# COTTON CORPORATION OF INDIA v. UNITED INDUSTRIAL BANK

- **Citation:** [1983] 3 S.C.R. 962
- **Court:** Supreme Court of India
- **Decided:** 1983-09-19
- **Bench:** D. A. Desai, V. Balakrishna Eradi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/cotton-corporation-of-india-v-united-industrial-bank-8418
- **Pages:** 23

## Headnote

Specific Relief Act. 1963-S. 41(b)-Whether court has jurisdiction' t•
trant injunction restraining any person from
in~tituting any proceeding in a court
not iubo!dinate to that from which injunction is sought?
A Branch Manager of the respondent-Bank C(_)·accepted 16 usance bills
of the aggregate value of over Rs. 45 lakhs relating lo purchases of cotton made
by a textile mill from the appellant-Corporation. When the usaii.ce bi,lls
inatured, the Corporation called upon the Bank to make payn1ent. The Bank
filed a suit against the Corporation praying inter alia for a declai"ation that
the co-acceptance of the usance bills by its Branch Manager was null and void
as he did not have the requisite authority to co-accept the bills on beha1 f of
the Bank and alsO for an interim injunction restraining the Corporation from
presenting a winding-up petition under the Companies_Act, 1956.
Th.e prayer
for injunction was turned down by a Single Judge of the High Court but the
same was granted by a Division Bench which heard the appeal agains·t the
order of the Sjngle Judge. The narrow question examined in this appeal was: ·
Whether in view of the provision contained in s. 41(b) of the Specific Relief
Act, 1963, the court will have jurisdiction to grant an injunction restraining
any person from instituting any proceeding in a court not subordinate to that"
ftom which the injunction is sought ?
Allowing the appeal,
HELD: From the language used ins. 56(b) of the Specific Relier Act,
1887 (which was the predecessor provision of s. 4I(b) of the 1963 Act) it was
clear that the court could not stay a proceeding in a court superior in hier3.rchy to the court from .which injUnction waS sought; but by a process of
judicial interpretation a consensus had been reached that a court could bY an
,injunction restrain a party befo_re it_ from .further prosecuting the proceeding
in other courts, superior or inferior. To some extent this approach had not
only effectively circumvented the provision contained in s. 56(b) of the repealed
Act but also denuded- it of its content The legislature took notice of this
judicial interpretation and materia1ly altered the language of the succeeding
Provision. It manifestly expressed its mind by enacting s. 4l(b) in such clear
and on-ambiguous language that an injunction cannot be granted to restrain
8.ny person-the language takes care of injunction acting in personum-from
instituting or prosecuting any procee4ing in a .Court not subordinate to that
from which injunction is sought. This change in language deliberately adopted
~y the legislature has to be given full effect.
[970 F-H; 971 A-B; DJ
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CoTTON CORPN, V, U.1. BANK
963
(i) Anyone having a right, that is a legally protected interest, complains
of its infringement and seeks relief through Court must have an unhindered,
uninterrupted access to Jaw courts. Access to court in search of justice
according to Jaw is the right of a person who complains of infringement of
his legally protected interest and a fortiori therefor~. no other court can by its·
actlon impede access to justice. This principle is deducible from the Consti·
tution which see~s to set up a society governed by rule of law. As a corollary
it must yield to another principle that a superior court can injunct a person by
restraining him from instituting or prosecuting a proceeding before a subordi·
nate court. Save this specific carving Out of the area where access to justice
Iilay be impeded by an injunction of the court, the legislature desired that
courts ordinarily should not impede access to justice through court. This is
the equitable principle underlying s. 41(b). Accordingly, it must receive such
interpretation as would advance the intendment and thwart the mischief it was
·enacted to supress and to keep the pat_h of access to justice through court
unobstructed.
[971 F-H; 972 A-BJ
(ii) The legal systen1 in our country envisages obtaining redressal of a
wrong or relief against unju~t denial the

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COTTON CORPORATION OF INDIA
v.
UNITED INDUSTRIAL BANK
September 19, 1983
(D. A. DESAI AND V. BALAKRISHNA ERADI, JJ.]
Specific Relief Act. 1963-S. 41(b)-Whether court has jurisdiction' t•
trant injunction restraining any person from
in~tituting any proceeding in a court
not iubo!dinate to that from which injunction is sought?
A Branch Manager of the respondent-Bank C(_)·accepted 16 usance bills
of the aggregate value of over Rs. 45 lakhs relating lo purchases of cotton made
by a textile mill from the appellant-Corporation. When the usaii.ce bi,lls
inatured, the Corporation called upon the Bank to make payn1ent. The Bank
filed a suit against the Corporation praying inter alia for a declai"ation that
the co-acceptance of the usance bills by its Branch Manager was null and void
as he did not have the requisite authority to co-accept the bills on beha1 f of
the Bank and alsO for an interim injunction restraining the Corporation from
presenting a winding-up petition under the Companies_Act, 1956.
Th.e prayer
for injunction was turned down by a Single Judge of the High Court but the
same was granted by a Division Bench which heard the appeal agains·t the
order of the Sjngle Judge. The narrow question examined in this appeal was: ·
Whether in view of the provision contained in s. 41(b) of the Specific Relief
Act, 1963, the court will have jurisdiction to grant an injunction restraining
any person from instituting any proceeding in a court not subordinate to that"
ftom which the injunction is sought ?
Allowing the appeal,
HELD: From the language used ins. 56(b) of the Specific Relier Act,
1887 (which was the predecessor provision of s. 4I(b) of the 1963 Act) it was
clear that the court could not stay a proceeding in a court superior in hier3.rchy to the court from .which injUnction waS sought; but by a process of
judicial interpretation a consensus had been reached that a court could bY an
,injunction restrain a party befo_re it_ from .further prosecuting the proceeding
in other courts, superior or inferior. To some extent this approach had not
only effectively circumvented the provision contained in s. 56(b) of the repealed
Act but also denuded- it of its content The legislature took notice of this
judicial interpretation and materia1ly altered the language of the succeeding
Provision. It manifestly expressed its mind by enacting s. 4l(b) in such clear
and on-ambiguous language that an injunction cannot be granted to restrain
8.ny person-the language takes care of injunction acting in personum-from
instituting or prosecuting any procee4ing in a .Court not subordinate to that
from which injunction is sought. This change in language deliberately adopted
~y the legislature has to be given full effect.
[970 F-H; 971 A-B; DJ
\ .
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CoTTON CORPN, V, U.1. BANK
963
(i) Anyone having a right, that is a legally protected interest, complains
of its infringement and seeks relief through Court must have an unhindered,
uninterrupted access to Jaw courts. Access to court in search of justice
according to Jaw is the right of a person who complains of infringement of
his legally protected interest and a fortiori therefor~. no other court can by its·
actlon impede access to justice. This principle is deducible from the Consti·
tution which see~s to set up a society governed by rule of law. As a corollary
it must yield to another principle that a superior court can injunct a person by
restraining him from instituting or prosecuting a proceeding before a subordi·
nate court. Save this specific carving Out of the area where access to justice
Iilay be impeded by an injunction of the court, the legislature desired that
courts ordinarily should not impede access to justice through court. This is
the equitable principle underlying s. 41(b). Accordingly, it must receive such
interpretation as would advance the intendment and thwart the mischief it was
·enacted to supress and to keep the pat_h of access to justice through court
unobstructed.
[971 F-H; 972 A-BJ
(ii) The legal systen1 in our country envisages obtaining redressal of a
wrong or relief against unju~t denial thereof by approaching the court set up
for the purpose. If a person complaining of invasion of his rights is injuncted
from approaching the court set up to grant relief by an action brciught by the
opposite side against whom he has a clai,n and which he wanted to enforce
through court, he would have to first defend that action and vindicate his '
right and thereafter,. when the injunction is vacated, he has to approach the
court for: relief1 In order to avoid such multiplicity of proceedings, the legis~
iature enacted s. 41(b) and statutorily provided that an injunction cannot be
granted by a court with a view to· restraining any person from instituting or
prosecuting any proceeding in a court not subordinate to that from which the
·injunction is sought. [972 C-F; G]
.
(iii)
Th~ ~onte.~tion thats. 41 (b).is not/attracted because it deals only
with perpetual lDJunctton cannot be accepted. The expression 'injunction• in
s. 4l(b) is not qualified by an adjective and ther¢fore it would compfehend
both interim and perpetual injunction. It is true that s. 37 specifically provides
that temporary injunctions which have to continue until a specified time or
until further order of the court are regulated by the Code of Civil Procedure.
But if a dichotomy is introduced by confining s. 41 to perpetual injunction
only ands. 37 read with 0. 39 C.P.C. being confined to temporary injunction,
an unnecessary grey area will develop. It is indisputable that ten1porary
injunction is granted during the peqdency of the; proceeding so that while
granting final relief the Court is not faced with a Situation that the· relief
. becomes infructuous or that during' the .pendeacy of the proce~ding an unfair
a_dva?tage is taken by the party in default or against whom temporary injunction is sought. But power to grant temporary injunction was conferred in aid
of or as auxiliary to· the final· relief that may be granted. If the" final relief
cannot be granted in terms as. prayed for, temporary relief in the same terms
can hardly if ever be granted. [973 C-FJ
State of Orissa v. Madan Gopal Rungta, [195 2] S.C.R. 28 referred to,
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964
SUPREME ColJRT REPORTS
[1983] 3 s.c.R.
Udyog Mandir v. Messrs. Contessa Knit Wear and Ors., A.I.R. [1975]
Bcim. 158; and Krishnadevi P. Gupta & Anr. v. Banwari/al Hanuman Prasad
Tibrewala, A.I.R. [1976] Bom. 233 approved.
In the instant case the Bank seeks to restrain the Corporation by an
injunction of the court from instituting a proceeding for winding-up oT t11e
Bank. There is a clear bar ins. 41(b) against granting this relief. The court
has no jurisdiction to grant a prepetual injunction restraining a person from
instituting a proceeding in a court not subordinate to it as a relief, and
thei'efore; ipso facto tempqrary relief cannot be granted in the same terms.
[974 B-C]
(iv) One cannot bodily import English decisions into our system to
develop a hybrid legal system and one .cannot be so hypnotised by·Englisl)
decisions to overlook legislative changes introduced in Indiah Law .. Whfrc
provisions are in pari n1ateria between the English Act and the Indian Act and
where local conditions do not materially differ from the conditions in U.K ..
one may, keeping in view the conditions in our country, look at the view taken
by the English Courts and if consistent with our Jurisprudence, our social
conditions and our chalked out path in which the law mu.st move, one can
profitably take help of the decision. [97; D-E]
Cadiz Waterworks Co. v. Hamett, [1874-75], 19 Equity Cases 182; Circle
Restaurant Castiglione Co. v. Lavery, [188)) 18 Ch. Div. 555; and New
Travellers Chambers Ltd. v. Messrs Cheese & Green, [1894] 17- Law Times
;1
.Reports 171-plea to take notice of, declined.
Buckley: Companies Act, 14th Edn., footnotes 7, 8 and 9, P. 524; and
Palmer's Company Precedents, Part !I, 17th Ed. p. 45-i>lea to take notice ·
of· declined.
Hungerford Investment Trust Ltd. v .. Harldas .Mundhra & Ors., [1972] 3
S.C.R. 690, at 701; Cha/es Forte Investments Ltd. v. Amanda, (1963] 2 All E.R.
940; Bryans/on Finance Ltd. v. De Vries, [1976] I All E.R. 25; and Stonegate
·Securities Ltd. v. Gregory, [1980] I All E.R. 241; referred to.
(v) The Court can in appropriate caseS grant temporary injunction in
exercise of its inherent power in cases not Covered by 0. 39, C.P.C, Bl.it the
inherent poWer of the Court cannot be invoked to nullify or stultify a statutory
Provision. While exercising inherent power, the court should not overlook
the statutory provision in s. 41(b) wh.ich clearly indicates that injunction torestrain initiation of proteedi1_1g cannot be granted. (980 C-D]
Manoharla/ Chopra v. Rai .Bahadur Rilo Raja Seth Hira/al, [1962] Supp.
I S.C.R. 450; and Padam Sen v. State of U.P.; [1961] I S.C.R. 884; referred to.
In the instant case, the appellate Judgment does not contain the slightes·t
reference to the invocation of the inherent power of the court in granting the
order of injunction now under challenge. Not only that, but the court has
not held that the contention of the Corporation is frivolous or untenable or
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COTTON CORPN. V. U.I. BANI<i
965
the claim is ma la fide. This becomes clear from the observation of the court
tbat the order passed by it is not founded on the merits of the Bank's case or
Jack of inerit in any claim which the Corporation may have against the plaintiffBank and it Would be open to the Corporatiqn to file a regular suit or summary
suit against the plaintiff-Bank in which appropriate orders would be passed by
the court seized of the matter as and when the occasion arises for the same.
(980 D-FJ
(vi)
Th~ contention that the presentatiOn of wjnding-up petition coupled
with advertisement thereof in newspaper as required by law has certain serious
consequences on the status, standing, financial viability stability and operational efficiency of the company, and where the debt is bona fide disputed, a
petition for Winding-up, which is not an alternative to the suit to recover the
same, may be a pressure tactic to obtain an unfair adv-antage, ·and therefor~,
the court must, despite the provision in s. 41(b), spell out a power in. appropriate cases to injunct a person from filing a winding-up petition, cannot be
accepted. This contention overlookS the various statutors safeguards against
admission, advertising and publication of winding-up petitions. There is
sufficient built-in safeguard in the provisions of the Companies Act and the
Rules framed thereunder which would save the company from any adverse
consequences, if a petitioner actuated by an ulterior motive presents the
petition. According to rule 96 of the Companies (Court) Rules, 1959 a petition
for winding-up has to come' up in Chambers before the Company Judge
and not in open court, and the rule confers a discretionary [,power on the
judge not to give any directions at that stage but merely issue a nOtice to
the company before giving directions. If Uoon receipt of such notice the
company appears and satisfies the judge that the debt is bona fide disputed
Or the presentiition of the petition is n1ala fide, or actuated by an ulterior
motive, or abuse of the process of the co~rt, the Judge may decline to admit
the petition and may direct and party presenting the winding-Up petition to
prove its claim by a suit or in any other manner. This is the jurisdiction of
the Company Court and it cannot be restrained from .exercising the same. by
some other court restraining the creditor from presenting a winding-up
petition. (981 B-H; 982 A; DJ
National Conduits Pvt. Ltd. v. S. S.
Arora, [1968] I S.C.R, 430,
referred to.
George v. The Athimattam Rubber Co. Ltd., A.I.R. 1964 Kerala 212,
approved.
In the instant case, even assuming that the Appellate Bench had in its
mind the inherent power of the court to grant injunction despite, statutory
inhibition and consistent with the view taken by the.courts in England, it had
then in order to do justice between the parties first reach an affirmative finding
that the winding-up petition as and when preSep.ted by the Corporation would
be frivolous and would constitute· an abuse of the· process of the court or
· would be a device to pressurise the Bank to submit to an unjust and dishonest
claim. It must also reach an affirmative conclusion that the debtor-Bank is
sufficiently solvent to satisfy the f;;:lailll as a~d when established. It has also
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SUPREME COURT REPORTS
(1983] 3 s.c.R.
to record an affirmative finding that the Corporation is not seeking bona fide
to present a petition for winding-up but is actuated by an ulterior motive in
prerenting the petiHon. However, the decision of the Appellate Bench is
conspicuously silent on these relevant points. [983 E-H; 984 A]
CIVIL APPELLATE JuRJSDICTION : Civil Appeal No. 7348 of
1983.
Appeal by Special leave from the judgment and ·order dated
the 19th March;l982 of the Bombay High Court in Appeal No. 527
of 1981 in notice of motion No. 1156/81 in Suit No. 1508/81.
Sankar Ghose, Miss Radha Rangaswamy and Rangaswamy for
the Appellant.
A. K. Sen, R. C. Nag, Rameshwar Nath and A. K. Sil for
\
the Respondents.
The Judgment of the Court was delivered by
DESAI, J.
First respondent United . Industrial Bank Limited
(Bank for short') having its r~gistered office at 7, Red Cross Place,
Calcutta filed Suit No. 1508 of 1981 on the original side of the
Bombay High Court against the appellant-The Cotton Corporation
of India Limited ('Corporation' for short) and one Tapan Kumar
Ghosh, who. at the relevant time was the Chief Branch Manager of
the Worli Branch of the Bank and defendant No. 3-Bradbury Mills
Limited, an exi5ting Company within the meaning of the Companies
Act, 1956 carrying on business at Maulana Azad Road, Jacob Circle,
Bombay praying for a declaration that the acceptance and or coacceptance of the bill of exchange and/or hundies listed in Exhibit 'K'
by second defendant Tapan Kumar· Ghosh for and on behalf of the
Bank was null and void and ·not binding on the Bank and calling
upon the Corporation to deliver up to the Court the disputed bills. of
exchange and/or hundies for the purpose of_.cancellation and for 11
direction cancelling the same. In this s\iit the Bank took out a notice
of motion No. 1156 of 1981 seeking to restrain by an interim injunction the Corporation from enforcing any claim whatever in any form
or from relying on or giving effect to the bills of exchange or hundies
involved in the dispute for the purpose of any .suit or other proceedings including winding-up proceedings under the Companies Act, 1956 ·
and/or the Banking Regulation Act, 1949 against the Bank. Notice of
motion also included a prayer for an interim injunction restraining
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COTTON CORPN. v. U.J. BANK (Desai, J.)
967
'
the defendants in any manner whatsoever either endorsing or
negotiating or transferring the said bills of exchange or hundies and
for appointment of a receiver to take custody of the bills of exchange
and hundies listed in Exh. 'K'. An ex-parte ad-interim injunction was
granted as prayed for. When the notice of motion came up fot
hearing, the learned judge made the following order:
" ... Mr. Cbagla confines prayer (a} o1lly to the filing_
of winding up petition by Defendant No. I and 3. He
presses prayer (b) in full. Notice of motion as against
the Defendant No. I dismissed. The Notice of Motion
made absolute in terms of prayer (a) in so far winding up
is concerned as against the defendant No. 3, so far as
prayer (b) is concerned, the bills are in the possession of
the 1st Defendants arid there is no question of other defendants negotiating the same.
Notice of Motion dismissed as regards prayer (b) also
against Defendants 2 and 3 ... "
The. Bank having been dissatisfied with the rejection of the
Notice of Motion against the Corporation preferred Appeal from an
order No. 527 of 1981. A Division Bench of the Bombay High
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Court allowed the appeal and issued interim injunction restraining
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the Corporation from presenting a winding. up petition, the order
being in the same terms as made against the 3rd defendant by the -
learned Single judge. The co(rectness and validity of this order is
impugned in this !lppeal.
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As the suit is pending awaiting adjudication on merits, every
attempt would be made by us to avoid any expression of opinion on
the. merits ofthe suit. The few facts which we propose to set out
.are for the purpose of understanding and appreciating the contention
only, the correctness or otherwise of the allegation of facts being
immaterial for the present purpose.
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The Corporation is engaged in th_e bussiness of purchasing and
selling cotton to textile mills in India. The policy of the Corporation
appears to be to sell cotton against cash payment, but in some cases
to accommodate the textile .mills the sale is effected on credit against
acceptance of usance bills co-acceped by the bankers of the textile
mills guaranteeing payment on due d~tes. 3rd defendant ·Bradbury
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SUPREME €0URT REPORTS
[1983] 3 s.c.R.
Mills Limited is alleged to have purchased cotton of the aggregate
value of Rs. 45, 75, 000 and in payment of the price issued t"6 usance
bills. The 3rd defedant by Its letter dated May 21, 1981 had informed
the Corporation that the Bank has given an undertaking, to Government of Maharashtra to monitor the cash flow of the 3rd defendant ·
and hence it had to operate account with that Bank only, and it
requested the Corporation to accept usance bills co-accepted by the
Bank. The Corporation asserts that the Bank through defendant No.
2 its Chief Branch Manager at Worli co-accepted the 16 usance bills
and according to the Corporation the acceptance was. evidenced by
four letters issued by the Bank. When the usance bills matured and
became due for payment, the Bank of Baroda on behalf of the
Corporation called upon the Bank to make the payment of the
amounts covered by the various usance bills. Simultaneously, the
3rd defendant was asked to direct its bankers, the plaintiff-bank in
this case; to discharge the usance bills and make the necessary
payment. The Solicitors of the Bank informed the Corporation
that they were awaiting instruction from the head office of the Bank
at Calcutta. .Thereafter, the Solicitors of the Corporation served a
notice .dated August 5, 1981 on the Bank calling upon it to make the
payment under the usance bills co-accepted by the Bank within 4 days
from the receipt of the notice. Soon thereafter the Bank filed a suit
against the Corporation and 2 others as stated hereinbefore. The
main contention of the Bank in the suit is that the Chief Branch
Manager defendant No. 2 had not the requisite authority to co·accept
the bills on behalf of the Bank and therefore, the Bank had incurred
no liability under the usance bills. There is some allegation of fraud
but it is not relevant for the present purpose. The suit is pending on
the Original Side of the Bombay High Court.
A very narrow question which we propose to examine in this
appeal is : Whether in view of the provision contained in Sec. 41 (b)
of the Specific Relief Act, 1963 ('Act' for short), the Court will have·
jurisdiction to grant an injunction restraining any person from instituting any proceeding in a court not subordinate to that from which
the injunction is sought ? The contention may be elaborated thus :
Can a person be restrained by.an injunction of the Court from instituting any proceeding which such person is otherwise entitled to institute
in a court not subordinate to that from which the injunction is
sought? In the facts of the present case, the narrow question is whether
the Corporation can be restrained by an injunction of the court from
presenting a winding·up petition a8ainst the Bank ? The liigh Court
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CoTTON CORPN. v. U.I. BANK (Desai, J.)
seems to hold that the Court has such powers in view of the provisions contained in 0.39 of the Code of Civil Procedure read with Sec.
37 of the Specific Relief Act, 1963 or in exercise of the inherent·
powers of the Court under Sec. 151 of the Code of Civil procedure.
Thfs position is seriously contested by the appellant in this appeal.
The reliefs which the Bank as plaintiff is seeking in the suit
filed by it are a declaration that Bank is not liable'to honour and·
discharge the usance biIIs co-accepted in its name by its Chief Branch
Manager-defendant 2 as envisaged by Sec. 34 and a further relief
that the disputed bills of exchange and hundies be delivered to the
Court for cancellation and be cancelled as envisaged. by Sec. 31: It is
in this suit that the Bank has obtained an interim injunction restrain·
ing the Corporation from presenting a winding-up petition against
the Bank.
·Part III of the Act bears the heading 'Preventive Relief' and
fasciculus of sections therein included. provido for injunctions generally.
Sec. 36 provides that preventive relief is granted at the discretion of
the Court by injunction, temporary or prepetual. Sec. 37 specifies
the nature and character of temporary and prepetual injunGtions.
Temporary injunctions are such as are to continue until a specified
time, or until the further order of the Court, and they may be granted
at any stage of a suit, and are regulated by the Code of Civil
Procedure, 1908. Permanent injunctions can only be granted by the
decree made at the hearing and upon merits of the suit and thereby
defendant in th~ suit is perpetually enjoined from assertion of a right
or from commission of an act, which would be contrary to the rights
of the plaintiffs. Section 38 sets out situations in which the court
can grant a perpetual injunction to the plaintiff to prevent the breach
of an obligation existing in its favour, whether expressly or by impli•
cation. Sec. 38 is thus an enabling section which confers power on
the court to grant perpetual injunction in situations and circumstances
therein enumerated. Sec. 41 caters to the opposite situation. It
provides that an injunction cannot be granted in the situation and
circumstances therein set out. The Corporation relies on Sec. 41 (b)
in support of its· contention that the court had no jurisdiction to
grant temporary injunction because perpetual injunction could not
have been granted by the Court in terms in which temporary or
interim injunction was sought. Sec. 41 (b) reads as under :
"41.
An injunction cannot be granted:-
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SUPREME COURT REPORTS
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(a) ............ _ ................ - ........ ..
(b) to restrain any person from instituting or
prosecnting any proceeding in a court not
subordinate to that from which the injunction
is sought ;
"
···············---···················
· The predecessor of Sec. 41 (b)~ Sec. 56 (b) of the Specific Relief Act
of 1887 repealed by 1963 Act read as under :
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"56.
Injunction cannot be granted :-
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(a) ······-·· .. --............ - ... .
(b) to stay proceeding in a ·court not subordinate
to that from which the injunction is sought,"
A glance at the two provisions, the existing and the repealed would
reveal the legislative response to judicial interpretation. Under Sec.
56 (b) of the repealed Act, the Court was precluded by its injunction
to grant stay of proceeding in a court not subordinate to that from
which the injunction was sought. In other words, the Court ·could
stay by its injunction a proceeding in a court subordinate to the
court granting injunction.· The injunction granting stay of proceeding
was directed to the Court and the Court has to be the Court subordinate to the one granting the injunction. This is postulated on the
. well recognised principle that the superior court can regulate proceedings in a court subordinate to it. It is implicit in this assumption
and the language used in Sec. 56 (b) that the court could not grant
injunction under Sec. 56 (b) of the repealed Act to stay proceeding
- in a court superior in heirarchy to the Court from which injunction is
sought. But by judicial interpretation, a consensus was reached that
· as injunction acts in personum while the Court by its injunction cannot stay .Proceedings in a Court of superior jurisdiction ; it could
certainly by an injunction restrain a party before it· from further
prosecuting the proceeding in other courts may be superior or inferior
in the heirarchy of courts. To some extent this approach not only
effectively circumvented the provision contained in Sec. 56 of the
repealed Act but denuded . it of its content.
The Legislature took
notice of this judicial interpretation and materially altered .the
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COTTON CORPN. v. u.1. BANK (Desai, J.)
971
language of the succeeding provision enacted in Sec. 41 (b) replacing
Sec. 56 (b) of the repealed Act while enacting Specific Relief Act of
1963. The Legislature manifestly expressed its mind by enacting
Sec. 41 (b} in such clear and unambiguous language that an injunction cannot be granted to restrain any person, the language takes
. care of. injunction acting in personnm, from instituting or prosecuting
any proceeding in a court not subordinate to that from which
injunction is sought. Sec. 4l(b} denies.to the court the jurisdiction to
·grant an injunction restraining any person from instituting or prosecuting any proceeding in a court which is not subordinate to the court
from which the injunction is sought. In other words, the court can still
grant an injunction restraining a person from instituting or prosecuting any proceeding in a court which is subordinate to the court from
which the injunction is sought. As a necessary corollary, it would
follow that the court is precluded from granting an injunction
restraining any person from instituting or prosecuting any proceeding
in a court of co-ordinate or surerior jurisdiction. This change in
language deliberaiely adopted by the Legislature after taking note of
judicial vacillation has to be given full effect.
'
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It is, t'herefore, necessary to unravel the underlying intendment
of the provision contained in Sec. 41 (b). It must at once be
conceded that Sec. 41 deals with perpetual injunction and it may as
well be conceded that it has nothing to do with interim or temporary .
injunction which as provided by Sec. 37 are dealt with by the Code
of Civil Procedure. To begin with, it can be said without fear of
contradiction that anyone having a right that is · a legally. protected
interest complains of its infringement and seeks relief through court
must have an unhindered_, uninterrupted access to law courts. The
expression 'court' here is used in its widest amplitude comprehendiug
every forutn where relief can be obtained in ·accordance with law.
Access to justice must not be hampered even at the hands of
judiciary. Power to grant injunction vests in the court unless the
Legislature.confers specifically such power on some other forum.
:Now ,access to court in search of justice according to law is the right
of a person who complains of infringement of his legally protected
interest and a fortiori therefor, no other court can by its action
impede access to justice. This principle is deducible
from the
Constitution which seeks to set up a society governed by rule of law.
As a corrolary, it must yield to another principle that the superior
court can injunct a person by restraining him from instituting or
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prosecuting a proceeding before a subordinate court. Save this
specific carving out of the area where ·access to justice may be impeded by an injunction of the court, the Legislature desired that the
courts ordinarily should not impede access to justice through court.
This appears to us to be the equitable principle underlying sec. 41 (b).
Accordingly, it must receive such interpretation as would advance the
intendment, and thwart the mischief it was enacted to suppress,
and
to keep the path . of access to justice through court
unobstructed.
Viewed from a slightly different ·angle, it would appear that the
legal system in our country envisages obtaining of redressal of wrong
or relief against unjust denial there of by approaching ·the court set
up for the purpose and invested with power both substantive and
procedural to do justice that is to grant relief against invasion or
violation of legally protected interests which are jurisprudentially
called rights. If a person complaining of invasion or violation of
his rights, is injuncted from approaching the court set up to grant
relief.by an action brought by the opposite side against whom he
has a claim and which he wanted to enforce through court, he would
have first to defend the action establishing that he has a just claim
and he cannot be restrained from approaching the couh to obtain
relief.
A person having a legal right and complains of its violation
or infringement, can approach the court and seek relief.
When such
person is injuncted from approaching the court, he has to vindicate
the right and then when injunction is vacated, he has to approach the
court for relief. In other words; he would have to go through the
gamut over again : W.hen defending against a claim of injunction the
person vindicates the claim and right to enforce the same. If successful he does not get relief but a door to court which was bolted in bis
face is opened. Why should he be expqsed to multiplicity of
proceedings ? . Jn· order to avoid such a situation the Legislature
enacted sec. 41 (b) and statutorily provided that an injunction cannot
be granted to restrain any person from instituting or prosecuting any
proceeding in a court not subordinate to that from which the
injunction is sought. Ordinarily a preventive relief by way
of
prohibitory injunction cannot be granted by a court with a view to
restraining any person from instituting or prosecuiing any proceeding ·
.and this is subject to one exception enacted in larger public interest,
namely, a superior court can injunct a person from instituting or
prosecuting an action in a subordinate court with a view to regulating
the proceeding before the subordinate courts. At any rate the court
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COTTON CORPN. v. u.1. BANK (Desai. J.)
973
is precluded by a statutory provision from granting an injunction
restraining a person from instituting or prosecuting a proceeding in ·
a court of coordinate jurisdiction or superior jurisdiction. There is
an· unresolved controversy whether a court can grant an injunction
against a person from instituting or prosecuting a proceeding before
itself but that is not relevant in the present circumstances and we do
not propose to enlarge the area of controversy.
Mr. Se.n, learned coutisel for the respondent-Bank, contended
that sec. 41 (b) is not at all attracted because it deals with perpetual
injunction and the temporary or interim injunction is regulated by
the Code of Civil Procedure specially so provided in Sec. 37 of the
Act. Expression 'injunction' in sec. 41 (b) is not qualified by an
adjective and therefore, it would comprehend both interim and
perpetual injunction .. It is, however, true that Sec. 37 specifically
provides that temporary injunctions which have to continue until a
specified time or until further order of the court are regulated by the
Code of Civil Procedure. But if a ·dichotomy is introduced by
confining Sec. 41 to perpetual injunctio~ only and Sec. 37 read with
0. 39 of the Code of Civil Procedure being confined to temporary
injunction, an unnecessary grey area will develop. It is indisputable.
that temporary injunction is granted during the pendency of the
proceeding so that while granting final relief the court is not faced
with a situation that the relief becomes infructuous or that during the
pendency of the proceeding an unfair advantage is not taken by the
party in default or against whom te~porary injunction is sought.
But power to grant temporary injunction was conferred in aid or as
auxiliary to the final relief that may be granted. · It the final relief
cannot be granted in terms as prayed for, temporary relief in the
same terms can hardly if ever be granted.
In The State of O~issa v. Madan Gopa/ Rungta(') a Constitution
. Bench of this Court clearly spelt out .the contours within which
interim relief can be granted. The Court said that 'an interim relief
can be granted only in aid of, and as ancillary to, the main relief
whieh may be available to the party on final determination of his
rii:hts in a suit or proceedings. If this be the purpose to achieve
which power to grant temporary relief is conferred, it is inconceivable
that where the final relief cannot be granted in the terms sought for
because the statute bars granting such a relief ipso facto the
(I) (1952J S.C,R. 28.
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temporary relief of the same nature cannot be granted. To illustrate
this point, let us take the relief which the Bank seeks. in its suit. The
prayer is that the Corporation be restrained by au injunction of the
Court from presenting a winding-up petition under the Companies ·
Act, 1956 or under the Banking Regulation Act, 1949.
In other
words, the Bank seeks to restrain the Corporation by an injunction
of the c~mrt from instituting a proceeding for winding-up of the
Bank. There is a clear bar in Sec. 41 (b) against granting this relief.
The Court has no jurisdiction to grant a perpetual injunction restraining a p~rson from instituting a proceeding in a court not subordinate
to it, as a relief, ipso facto temporary relief cannot be granted in the
same terms.
The interim relief can obviously be not granted also because the
obj~ct behind granting interim relief is to maintain status quo ante
so that the final relief can be appropriately ·moulded without the
party's position being altered during· the pendency of the
proceedings.
Mr. Seu, however, urged that even though the Legislature has
materially altered the language of the corresponding provision iit
sec. 56(b) of 1877 Act while enacting Sec. 41(b), yet the change in
language would have no impact on the. view of law taken by the
courts while interpreting sec; 56(b) of the repealed Act. proceeding
along this line, Mr. Sen urged that under sec. 56(b) of the 187.7 Act
even though injunction could not be granted to stay proceedings tn a
court not subordinate to that from which injunction is sought, the
Court by an interpretative process spelt out a power to grant injunction 'in personum against a party from instituting a proceediqg. It is
true that giving a· literal meaning to the provision contained in
sec. 56(b) which denied the power to the Court to grant injunction . to
stay proceedings in a court ·not subordinate to that from which
injunction is sought, the cou<t demarcated the unoccupied area by -
holding that even if the court cannot grant injunction to stay the
proceeding, it can certainly iujunct a party from ins.tituting_ or
prosecuting a proceeding in a court not subordinate to that from
which the injunction was sought But it is this very interpretatipn
which attr~cted the aitention of the Legislature, and it respondent by
specific change in language to nullify the interpretation so that it
becomes crystal clear that an injunction cannot be granted to restrain
any person from instituting or prosecuting any proceeding in a court
not subordinate to that from which the injunction was sought. The
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COTTON CORPN. v. u.1. BANK (Desai, J.)
975
power to grant injunction ill personum was thus legislatively curtailed.
Legislative response to court's interpretation has to be noticed and
in our opinion the alteration in the language provides the legislative
response to the judicial interpretation, and cannot be wished away,
but must be given effect.
Mr. Sen, however, urged that the Specific Relief Act, 1877 was
founded on English equity jurisprudence and therefore, it was
permissible to refer to English law on the subject wherever the Act
. did not deal specifically with any topic.
(See Hungerford Investment ,,,.
Trust Limited v. Haridas Mundhra & Ors.)(1)
It was further submitted that 1963 Act is equally based on the experience derived from
the working of the 1877 Act and the English equity jurisprudence
aild therefore, where light is shed by decisions in England, the same
must illumine our path. Where _provisions. are in pari
materia
between the English Act and the Indian Act and where local conditions do not materially differ from the conditions in U.K., one may
keeping in vi~w the conditions in our country look at the view taken ·
by the English courts and if consistent with our· jurisprudence, our
·social conditions, our chalked out path in which the law must move,
one can profitably take help of the decision. There would be nothing
wrong in referring to the same.
But ignoring all the relevant considerations, one cannot bodily import English decisions in our system
to develop a hybrid legal system and one cannot be so hypnotised by
English decisions to overlock legislative changes introduced in Indian
Law.
With this caution, let us refer to one or two decisions relied on
by Mr. Sen to el<pand the sweep of the language of Sec. 41\b), sci
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that the court can still injunct a person from instituting a proceeding
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which the person is otherwise entitled to institute in a co-urt of
coordinate or superior jurisdiction, in the teeth of express
'prohibition' enacted in sec·. 41(b).
To start with, it wonld be advantageous first to notice Sec.
24(') of the Supreme Court of Judicature Act of 1873 now reenacted
G
as Supreme Court of Judicature (Consolidation) Act 1925, which
reads as tinder :
"No case or proceeding at any time pending in the
High Court of Judicature or before the Court of Appeal
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shall be restrained by prohibition ,or injunction."
(1) [1972] 3 S.C.R. 699 at 701.
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It would appear at a glance that an injunction cannot be issued to
stay_ a ·pending proeeeding in the High Court of Judicature or before·
the Court of Appeal. The section does.not refer to initiation or institution of proceeding. On a grammatical interpretation oftbe section it
would be open to the court to spell out a power to grant injunctfon
to restrain a person from ·.instituting a proceeding because what is
barre4 by the statute is injunction from prosecuting a ·pending
proceeding. Compare this language 1Yith Section 41(b) which specifically provides that an-injunction cannot be granted to restrain a
'-person from instituting aud prosecuting any proceeding. The relevant provision in our country covers both the situations while in
England it covers only one situ~tion. This clear distinction in law
bas to be kept in view before applying English decisions to which
our attention was drawn.
And now to the decisions: In Cadiz Waterworks Company v.
Barnett('), the court on being satisfied that the Company was sqlvent
and that the debt was bona fide disputed' and that· the object of the
defendant in the case was not the bona fide purpose of honestly
compelling the payment of bis debt but for the purpose of making an
unjust attempt to compel them to submit to an unjust demand, restrained the respondent from presenting a petition for winding-up the
the Company in the Court. In reaching this conclusion it was
observed that if a winding-up petition is presented and advertised, it
would inflict irreparable injury on the -plantiffs, while at the ·same
moment it could not possibly do the defendant slightest good. Let
it be definitely made clear that not a whisper was raised.