which can or cannot be compensated otherwise.
The Court thus recognized public interest as a relevant factor to be taken into
account while deciding whether to grant an injunction.
215
Supra. 216
AIR 1999 SC 3105.
278
In Nagar Nigam and Ors. v. Udai Singh And Ors.217
, it was held by the Allahabad
High Court that under the principle of balance of convenience, the Court may, in
addition to considering the public convenience, consider the effect of an injunction
on the rights of third persons. It has been further stated that where the land is being
used for some public purpose like sullage farm, collecting rain waters and for the
purpose of drainage in the city, the public interest as also the rights of third persons
is to be considered while considering the question of balance of convenience.
Further, the court relied upon the decision in the case of U.P. Avas Evam Vikas
Parishad vs N. V. Rajgopalan Acharya218
where it was observed that public
convenience is required to be considered while examining the question of balance
of convenience.
The Gauhati High Court in the case of State of Assam v. M.S. Associates219
observed that “public interest or public policy is also to be considered while
evaluating the question of granting injunction”.
In Smt Ishmali Devi & Ors vs Delhi Development Authority,220
it was observed by
the High Court of Delhi, that a time has come where courts should keep the larger
public interest in mind while exercising their power of granting stay/injunction. In
a civil suit, granting of injunction or other similar orders of an interlocutory nature
is discretionary. The courts have to weigh public interest vis-à-vis private interest
while exercising this power.
In Khushwant Singh and Anr. v. Maneka Gandhi,221
the Court vacated the
injunction granted against the defendants from publishing, circulating or selling the
biography of the respondent and her family. The Division Bench relied upon the
following observations of Lord Denning in Woodword v. Hutch Inc222
:
“The reason is because the interest of the public in knowing the truth outweighs
the interest of a plaintiff in maintaining his reputation.”
217
AIR 2003 All 34. 218
AIR 1989 All 175. 219
AIR 1994 Gauhati 105. 220
CS(OS) No. 1075/2000 dated 24th
August, 2009. 221
AIR 2002 Delhi 58. 222
(1977) 2 All ER 751.
279
In Smt. Chandra Prabha v. State of Haryana223
the appellant filed a suit for
permanent injunction against the State of Haryana alleging that under self
employment scheme of the Government, the appellant moved application dated
30.9.1988 to Municipal Committee for allotment of 10 meters x 10 meters site for
running a restaurant and subsequently the appellant was allotted the land. The
appellant obtained loan from various sources and started running the restaurant in
the disputed site. Electricity connection was also obtained by the appellant. On
18.4.1993, Municipal Committee demolished appellant's restaurant. She started the
restaurant again at the disputed site. On 28.4.1993, the defendants again threatened
to remove the appellant's restaurant. Accordingly, the appellant filed suit on
28.4.1993 seeking permanent injunction restraining the defendants from
demolishing the appellant's restaurant at the disputed site and also prayed that if
the respondent succeeds in doing so, then relief of mandatory injunction for
restoration of restaurant and damages be also granted. Defendants no. 1 and 2, inter
alia, pleaded that the plaintiff has encroached upon the land of PWD illegally and
has constructed khokha measuring 12 feet x 10 feet and has placed her benches,
stools etc. in front of the khokha, thereby causing hindrance in smooth flow of
traffic. The Punjab and Haryana High Court declined the prayed for injunction and
observed that “in a case involving public property and public interest, the courts
while granting injunction have also to bear in mind as to whether the grant of
injunction would be conducive or detrimental to public interest. In the instant case,
grant of injunction in favour of the appellant would certainly be detrimental to
public interest”.
In Unique Alliance Industries, Goa vs Anupama Agencies, Trichur and Ors224
, the
Kerala High Court held that “grant of temporary injunction, as noticed, is purely a
discretionary exercise of power by the court. This power has to be exercised by the
court fairly and equitably. It can refuse temporary injunction against a Bank if the
court feels that granting of such injunction will result in gross injustice to the Bank
or the public at large. In certain cases public interest assumes much importance at
the realms of granting or refusing the temporary injunction in the case of banking
institutions”.
223
RSA NO. 3610/2002 (O&M) dated 6th
April 2010. 224
AIR 1995 Ker 52.
280
In Jet Airways (I) Ltd. vs Mr. Jan Peter Ravi Karnik225
plaintiff seeks an order of
permanent injunction restraining the defendant from taking up or continuing any
employment until 11th
October, 2005 with any other airline, including Sahara
Airlines for the purpose of operating aircraft on the basis of the endorsement of the
license obtained as a result of the training provided by the plaintiff. The court held
that “It is a settled principle of law that the relief of injunction should not be
granted if it would compel the employee to serve the employer or when the grant of
injunction will lead to the employee remaining idle. Grant of an injunction which
would lead to either of these two results would not be in public interest”.
The Supreme Court in Mahadeo Savlaram Shelkae v. Pune Municipal
Corporation226
held “it is common experience that injunction normally is asked for
and granted to prevent public authorities from proceeding with execution of or
implementing scheme of public utility. Public interest is therefore one of the
material relevant considerations in either exercising or refusing to grant ad-
interim injunction”. The Supreme Court further observed that “Courts should
necessarily consider the effect on public purpose and should suitably mould the
relief”.
4.16.4 Opinions of Eminent Jurists and Academicians
The view that public interest must be borne in mind by court deciding matters of
injunction is supported not only by judicial precedents but also by eminent jurists
and writers.
R.A. Buckley has stated in his treatise as under:
“A plaintiff may still be deprived of an injunction in such a case on general
equitable principles under which factors such as the public interest may, in an
appropriate case, be relevant. It is of interest to note, in this connection, that it has
not always been regarded as altogether beyond doubt whether a plaintiff who does
thus fail to substantiate a claim for equitable relief could be awarded
damages".227
225
2000 (4) BomCR 487. 226
(1995) 3 SCC 33. 227
Buckley R. A., Modern Law Review, Vol 44, 1981 Edition, at page 214.
281
Zuckerman has noted:
"If the plaintiff is likely to suffer irreparable or uncompensable damage, no
interlocutory injunction will be granted, then, provided that the plaintiff would be
able to compensate the defendant for any unwarranted restraint on the defendant's
right pending trial, the balance would tilt in favour of restraining the defendant
pending trial. Where both sides are exposed to irreparable injury pending trial, the
courts have to strike a just balance".228
He has further observed:
"The court considering an application for an interlocutory injunction has four
factors to consider: first, whether the plaintiff would suffer irreparable harm if the
injunction is denied; secondly, whether this harm outweighs any irreparable harm
that the defendant would suffer from an injunction; thirdly, the parties' relative
prospects of success on the merits; fourthly, any public interest involved in the
decision. The central objective of interlocutory injunctions should therefore be
seen as reducing the risk that rights will be irreparably harmed during the
inevitable delay of litigation".229
David Bean has stated as follows:
"If the plaintiff obtains an interlocutory injunction, but subsequently the case goes
to trial and he fails to obtain a perpetual order, the defendant will meanwhile have
been restrained unjustly and will be entitled to damages for any loss he has
sustained. The practice has therefore grown up, in almost every case where
interlocutory injunction is to be granted, of requiring the plaintiff to undertake to
pay any damages subsequently found due to the defendant as compensation if the
injunction cannot be justified at trial. The undertaking may be required of the
plaintiff in appropriate cases in that behalf.230
Joyce has noted:
“Upon a final judgment dissolving an injunction, a right of action upon the
injunction bond immediately follows, unless the judgment is superseded. A right to
228
Zuckerman A.A.S., "Mareva Injunctions and Security for Judgment in a Framework of Interlocutory Remedies", The Law Quarterly Review Vol 109, at page 432 (at p. 446).
229 Ibid, p. 447.
230 David Bean, "Injunctions" 1st Edn, at page 22.
282
damages on dissolution of the injunction would arise at the determination of the
suit at law".231
4.16.5 Position in United States of America
In the US too, a party seeking a preliminary injunction must demonstrate the
existence of the following ingredients:
� That there is a substantial likelihood of success on the merits of the case,
� That they face a substantial threat of irreparable damage or injury if the
injunction is not granted,
� That the balance of harms weighs in favor of the party seeking the preliminary
injunction
� That the grant of an injunction would serve the public interest.232
The expression "balance of harms" refers to threatened injury to the party seeking
preliminary injunction as compared to the harm that the other party may suffer
from the injunction. The United States Supreme Court revisited the requirements
for obtaining a preliminary injunction in Winter v. NRDC Inc233
. The Court
changed one requirement slightly:
"A plaintiff seeking a preliminary injunction must establish that he is likely to
succeed on the merits, that he is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his favor, and that an
injunction is in the public interest."
4.16.6 Position in United Kingdom
In England the authorities are conflicting on this point. In Miller v Jackson234
(1977), Lord Denning refused to grant an injunction to prevent cricket balls from
the local club flying into the plaintiff’s garden. Lord Denning felt that the
community interest in playing cricket could be taken into account and refused the
injunction, awarding damages instead. The decision was criticised on the grounds
231
Joyce, Injunctions, Vol. 1, paragraph 177 at page 293. 232
Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008). 233
555 U.S. 7 (2008). 234
[1977] QB 966.
283
that Lord Denning was essentially permitting the cricket club to buy the plaintiff’s
right not to be subjected to these nuisances.
In Bellew v Cement Ltd.235
(1948), an injunction was sought to restrain quarrying
works. One of the grounds on which the defendant sought to resist the injunction
was the significant public inconvenience that it was going to cause. The defendants
were the sole manufacturers of cement in the country and their products were
extremely important to the building industry. The Supreme Court however refused
to take this matter into account stating that the public interest was irrelevant since
this was a matter of private law. Black J dissented and held that although a public
convenience could not justify the refusal of a remedy for a nuisance that was not to
say that it could not be taken into account in deciding how to remedy the nuisance.
In Kennaway v Thompson236
(1980) the court indicated its disapproval of Lord
Denning’s approach. Here similar arguments were made regarding the public
recreational interest in motor boats being available for racing on a lake. The Court
of Appeal rejected this argument adopting an approach similar to the Bellew
decision in this jurisdiction.
Despite Bellew there have been cases in this jurisdiction where the courts have
looked beyond the rights of the parties actually involved in the particular
application for an injunction. In Howard v Commissioners for Public Works237
(1993) O’Hanlon J refused an injunction to restrain development works taking
place on an interpretative centre in the Burren. In reaching that decision he took
into account the fact that restraining the works would have a serious impact on the
employment levels in the area since many local people were employed in the
project.
In Dun Laoghaire Rathdown CC v Shackleton238
(2002) the court in granting an
injunction preventing an arbitrator from hearing a claim for compensation said it
had been influenced by public interest considerations. It is however important to
note that unlike the earlier cases both these cases were not restricted to private
rights.
235
[1948] IR 61. 236
[1980] 3 All ER 329. 237
[1994] 1 IR 101. 238
[2002] IEHC 2.
284
4.16.7 Assessment
It is thus no longer res integra that in granting or refusal of injunctions, be it
interim or permanent, public interest is relevant. As the Supreme Court and other
Courts have repeatedly highlighted, where public interest was at stake, it must
outweigh the interest of the parties. Courts should keep the larger public interest in
mind while exercising their power of granting stay/injunction. Public interest is
considered to be superior to private interest.239
There are, however, questions that remain unanswered. While nearly everyone
claims that aiding the common well-being or general welfare is positive, there is
little, if any, consensus on what exactly constitutes the public interest, or whether
the concept itself is a coherent one. There are often cases where both rival litigants
are able to demonstrate that either decision is likely to benefit certain sections of
the society. How is this factor to be weighed in that circumstance is yet to be
evaluated. The ground of public interest should favour the greater good or the
greater number of people who will be affected, is not yet clear from decisions of
the courts. What should not be lost sight of is that the judiciary is hardly equipped
to take a decision what would further greater public interest. It was never intended
to be part of the welfare scheme and was therefore not invested with the requisite
apparatus. It cannot substitute its opinion for that of the executive or the legislature
as to which decision would advance public interest. It is open to debate whether the
judiciary is only to enforce the law as it stands and whether it ought to take a moral
call on facts of cases.
Despite the shortcomings, it cannot be denied that upholding and protection of
public interest in deciding whether to grant an injunction, is a salutary principle
and has been a watershed in civil jurisprudence. The doctrine of public interest acts
as a reminder that a Court of equity would not be justified in passing an inequitable
decree. Equity holds a discreet and beneficent hand and cannot be pressed into
service at the expense of public loss and mischief. Defining the scope of public
interest in the decision making process, it may be summed up, as succintly done by
the Hon’ble Supreme Court that whatever furthers the general interest of the
community as opposed to a particular interest of the individual must be regarded as
239
Panchkuian Road Refugee Vyapar Sangh Vs. DMRC; 130 (2006) DLT 553.
285
a public purpose and emphasis must unmistakably be on the community.240
4.17 ABUSE OF THE PROCESS OF INJUNCTION
4.17.1 Falsehood in Civil Litigation
For many centuries, Indian society cherished two basic values of life – ‘Satya'
(truth) and ‘Ahimsa' (non-violence). Mahavir, Gautam Buddha and Mahatma
Gandhi guided the people to ingrain these values in their daily life. Truth
constituted an integral part of the justice-delivery system which was in vogue in
pre-Independence era and the people used to feel proud to tell truth in the courts
irrespective of the consequences. However, post-Independence period has seen
drastic changes in our value system. The materialism has over-shadowed the old
ethos and the quest for personal gain has become so intense that those involved in
litigation do not hesitate to take shelter of falsehood, misrepresentation and
suppression of facts in the court proceedings. In the last four decades, a new creed
of litigants has cropped up. Those who belong to this creed do not have any respect
for truth. They shamelessly resort to falsehood and unethical means for achieving
their goals. In order to meet the challenge posed by this new creed of litigants, the
courts have, from time to time, evolved new rules and it is now well established
that a litigant, who attempts to pollute the stream of justice or who touches the pure
fountain of justice with tainted hands, is not entitled to any relief, interim or
final.241
4.17.2 Fraudulent Assertions and Misrepresentation in Pleadings
Indian Courts are facing a crisis being afflicted by a malaise which is clogging the
wheels of the justice delivery system. Often litigants are found to make false
averments of facts in the pleadings and raise untenable contentions with impunity.
Thereafter litigation, on controversies supposedly arising out of these false
averments are dragged on for years in the hope that the other side will succumb to
buy peace. If the other side does not so settle, in the end, he is hardly compensated
and remains a loser. There is little fear of law in the minds of the unscrupulous.
This has been remarked to be one of the main problems plaguing the judicial
system. Courts have in numerous cases passed observations on how litigation with
240
Sooraram Pratap Reddy Vs. District Collector, Ranga Reddy District (2008) 9 SCC 552. 241
Dalip Singh v. State of U.P. (2010) 2 SCC 114.
286
false claims is filed, or false defences are put forward, and then continues to
remain pending, consuming the Court's time and resources, due to which courts are
overloaded and there is delay in disposal.242
If there is falsehood in the pleadings (plaint, written statement or replication), the
task of the Court is also multiplied and a lis that could be decided in a short time,
then takes several years. It is the legal duty of every party to state in the pleadings
the true facts and if they do not, they must suffer the consequences and the Court
should not hold back from taking action. A similar sentiment had been expressed
by the Karnataka High Court in A. Hiriyanna Gowda v. State of Karnataka,243
in
the following words:
“It has unfortunately become the order of the day, for false statements to be made
in the course of judicial proceedings even on oath and attempts made to
substantiate these false statements through affidavits or fabricated documents. It is
very sad when this happens because the real backbone of the working of the
judicial system is based on the element of trust and confidence and the purpose of
obtaining a statement on oath from the parties or written pleadings in order to
arrive at a correct decision after evaluating the respective positions. In all matters
of fact therefore, it is not only a question of ethics, but an inflexible requirement of
law that every statement made must be true to the extent that it must be verified
and correct to the knowledge of the person making it. When a client instructs his
learned Advocate to draft the pleadings, the basic responsibility lies on the clients
because the Advocate being an officer of the court acts entirely on the instructions
given to him, though the lawyer will not be immune from even a prosecution. If
the situation is uncertain it is for his client to inform his learned Advocate and
consequently if false statements are made in the pleadings the responsibility will
devolve wholly and completely on the party on whose behalf those statements are
made.”
Unscrupulous persons file false claims or defences with a view that the other
person would get tired and would then agree to compromise with him by giving up
some right or paying some money. If the other party is not able to continue
242
Delhi High Court in Sanjeev Kumar Mittal v. The State Test.Cas.No.19/2004 decided on 18th
November, 2010. 243
1998 Cri.L.J. 4756.
287
contesting the case or the Court by reason of falsehood falls into an error, the
wrong succeeds. Many times, the other party compromises, or at other times, he
may continue to fight it out. But as far as the party in the wrong is concerned, even
if these litigants ultimately lose the lis, they become the real victors and have the
last laugh.
Pleadings thus continue to be taken very lightly and false and incorrect statements
are tended to be made in the course of judicial proceedings, and fabricated
documents are produced. Even in cases where this comes to light of the Court the
party seems to get away because Courts do not take necessary counter-action. The
disastrous result of such leniency or indulgence is that it sends out wrong signals.
It creates almost a licence for litigants and their lawyers to indulge in such serious
malpractices because of the confidence that no action will result. It is a matter of
propriety and is very necessary that an example be made of persons who are
indulging in such malpractices which undermine the very administration of justice
dispensation system and the working of the Courts. This will have a deterrent
effect on others.
4.17.3 Frivolous Litigation
Similarly, frivolous defences and frivolous litigation have become calculated
ventures involving no risks. One has to engage professionals to prolong the
litigation so as to deprive the rights of a person and enjoy the fruits of illegalities.
In such cases where Court finds that using the Courts as a tool, a litigant has
perpetuated illegalities or has perpetuated an illegal possession, the Court must
impose costs on such litigants which should be equal to the benefits derived by the
litigant and harm and deprivation suffered by the rightful person so as to check the
frivolous litigation and prevent people from reaping a rich harvest of illegal acts
through the Courts.
Frivolous litigation is one of the factors responsible for overflowing of court
dockets. In frivolous litigation the case is dragged on as long as possible. Even if
such litigants ultimately loose the lis, they become the real victors and have the last
laugh. This class of people who commit illegal acts by obtaining stays and
injunctions from the Courts must be made to pay the sufferer not only the entire
illegal gains made by them as costs to the person deprived of his right, but also
288
must be burdened with exemplary costs. Faith of people in judiciary can only be
sustained if the persons on the right side of the law do not feel that even if they
keep fighting for justice in the Court and ultimately win, they would turn out to be
a fool since winning a case after 20 or 30 years would make wrongdoer as real
gainer who had reaped the benefits for all those years. Thus, it becomes the duty of
the Courts to see that such wrongdoers are discouraged at every step and even if
they succeed in prolonging the litigation due to their money power, ultimately they
must suffer the costs of all these years long litigation. Despite settled legal
positions, the obvious wrong doers, use one after another tier of judicial review
mechanism as a gamble, knowing fully well that dice is always loaded in their
favour, since even if they lose, the time gained is the real gain. This situation must
be redeemed by the Courts.
4.17.4 The Remedy of Imposition of Costs
The justice delivery system has to be pure and should be such that the persons who
are approaching the Courts and filing the proceedings must be wary of using
fabricated documents and also of making false statements on oath. The court of
law has to ascertain the truth and render justice in accordance with the law. As
such, in order to establish truth, it is necessary for it to protect itself from being
misled by advocates and parties which may make it almost impossible to
administer effective and truthful justice to the litigants at large. People have
blatantly used fabricated documents for the purpose of achieving the desired results
even by misleading the Court and / or by making false statements or by using
fabricated documents. Such persons cannot escape penalties.244
One of the aims of every judicial system has to be to discourage unjust enrichment
using Courts as a tool. The costs imposed by the Courts must in all cases should be
the real costs equal to deprivation suffered by the rightful person.
Explaining restitution, in the case of South Eastern Coalfields Ltd. v. State of
M.P.,245
the Hon'ble Supreme Court said:
“In law, the term ‘restitution' is used in three senses:
244
Vijay Enterprises v. Gopinath Mahade Koli 2006 (4) Bom.C.R. 701. 245
(2003) 8 SCC 648 : AIR 2003 SC 4482.
289
(i) return or restoration of some specific thing to its rightful owner or status;
(ii) compensation for benefits derived from a wrong done to another; and
(iii) compensation or reparation for the loss caused to another.”
Restitution includes compensation and levy of costs. The Court, in Padmawati and
Ors. v. Harijan Sewak Sangh,246
imposed costs of Rs. 15.1 lakhs. Against this,
Special Leave to Appeal (Civil) No. 29197/2008 was preferred to the Supreme
Court. On 19.03.2010, the Hon'ble Supreme Court passed the following order:
“We have heard learned counsel appearing for the parties. We find no ground to
interfere with the well-considered judgment passed by the High Court. The Special
Leave Petition is, accordingly, dismissed.”
Padmawati's case (supra) was one where the wrongdoer was holding up delivery of
possession. There may also be cases where a party puts forward a false claim in
order to entangle someone else's property in the hope that he can, with court delays
and the needs of the other, one day, extract money for withdrawing the claim. A
similar treatment must be given to such litigants too.
Sections 35 and 35A of the Code of Civil Procedure, 1908 make award of costs a
discretionary power of Court and respectively fixes that compensatory costs for
vexatious claims and defences should not exceed Rs. 3,000. Whether the Court is
permitted to exceed the statutory limits fixed while awarding compensatory costs
was considered in the case of Ashok Kumar Mittal Vs. Ram Kumar Gupta247
succinctly decided by Supreme Court.
While deciding the SLP against the impugned judgment passed by Hon'ble High
Court of Delhi, the Hon'ble Supreme Court underlined that on account of loss of
judicial time costs imposed by the court should have been made payable to the
State, instead of remitting it to the Delhi High Court Legal Services Committee
since it is State that spends money on providing judicial infrastructure. Also, the
High Court had imposed exemplary costs of Rs. 1,00,000/- on both the parties. the
Apex Court stated that "the Order relating to costs may not strictly be correct”
since under Section 35 of the Code of Civil Procedure, award of costs is
246
(2008) DLT 411. 247
Special Leave Petition [Civil] Nos. 30991-30992/2008 dated January 9, 2009.
290
discretionary but subject to conditions and limitations whereas under Section 35A,
compensatory costs for vexatious claims and defences cannot exceed Rs. 3,000.248
4.17.5 Rejection of plaint
A suit which is an abuse of the process of law is required to be rejected at the very
threshold. That would essentially ‘nip the evil in the bud.’ In such cases, the court
must save expenses, achieve expedition and avoid the courts' resources being used
up without serving any useful purpose. A litigation which, in the opinion of the
court, is doomed to fail should not further be allowed to be used as a tool of
harassment. In the case of T. Arivandam v. T.V. Satyapal and Another,249
, the
Supreme Court held that if on a meaningful, not formal, reading of the plaint if is
manifestly vexatious and meritless, in the sense of not disclosing a clear right to
sue, the court should reject the plaint under Order VII Rule 11 of the Code of Civil
Procedure. In the case of Liverpool & London S.P.& I Association Ltd. Vs. Sea
Success I & Another250
it was held that when no cause of action is disclosed by the
plaint, courts should not unnecessarily protract the hearing of suit. In the case of
Saleem Bhai v. State of Maharashtra251
it was held with reference to Order 7 Rule
11 of the Code of Civil Procedure that the relevant facts which need to be looked
into for deciding an application are the averments in the plaint. The trial court can
exercise the power at any stage of the suit before registering the plaint or after
issuing summons to the defendant at any time before the conclusion of the trial.
For the purposes of deciding an application under clauses (a) and (d) of Order 7
Rule 11 of the Code, the averments in the plaint are germane: the pleas taken by
the defendant in the written statement would be wholly irrelevant at that stage. In
the case of I.T.C. Ltd. v. Debts Recovery Appellate Tribunal252
it was held that the
basic question to be decided while dealing with an application filed under Order 7
Rule 11 of the Code is whether a real cause of action has been set out in the plaint
or something purely illusory has been stated with a view to get out of Order 7 Rule
11 of the Code.
248
Reference may also be made to the 240th
Report on Costs in Civil Litigation of the Law Commission of India on 9
th May 2012.
249 (1977) 4 SCC 467.
250 (2004) 9 SCC 512.
251 (2003) 1 SCC 557.
252 (1998) 2 SCC 70.
291
The trial court must remember that if on a meaningful and not formal reading of
the plaint it is manifestly vexatious and meritless in the sense of not disclosing a
clear right to sue, it should exercise the power under Order 7 Rule 11 of the Code
taking care to see that the ground mentioned therein is fulfilled. If clever drafting
has created the illusion of a cause of action, it has to be nipped in the bud at the
first hearing by examining the party searchingly under Order 10 of the Code.
It is trite law that pleadings are not to be considered in isolation and the whole
plaint has to be read for the purpose of deciding whether it holds merit, or is a mere
vexatious or frivolous suit. As was observed by Supreme Court in Roop Lal Sethi
v. Nachhattar Singh Gill253
only part of the plaint cannot be rejected and if no
cause of action is disclosed, the plaint as a whole must be rejected. In the case of
Raptakos Brett & Co. Ltd. v. Ganesh Property254
too, it was observed that the
averments in the plaint as a whole have to be seen to find out whether clause (d) of
Rule 11 of Order 7 was applicable.
The real object of Order 7 Rule 11 of the Code is to keep out of courts
irresponsible suits.255
Order 10 of the Code is a tool in the hands of courts by
resorting to which and by searching examination of the party in case the court is
prima facie of the view that the suit is an abuse of the process of the court in the
sense that it is a bogus and irresponsible litigation, the jurisdiction under Order 7
Rule 11 of the Code can be exercised.256
Rejection of plaint under Order 7 Rule 11
CPC does not preclude the plaintiff from filing a fresh suit.257
The power vested
under Order 7 Rule 11 of the Code of Civil Procedure can be invoked if on
meaningful reading of plaint, no clear right to sue is found, and where plaint is
vexatious and meritless, for which, the whole plaint must be read and there cannot
be compartmentalization, dissection, segregation and inversions of language of
various paragraphs of the plaint and in the latter circumstance, it would not be
cogent ground for rejecting the plaint.
Normally, a plaint cannot be rejected while exercising power under Article 227 of
the Constitution. However, if a party comes to the Court with unclean hands and
253
(1982) 3 SCC 487. 254
(1998) 7 SCC 184. 255
Popat and Kotecha Property v. State Bank of India Staff Assn., (2005) 7 SCC 510. 256
Sopan Sukhdeo Sable & Ors v. Assistant Charity Commissioner, (2004) 3 SCC 137. 257
Order 7 Rule 13 of Code of Civil Procedure.
292
re-agitates the matters, Courts are not powerless to exercise its discretion in putting
a full stop to the same and accordingly the suit may be ordered to be struck off
under Article 227 of the Constitution of India.258
Courts cannot be a tool in the
hands of vexatious litigants and it would be a mockery of justice to permit a
plaintiff to enjoy luxury of re-litigation.259
The reason is that provisions of Order
VII Rule 11 CPC are not exhaustive. However the Court has got inherent powers
to see that vexatious litigations are not allowed to consume time of the Court and
accordingly, court can reject the plaint if allegations in plaint reveal an abuse of
process of law.260
The process of Court should not be misused or abused but shall be used bonafide
and properly. The Court should prevent improper use of litigative process. The
question whether litigation is frivolous or abuse of process has to be judged from
the angle of interest of justice and public policy. When a litigant abuses the process
of Court, the High Court, while exercising its power of superintendence can step in
where there is blatant violation of process of Court.261
Frivolous or vexatious proceedings may also amount to an abuse of the process of
Court, especially where the proceedings are absolutely groundless.262
The Court
then has the power to stop such proceedings summarily and prevent the time of the
public and the Court from being wasted. Undoubtedly, it is a matter of Courts'
discretion whether such proceedings should be stopped or not; and this discretion
has to be exercised with circumspection. It is a jurisdiction which should be
sparingly exercised and exercised only in special cases.263
The alternative remedy
under Code of Civil Procedure is not a bar to invoke the jurisdiction under Article
227 of the Constitution of India.264
The Court should invoke its inherent power to
strike off a plaint when it comes to the conclusion that the claim has been made
only for collateral purpose or is spurious one or of frivolous nature or improper use
of machinery of court or its continued prosecution results in vexatious litigation.265
258
RM.Subbiah v. S.Ramakrishnan & others 2012-1-LW 437. 259
Tamil Nadu Handloom Weavers' Co-operative Society v. S.R.Ejaz 2009 (5) CTC 710. 260
Dindigul Pettai Sathangudi Shatriya Nadar Uravinmurai v. Selvaraj 2009 (2) CTC 57. 261
Seeni alias Sundarammal v. Ramasamy Poosari 2000 (III) CTC 74. 262
Maria Soosai and anr. v. Esakkiammal 1999-1-LW 727. 263
K.K.Modi v. K.N.Modi (1982 (2) AIR SCW 116) was relied upon. 264
Southern and Rajamani Transport Private Limited v. R.Srinivasan 2010 (4) CTC 690. 265
Ramiah Asari v. Kurshad Begaum, reported in 1999 (I) CTC 600.
293
In the case of K.K.Modi v. K.N.Modi,266
the Supreme Court held as follows :
"One of the examples cited as an abuse of the process of the court is relitigation. It
is an abuse of the process of the court and contrary to justice and public policy for
a party to relitigate the same issue which has already been tried and decided earlier
against him. The reagitation may or may not be barred as res judicata. But if the
same issue is sought to be reagitated, it also amounts to an abuse of the process of
the court. A proceeding being filed for a collateral purpose, or a spurious claim
being made in litigation may also in a given set of facts amount to an abuse of the
process of the court. Frivolous or vexatious proceedings may also amount to an
abuse of the process of the court, especially where the proceedings are absolutely
groundless. The court then has the power to stop such proceedings summarily and
prevent the time of the public and the court from being wasted. Undoubtedly, it is a
matter of the courts discretion whether such proceedings should be stopped or not;
and this discretion has to be exercised with circumspection. It is a jurisdiction
which should be sparingly exercised, and exercised only in special cases. The
Court should also be satisfied that there is no chance of the suit succeeding."
4.17.6 Denial of Relief due to Concealment
Injunction is an equitable relief and is available only to persons who come to Court
with clean hands. Reference may be made to Section 41(i) of the Specific Relief
Act, 1963. Suppression of material facts has been held to be an abuse of the
process of the court.267
The party not approaching the Court with clean hands
would be liable to be non-suited and such party, who has also succeeded in
polluting the stream of justice by making patently false statements, cannot claim
relief.268
While approaching the court, a litigant must state correct facts and come
with clean hands.269
Where such statement of facts is based on some information,
the source of such information must also be disclosed.270
Totally misconceived
petition amounts to abuse of the process of the court and such a litigant is not
required to be dealt with lightly, as a petition containing misleading and inaccurate
266
(1998) 3 SCC 573. 267
Tilokchand H.B. Motichand & Ors. v. Munshi & Anr. 1969 (1) SCC 110. 268
A. Shanmugam v. Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam & Anr. (2012) 6 SCC 430.
269 Chandra Shashi v. Anil Kumar Verma (1995) SCC 1 421.
270 Abhyudya Sanstha v. Union of India & Ors. (2011) 6 SCC 145.
294
statement, if filed, to achieve an ulterior purpose amounts to abuse of the process
of the court.271
A litigant is bound to make “full and true disclosure of facts”.272
Courts have, over the centuries, frowned upon litigants who, with intent to deceive
and mislead the Courts, initiated proceedings without full disclosure of facts and
came to the courts with ‘unclean hands’. Courts have held that such litigants are
neither entitled to be heard on the merits of the case nor entitled to any relief.273
The people, who approach the Court for relief on an ex parte statement, are under a
contract with the court that they would state the whole case fully and fairly to the
court and where the litigant has broken such faith, the discretion of the court
cannot be exercised in favour of such a litigant. The obligation to approach the
Court with clean hands is an absolute obligation and has repeatedly been reiterated
by this Court.274
Quests for personal gains have become so intense that those
involved in litigation do not hesitate to take shelter of falsehood and misrepresent
and suppress facts in the court proceedings. Materialism, opportunism and
malicious intent have over-shadowed the old ethos of litigative values for small
gains. A litigant who attempts to pollute the stream of justice or who touches the
pure fountain of justice with tainted hands is not entitled to any relief, interim or
final. The Court must ensure that its process is not abused and in order to prevent
abuse of the process the court, it would be justified even in insisting on furnishing
of security and in cases of serious abuse, the Court would be duty bound to impose
heavy costs. Wherever a public interest is invoked, the Court must examine the
petition carefully to ensure that there is genuine public interest involved. The
stream of justice should not be allowed to be polluted by unscrupulous litigants.275
The Court has to maintain strictest vigilance over the abuse of the process of court
and ordinarily meddlesome bystanders should not be granted “visa”. Many societal
pollutants create new problems of unredressed grievances and the Court should
endure to take cases where the justice of the lis well justifies it.276
It is settled law that a person who approaches the Court for grant of relief,
equitable or otherwise, is under a solemn obligation to candidly disclose all the
271
State of Madhya Pradesh v. Narmada Bachao Andolan & Anr.(2011) 7 SCC 639. 272
Kalyaneshwari v. Union of India & Anr. (2011) 3 SCC 287. 273
Dalip Singh v. State of U.P. & Ors. (2010) 2 SCC 114. 274
Amar Singh v. Union of India & Ors. (2011) 7 SCC 69. 275
State of Uttaranchal v Balwant Singh Chaufal & Ors. (2010) 3 SCC 402. 276
Kishore Samrite v. State of U.P. & Ors. Criminal Appeal No.1406 Of 2012 decided by Supreme Court on October 18, 2012.
295
material/important facts which have bearing on the adjudication of the issues raised
in the case.277
In other words, he owes a duty to the court to bring out all the facts
and refrain from concealing/suppressing any material fact within his knowledge or
which he could have known by exercising diligence expected of a person of
ordinary prudence.278
If he is found guilty of concealment of material facts or
making an attempt to pollute the pure stream of justice, the court not only has the
right but a duty to deny relief to such person.279
In one of the earliest decisions on
the subject R. v. Kensington Income Tax Commissioner,280
Viscount Reading,
Chief Justice of the Divisional Court observed:
“Where an ex parte application has been made to this Court for a rule nisi or other
process, if the Court comes to the conclusion that the affidavit in support of the
applicant was not candid and did not fairly state the facts, the Court ought, for its
own protection and to prevent an abuse of its process, to refuse to proceed any
further with the examination of the merits. This is a power inherent in the Court,
but one which should only be used in cases which bring conviction to the mind of
the Court that it has been deceived. Before coming to this conclusion a careful
examination will be made of the facts as they are and as they have been stated in
the applicant’s affidavit, and everything will be heard that can be urged to
influence the view of the Court when it reads the affidavit and knows the true facts.
But if the result of this examination and hearing is to leave no doubt that this Court
has been deceived, then it will refuse to hear anything further from the applicant in
a proceeding which has only been set in motion by means of a misleading
affidavit.”
The above extracted observations were approved by the Court of Appeal in the
following words: “It is the duty of a party asking for an injunction to bring
under the notice of the Court all facts material to the determination of his right to
that injunction: and it is no excuse for him to say that he was not aware of the
importance of any facts which he has omitted to bring forward. If an applicant does
not act with uberrima fides and put every material fact before the Court it will not
grant him an injunction, even though there might be facts upon which the
injunction might be granted.” His Lordship rightly pronounced: “The Court, for its
277
State of Haryana v. Karnal Distillery Co. Ltd. (1977) 2 SCC 431. 278
Vijay Kumar Kathuria v. State of Haryana (1983) 3 SCC 333. 279
Welcome Hotel and others v. State of Andhra Pradesh and others etc. (1983) 4 SCC 575. 280
(1917) 1 KB 486.
296
own protection, is entitled to say: We refuse this writ without going into the merits
of the case on the ground of the conduct of the applicant in bringing the case
before us.” Warrington, L.J. was also of the same opinion. In a concurring
judgment His Lordship observed: “It is perfectly well settled that a person who
makes an ex parte application to the Court – that is to say, in absence of the person
who will be affected by that which the Court is asked to do – is under an obligation
to the Court to make the fullest possible disclosure of all material facts within his
knowledge, and if he does not make that fullest possible disclosure, then he cannot
obtain any advantage from the proceedings, and he will be deprived of any
advantage he may have already obtained by means of the order which has
thus wrongly been obtained by him.”
The Supreme Court and different High Courts have repeatedly invoked and applied
the rule that a person who does not disclose all material facts has no right to be
heard on the merits of his grievance.281
In Hari Narain v. Badri Das,282
Supreme Court revoked the leave granted to the
appellant by making following observations:
“It is of utmost importance that in making material statements and setting forth
grounds in applications for special leave made under Article 136 of the
Constitution, care must be taken not to make any statements which are inaccurate,
untrue and misleading. In dealing with applications for special leave, the Court
naturally takes statements of fact and grounds of fact contained in the petitions at
their face value and it would be unfair to betray the confidence of the Court by
making statements which are untrue and misleading. Thus, if at the hearing of the
appeal the Supreme Court is satisfied that the material statements made by the
appellant in his application for special leave are inaccurate and misleading, and the
respondent is entitled to contend that the appellant may have obtained special leave
from the Supreme Court on the strength of what he characterizes as
281
G. Narayanaswamy Reddy (dead) by LRs. and another v. Government of Karnataka and
another (1991) 3 SCC 261, S.P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by LRs. and others (1994) 1 SCC 1, Agricultural and Processed Food Products v. Oswal Agro Furane and others (1996) 4 SCC 297, Union of India and others v. Muneesh Suneja (2001) 3 SCC 92, Prestige Lights Ltd. v. State Bank of India (2007) 8 SCC 449, Sunil Poddar and others
v. Union Bank of India (2008) 2 SCC 326, K.D. Sharma v. Steel Authority of India Ltd. and others (2008) 12 SCC 481, G. Jayshree and others v. Bhagwandas S. Patel and others (2009) 3 SCC 141.
282 AIR 1963 S.C. 1558.
297
misrepresentations of facts contained in the petition for special leave, the Supreme
Court may come to the conclusion that in such a case special leave granted to
the appellant ought to be revoked.”
In the case of S. Raminder Singh Vs. NCT of Delhi,283
the Hon'ble High Court of
Delhi observed as under:
“While seeking the discretionary relief, the petitioner is bound to approach the
Court with clean hands and not to conceal any facts”.
In the case of S.P. Changalvaraya Naidu (dead) by L.Rs. vs. Jagannath (dead) by
L.Rs,284
it was noted :
“The principle of "finality of litigation" cannot be pressed to the extent of such an
absurdity that it becomes an engine of fraud in the hands of dishonest litigants.
The courts of law are meant for imparting justice between the parties. One who
comes to the court, must come with clean hands. We are constrained to say that
more often than not, process of the court is being abused. Property-grabbers, tax-
evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life
find the court process a convenient lever to retain the, illegal-gains indefinitely.
We have no hesitation to say that a person whose case is based on falsehood, has
no right to approach the Court. He can be summarily thrown out at any stage of
the litigation”.
Similar observations were made by the Hon'ble High Court of Delhi in the case of
M/s. Seemax Construction (P) Ltd. V. State Bank of India.285
It is also trite law that so as to enable the court to refuse to exercise its
discretionary jurisdiction suppression must be of material fact. What would be a
material fact, suppression whereof would disentitle the appellant to obtain a
discretionary relief, would depend upon the facts and circumstances of each case.
Material fact would mean material for the purpose of determination of the lis, the
logical corollary whereof would be that whether the same was material for grant or
denial of the relief. If the fact suppressed is not material for determination of the lis
283
102 (2003) DLT 511. 284
AIR 1994 SC 853. 285
AIR 1992 Delhi 197.
298
between the parties, the court may not refuse to exercise its discretionary
jurisdiction. It is also trite that a person invoking the discretionary jurisdiction of
the court cannot be allowed to approach it with a pair of dirty hands. But even if
the said dirt is removed and the hands become clean, whether the relief would still
be denied is the question.286
In the landmark case of Moody v. Cox287
, it was held thus:
"It is contended that the fact that Moody has given those bribes prevents him from
getting any relief in a Court of Equity. The first consequence of his having offered
the bribes is that the vendors could have rescinded the contract. But they were not
bound to do so. They had the right to say "No, we are well satisfied with the
contract; it is a very good one for us; we affirm it". The proposition put forward by
counsel for the defendants is: "It does not matter that the contract has been
affirmed; you still can claim no relief of any equitable character in regard to that
contract because you gave a bribe in respect of it. If there is a mistake in the
contract, you cannot rectify it, if you desire to rescind the contract, you cannot
rescind it, for that is equitable relief. With some doubt they said: "We do not think
you can get an injunction to have the contract performed, though the other side
have affirmed it, because an injunction may be equitable remedy." When one asks
on what principle this is supposed to be based one receives in answer the maxim
that any one coming to equity must come with clean hands. It think the expression"
clean hands" is used more often in the text books than it is in the judgments,
though it is occasionally used in the judgments, but I was very much surprised to
hear that when a contract, obtained by the giving of a bribe, had been affirmed by
the person who had a primary right to affirm it, not being an illegal contract, the
courts of Equity could be so scrupulous that they would refuse any relief not
connected at all with the bribe. I was glad to find that it was not the case, because I
think it is quite clear that the passage in Dering v. Earl of Winchelsea 1 Cox, 318
which has been referred to shows that equity will not apply the principle about
clean hands unless the depravity, the dirt in question on the hand, has an immediate
and necessary relation to the equity sued for. In this case the bribe has no
immediate relation to rectification, if rectification were asked, or to rescission in
connection with a matter not in any way connected with the bribe. Therefore that
286
Arunima Baruah Vs. Union of India & Ors [2007] Insc 464 (27 April 2007). 287
[1917 (2) Ch 71].
299
point, which was argued with great strenuousness by counsel for the defendant
Hatt, appears to me to fail, and we have to consider the merits of the case."
In Halsbury's Laws of England,288
the law is stated in the following terms:
"He who seeks equity must do equity. In granting relief peculiar to its own
jurisdiction a court of equity acts upon the rule that he who seeks equity must do
equity. By this it is not meant that the court can impose arbitrary conditions upon a
plaintiff simply because he stands in that position on the record. The rule means
that a man who comes to seek the aid of a court of equity to enforce a claim must
be prepared to submit in such proceedings to any directions which the known
principles of a court of equity may make it proper to give; he must do justice as to
the matters in respect of which the assistance of equity is asked. In a court of law it
is otherwise: when the plaintiff is found to be entitled to judgment, the law must
take its course; no terms can be imposed.
He who comes into equity must come with clean hands. A court of equity refuses
relief to a plaintiff whose conduct in regard to the subject matter of the litigation
has been improper. This was formerly expressed by the maxim "he who has
committed iniquity shall not have equity", and relief was refused where a
transaction was based on the plaintiff's fraud or misrepresentation, or where the
plaintiff sought to enforce a security improperly obtained, or where he claimed a
remedy for a breach of trust which he had himself procured and whereby he had
obtained money. Later it was said that the plaintiff in equity must come with
perfect propriety of conduct, or with clean hands. In application of the principle a
person will not be allowed to assert his title to property which he has dealt with so
as to defeat his creditors or evade tax, for he may not maintain an action by setting
up his own fraudulent design.
The maxim does not, however, mean that equity strikes at depravity in a general
way; the cleanliness required is to be judged in relation to the relief sought, and the
conduct complained of must have an immediate and necessary relation to the
equity sued for; it must be depravity in a legal as well as in a moral sense. Thus,
fraud on the part of a minor deprives him of his right to equitable relief
notwithstanding his disability. Where the transaction is itself unlawful it is not
288
Fourth Edition, Vol. 16, pages 874- 876.
300
necessary to have recourse to this principle. In equity, just as at law, no suit lies in
general in respect of an illegal transaction, but this is on the ground of its illegality,
not by reason of the plaintiff's demerits."289
In Spry on Equitable Remedies,290
it was stated as follows:
"that the absence of clean hands is of no account "unless the depravity, the dirt in
question on the hand, has an immediate and necessary relation to the equity sued
for". When such exceptions or qualifications are examined it becomes clear that
the maxim that predicates a requirement of clean hands cannot properly be
regarded as setting out a rule that is either precise or capable of satisfactory
operation.
In these cases, however, it is necessary that the failure to disclose the matters in
question, and the consequent error or misapprehension of the defendant, should be
such that performance of his obligations would bring about substantial hardship or
unfairness that outweighs matters tending in favour of specific performance. Thus
the failure of the plaintiff to explain a matter of fact, or even, in some
circumstances, to correct a misunderstanding of law, may incline the court to take
a somewhat altered view of considerations of hardship, and this will be the case
especially where it appears that at the relevant times the plaintiff knew of the
ignorance or misapprehension of the defendant but nonetheless did not take steps
to provide information or to correct the material error, or a fortiori, where he put
the defendant off his guard or hurried him into making a decision without proper
enquiry." 291
Thus, the plaintiff can be non-suited on the ground of concealment of
material fact only if the material fact has a bearing on the facts of the case.292
4.18 SYNTHESIS AND SUMMATION
Central to the remedy of injunction is the law of equity. Equity, as seen above, is
the body of law that has been made and developed by the Judges in the Chancery
courts to modify the rigid application of the common law. Equity is grounded on
principles and doctrines whose application and remedies can be moulded in
289
Snell's Equity, Thirtieth Edition, Pages 30-32 and Jai Narain Parasrampuria (Dead) and Others v. Pushpa Devi Saraf and Others (2006) 7 SCC 756.
290 Fourth Edition, page 5.
291 Reference was made to Moody v. Cox (supra) and Meyers v. Casey (1913) 17 C.L.R. 90.
292 Karmawali & Anr. Vs. Harpreet Singh Batra & Ors. ILR, (2007) I Delhi 63.
301
exercise of judicial discretion to ensure a just and fair result. The law of equity
was developed by Judges who were in intimate touch with the people, their
character, their sentiments, their opinions, their ideas of right and wrong, of
justice and injustice. The law is the effort of people to express their idea of right
and wrong. Equity therefore comprises of rules of conduct recognized by the
community as binding on its members.
The law declared, enforced and developed by the Courts of Common Law is
common law. These courts are the Courts of Common Pleas, of the King's Bench
and of Exchequer. Although the administration of Common Law and Equity has
been fused into a single procedural system, this has not resulted in the fusion of
Common Law and Equity as bodies of rules. Equity continues to have a
significant role in many contemporary aspects of the law.
There are a variety of equitable maxims that are useful generalizations of complex
law, and are founded on conscience. These principles have been elaborated above.
They are based on notions of fair play, and can be referred to as propositions of
ethics or morality. Each set of facts demands varying application of the equitable
principles, and this has helped the law grow tremendously.
Equity forms the basis of deciding suits and applications for injunction, and
shapes the discretion of courts. Injunctive remedies are generally available at
three stages of litigation namely, an ad interim restraining order, which is often ex
parte; a temporary injunction issued after initial hearing and argument but before
a final determination on merits; and the permanent injunction, based on a decision
on merits following a full hearing. Equity plays a prominent role in determination
of injunction applications. It impinges on the conscience of the court. The manner
of exercising discretion founded on equity has been emphasized by courts in a
plethora of cases. Relying on principles of equity, courts now insist on fulfilment
of various conditions (examination of whether the plaintiff's case suffers from
laches, clean hands, estoppel, adequate remedy at law, or proof of irreparable
harm) before grant of an injunction. Equity is also responsible for ensuring
suitable application of the law by avoiding unjust results. It infuses flexibility and
contributes to the widening of discretion of courts. It also helps in tailoring the
most suitable remedy warranted by the facts presented and for this purpose the
court is empowered to mould the relief. One such potent tool in the hands of the
302
court is of conditional orders, in which the court is vested with powers to impose
conditions while granting interim relief.
It is the element of equity that prescribes the requirement of full and frank
disclosure of all material facts, and makes it obligatory for courts to ensure that
their orders, though in deciding private disputes, do not adversely affect public
interest. Equity also lays down a high standard of disclosure of facts by plaintiffs.
It is not sufficient for the plaintiff to state correctly facts which are in his favour.
The plaintiff is also required to disclose the weaknesses of his case, if any, by
stating facts which are relevant for adjudication. In case the plaintiff is found to be
concealing facts, the equitable relief of injunction must be denied to him, and the
plaint is required to be rejected, in addition to imposition of realistic costs.
In litigation proceedings, the interim relief, actually meant to support the main
claim, can change the fate of the case commercially, if not legally and thus the
need for a court is to see, "that the stable door is locked before the horse has gone."
It is this need that fuels the growth of innovative and creatively crafted orders.
The person seeking equity must do equity. The conduct of the plaintiff is relevant
for deciding whether he is to be granted relief. The legal maxim jure naturae
aequum est neminem cum alterius detrimento et injuria fieri locupletiorem, which
means that it is a law of nature that one should not be enriched by the loss or injury
to another, is the percept for Courts. Another ancillary, but extremely relevant,
issue is of restitution. Restitution is a form of injunction and is an equitable
instrument aimed at preventing a person from suffering without his fault. The
doctrine is aimed at ensuring that a person does not enrich himself from his owen
wrong.
The wide jurisdiction of the court arising out of the above equitable considerations
should not become a source of abuse by mischievous litigants. Careful scrutiny of
plaints is therefore necessary to ensure that the litigation is genuine, not motivated
by extraneous considerations and imposes an obligation upon the litigant to
disclose the true facts and approach the court with clean hands.
Another settled canon of administration of justice is that no litigant should be
permitted to misuse the judicial process by filing frivolous petitions. No litigant
303
has a right to unlimited drought upon the court time and public money in order to
get his affairs settled in the manner as he wishes. Easy access to justice should not
be used as a licence to file misconceived and frivolous petitions.
Thus the role of equity is shaping judicial discretion and thought cannot be
undermined. This dimension was succinctly highlighted by the Supreme Court by
sourcing it into the inherent powers of the court, in the case of Manohar Lal
Chopra v. Raj Bahadur Rao Raja Seth Hiralal AIR 1962 SC 527 in which it was
held that the Code of Civil Procedure is not an exhaustive code and civil courts are
authorized to pass such orders as may be necessary for the ends of justice, or to
prevent abuse of the process of court.
Judges at all levels have to engage themselves in the journey of discovering the
truth. This is their mandate, obligation and bounden duty. It is equity that
strengthens, supports and promotes an environment conducive to due discharge of
this duty in a conscientious manner. `