Acts in Contravention of Orders of Injunction —The Consequences

Introduction

Interlocutory Orders

Interlocutory orders or as we know them orders of injunction passed by courts pending disposal of the suit, application or proceedings are a regular feature in every lawyer’s practice. You are either applying for the same if you are a plaintiff or attempting to prevent the same being passed against you if you are a defendant. We encounter this day in and day out. These orders inure till the disposal of the suit or till they are otherwise set aside in appeal or vacated due to changed circumstances or lapsing of the orders in cases where the orders are limited only up to a particular date or only for a particular purpose. This article will address the issue of the consequences that ensue after passing of an order of injunction.

Orders of injunction are passed in view of the inherent jurisdiction of the court under Order 39 of the Code of Civil Procedure 1908[1] (CPC) which sets out the various circumstances in which an order of injunction can be passed. There also orders of attachment before judgment under Order 38[2] which are also passed. A third type of injunctive orders which we regularly come across are orders passed by the court under Section 9 of the Arbitration and Conciliation Act 1996[3]. There are also orders of injunction passed in terms of exercise of writ jurisdiction in constitutional matters where the challenges normally are to orders of inferior courts, authorities, tribunals, etc.

The proposition

What is to happen to these orders of injunction and what is the consequence of these orders of injunction when parties choose to ignore them. Can a party choose to simply say I will not follow the order whatever it maybe and render the order passed as infructuous or non-effective.

A question also arises as to what are the remedies available to a person who has an order of injunction his favour and finds the defendant or respondent is not complying with the order.

As is well known, these orders take many forms and usually are prohibitory in nature and meant to preserve the subject of the dispute or prevent damage or loss to the party applying. Orders of injunction are normally sought (to prevent parties from entering into third-party contracts, breaching contracts, creating third-party rights, trespassing, etc.) so that the entire suit or action in which final relief or orders are to be passed is not rendered infructuous. There are innumerable instances where orders of injunction are sought such as in suits/actions for specific performance, for trespass, for breach of contractual rights, for land, pertaining to development rights, partnership disputes and partition actions amongst a host of others. It is in such suits/actions that the plaintiff applies for interim relief and depending upon the merits of the case the court passes a temporary injunction pending disposal of the suit against the defendant.

As is the case many a times the defendant would not want to be bound by the order and would try to get out of it or frustrate it by creating third-party rights or dealing with the property even after orders of injunction.

In order that this does not happen, time and again in the decisions which I will now elaborate it has been held that orders of injunction are required to be obeyed and cannot be flouted with impunity. The consequence of flouting the same is that the entire transaction or actions sought to be taken contrary to the orders of injunction are declared to be void and non-effective. Courts have time and again held that in fact the wrong or action or transfer contrary to an order of injunction must be rolled back or treated as non-effective. The remedy in such cases available is to apply to the court to declare the transactions which have transpired as of no effect and not binding on the party in whose favour the relief of injunction is continuing. In most cases this will require an amendment to bring on record the facts as are relevant and necessary prayers seeking to declare the impugned transactions as illegal, not binding or ineffective.

The law on the subject

The following cases set out the view consistently taken by courts:

(1) Surjit Singh v. Harbans Singh[4] (M.M. Punchhi and Sujata V. Manohar, JJ.):

“4. … In defiance of the restraint order (of the Court), the alienation/assignment was made. If we were to let it go as such, it would defeat the ends of justice and the prevalent public policy. When the Court intends a particular state of affairs to exist while it is in seisin of a lis, that state of affairs is not only required to be maintained, but it is presumed to exist till the court orders otherwise. The Court, in these circumstances has the duty, as also the right, to treat the alienation/assignment as having not taken place at all for its purposes.”

(2) Tayabbhai M. Bagasarwalla v. Hind Rubber Industries (P) Ltd.[5] (B.P. Jeevan Reddy and Suhas C. Sen, JJ.):

“28. … these orders (of the court) have to be obeyed and their violation can be punished even after the question of jurisdiction is decided against the plaintiff provided the violation is committed before the decision of the court on the question of jurisdiction.”

(3) Jehal Tanti Nageshwar Singh[6] (G.S. Singhvi and S.A. Bobde, JJ.):

“Since the sale deed was executed in favour of Respondent 1 in the teeth of the order of injunction passed by the trial court, the same appears to be unlawful.

(4) Satyabrata Biswas v. Kalyan Kumar Kisku[7] (S. Mohan and A.S. Anand, JJ.):

23. … Any act done in the teeth of the (court) order of status quo is clearly illegal. All actions including the grant of sublease are clearly illegal.”

(5) In Jehal Tanti v. Nageshwar Singh[8], it was held:

“11. The same issue was considered in Vidur Impex and Traders (P) Ltd. v. Tosh Apartments (P) Ltd. [9] and it was held:

  1. … At the cost of repetition, we consider it necessary to mention that Respondent 1 had filed suit for specific performance of agreement dated 13-9-1988 executed by Respondent 2. The appellants and Bhagwati Developers are total strangers to that agreement. They came into the picture only when Respondent 2 entered into a clandestine transaction with the appellants for sale of the suit property and executed the agreements for sale, which were followed by registered sale deeds and the appellants executed agreement for sale in favour of Bhagwati Developers. These transactions were in clear violation of the order of injunction passed by the Delhi High Court which had restrained Respondent 2 from alienating the suit property or creating third-party interest. To put it differently, the agreements for sale and the sale deeds executed by Respondent 2 in favour of the appellants did not have any legal sanctity.

 (6) DDA v. Skipper Construction Co. (P) Ltd.[10]:

“17. The principle that a contemnor ought not to be permitted to enjoy and/or keep the fruits of his contempt is well settled. In Mohd. Idris v. Rustam Jehangir Babuji[11], this Court held clearly that undergoing the punishment for contempt does not mean that the court is not entitled to give appropriate directions for remedying and rectifying the things done in violation of its orders.  The petitioners therein had given an undertaking to the Bombay High Court.  They acted in breach of it.  A learned Single Judge held them guilty of contempt and imposed a sentence of one month’s imprisonment.  In addition thereto, the learned Single Judge made appropriate directions to remedy the breach of undertaking.  It was contended before this Court that the learned Judge was not justified in giving the aforesaid directions in addition to punishing the petitioners for contempt of court.  The argument was rejected holding that the Single Judge was quite right in giving appropriate directions to close the breach (of undertaking).

  1. The above principle has been applied even in the case of violation of orders of injunction issued by civil courts. In Clarke v. Chadburn[12], Sir Robert Megarry V.C. observed:

I need not cite authority for the proposition that it is of high importance that orders of the court should be obeyed. Wilful disobedience to an order of the court is punishable as a contempt of court, and I feel no doubt that such disobedience may properly be described as being illegal. If by such disobedience the persons enjoined claim that they have validly affected some charge in the rights and liabilities of others, I cannot see why it should be said that although they are liable to penalties for contempt of court for doing what they did, nevertheless those acts were validly done.  Of course, if an act is done, it is not undone merely by pointing out that it was done in breach of the law. If a meeting is held in breach of an injunction, it cannot be said that the meeting has not been held.  But the legal consequences of what has been done in breach of the law may plainly be very much affected by the illegality.  It seems to me on principle that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them.”

(7) In Century Flour Mills Ltd. v. S.  Suppiah[13], it was held by a Full Bench of the Madras High Court that where an act is done in violation of an order of stay or injunction, it is the duty of the court, as a policy, to set the wrong right and not allow the perpetuation of the wrongdoing. The inherent power of the court, it was held, is not only available in such a case, but it is bound to exercise it to undo the wrong in the interest of justice. That was a case where a meeting was held contrary to an order of injunction. The Court refused to recognise that the holding of the meeting is a legal one. It put back the parties in the same position as they stood immediately prior to the service of the interim order.

(8)  In Sujit Pal v. Prabir Kumar Sun[14] a Division Bench of the Calcutta High Court has taken the same view. There, the defendant forcibly dispossessed the plaintiff in violation of the order of injunction and took possession of the property. The Court directed the restoration of possession to the plaintiff with the aid of police. The Court observed that no technicality can prevent the court from doing justice in exercise of its inherent powers. It held that the object of Rule 2-A of Order 39[15] will be fulfilled only where such mandatory direction is given for restoration of possession to the aggrieved party.  This was necessary, it observed, to prevent the abuse of process of law.

(9) In Keshrevial Jivji Shah v. Bank of   Maharashtra[16], it was held:

“27. We cannot accept Shri Naphade’s contention that observations of the Supreme Court in Surjit Singh[17] should be read as restricted to proceedings under Order 22 Rule 10 of the Civil Procedure Code and the same cannot be extended to defiance of injunction order issued under Order 39 Rule 1 of the Civil Procedure Code. Once the issue is placed on the pedestal of public policy and the very faith of litigants in rule of law and administration of justice, then it is not possible to make the distinction or bifurcation suggested by Shri Naphade. It would mean that consequences of nullifying such transaction not being provided by the statute, it would not lose its legal efficacy even if it is in utter disregard to or in violation of or breach of prohibitory order or order of injunction issued by a court of law. It would mean that parties can breach and violate court orders openly and with impunity neither they nor the beneficiaries suffer any consequences. It is time that we recognise the principle that transfer of immovable property in violation of an order of injunction or prohibition issued by court of law, confers no right, title or interest in the transferee, as it is no transfer at all. The transferee cannot be allowed to reap advantage or benefit from such transfer merely because he is not party to the proceedings in which order of injunction or other prohibitory direction or restraint came to be issued. It is enough that the transferor is a party and the order was in force. These two conditions being satisfied, the transfer must not be upheld. If this course is not adopted then the tendency to flout orders of courts which is increasing day by day can never be curbed. The court exercises its powers on the foundation of respect and regard for its authority by litigating public. People would lose faith and respect completely if the court does not curb and prevent this tendency. The note of caution of the Supreme Court must be consistently at the back of everybody’s mind. Therefore, Shri Naphade is not right in the distinction which he is trying to make.

  1. Equally untenable is the contention of Shri Naphade that an order of injunction will bind only the transferor in this case. It is his submission that the said order does not bind the world at large. He submits that ownership rights are neither taken away nor restricted in any manner by order of injunction or other preventive directions. He submits that the transfer in favour of his client was thus neither invalid nor illegal, leave alone null and void. For the reasons already recorded above, we find it difficult to accept this contention of Shri Naphade. Decision of the Supreme Court in Krishan Kumar NarulaState of Jammu & Kashmir[18] has no application. There, the Supreme Court was distinguishing an order of stay from an order of injunction. The distinction was made in the context of consequences upon breach and violation of such orders. It is in that context that the Supreme Court observed that the order of stay is qua a Court, whereas an order of injunction reaches and touches a party to the lis. These observations cannot be applied when it is noticed that during the pendency of an order of injunction, immovable property, which is subject-matter of restraint or injunction, is transferred. When this course is admittedly adopted, then there is no choice but to declare the transaction as illegal. There is no question of then deciding the nature and effect of the order of injunction.”

Other remedies

There is also a remedy available to apply for holding the violator guilty of civil contempt under Section 2(b) of the Contempt of Courts Act, 1971[19]. This remedy enables the court to (if contempt is proved) pass orders for detention of the contemnor which is a strong deterrent and usually results in the contemnor reversing the transaction or step taken in order to avoid the stringent punishment of imprisonment. In cases of companies the directors can be hauled up for contempt and punished.

It must however be noted that since the orders of injunction operate only till the disposal of the suit finally in the event that there is a transaction which is contrary to the injunction the same would not take effect if the suit is decreed in favour of the plaintiff but in the event the suit of the plaintiff fails the necessary consequences is that the order itself of temporary injunction comes to an end an d in that event the transaction pending the suit would continue and take effect.

Conclusion                       

Operative orders of injunction cannot be ignored and if so ignored will not only invite the wrath of the court but will invariably have the effect of the court nullifying the transactions and preventing the defaulting party acting contrary to injunctions issued till the injunctive relief is in force.


*Advocate, High Court, Bombay. Assisted by Mayur Agarwal, Arjun Prabhu and Sheetal Parkash. Author can be reached at karlkshroff1@gmail.com.

[1] Order 39, Code of Civil Procedure 1908.

[2] Order 38 CPC.

[3] Section 9, Arbitration and Conciliation Act 1996.

[4] (1995) 6 SCC 50, 52.

[5] (1997) 3 SCC 443, 460. Also see paras 15-18, 22 & 28, pp.   453-460.

[6] (2013) 14 SCC 689, 695, para 13.

[7] (1994) 2 SCC 266, 276.

[8] (2013) 14 SCC 689, 694-695.

[9] (2012) 8 SCC 384, 414.

[10] (1996) 4 SCC 622, 635-636.

[11] (1984) 4 SCC 216.

[12] (1985) 1 WLR 78.

[13] 1975 SCC OnLine Mad 73.

[14] 1985 SCC OnLine Cal 146.

[15] Rule 2-A, Order 39 CPC.

[16] 2004 SCC OnLine Bom 368.

[17] (1995) 6 SCC 50.

[18] (1967) 3 SCR 50.

[19] Section 2(b) of Contempt of Courts Act, 1971.

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