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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

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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.

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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.

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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].

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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. `