Plaintiff in a joint Bar and Restaurant project sought interim injunctions against co-investors who allegedly excluded him via a company. The High Court found balance of convenience favoured defendants, held a bare injunction without other reliefs unsustainable, and dismissed both appeals upholding the trial court's order.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI MISCELLANEOUS FIRST APPEAL NO. 5885 OF 2024 (CPC)
C/W
MISCELLANEOUS FIRST APPEAL NO. 5886 OF 2024
IN MFA No. 5885/2024
BETWEEN:
SRI. SHREYAS A., S/O. P.R. ASHOK, AGED ABOUT 29 YEARS, R/AT NO.1107, 28TH MAIN ROAD, 35TH 'D' CROSS, 4TH T BLOCK, JAYANAGAR, BENGALURU-560 041
…APPELLANT
Digitally signed by SUVARNA T Location: HIGH COURT OF KARNATAKA
(BY SRI. JAYA KUMAR S PATIL, SENIOR ADVOCATE A/W SRI. VENKATESHA C., ADVOCATE)
AND:
REPRESENTED BY ITS PARTNERS. SMT. KALAVATHI C PATEL, W/O CHANDULAL N PATEL, AGED ABOUT 53 YEARS.
SRI. SAGAR C PATEL, S/O CHANDULAL N PATEL, AGED ABOUT 31 YEARS.
SMT. BHAVANI C PATEL, D/O CHANDULAL N PATEL, AGED ABOUT 28 YEARS.
ALL RESIDING AT SITE NO. 41/9, DODDAKANNAHALLI VILLAGE, VARTHU HOBLI, BENGALURU EAST TALUK, BENGALURU -560 035.
…RESPONDENTS
(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE A/W SRI. MANU K., ADVOCATE FOR C/R1 TO C/R3)
THIS MFA IS FILED UNDER ORDER 43 RULE 1(r) OF CPC, AGAINST THE ORDER DATED 27.06.2024 PASSED ON I.A. NO.3 IN O.S.NO. 3378/2024 ON THE FILE OF THE XXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU (CCH-36), DISMISSING THE I.A. NO.3 FILED UNDER ORDER XXXIX RULE 1 AND 2 READ WITH SECTION 151 OF CPC.
IN MFA NO. 5886/2024
BETWEEN:
SRI. SHREYAS A., S/O. P.R. ASHOK, AGED ABOUT 29 YEARS, R/AT NO.1107, 28TH MAIN ROAD, 35TH 'D' CROSS, 4TH T BLOCK, JAYANAGAR, BENGALURU-560 041.
...APPELLANT
(BY SRI. JAYA KUMAR S PATIL, SENIOR ADVOCATE A/W SRI. VENKATESHA C., ADVOCATE)
AND:
R/AT. NO. 1358, 1ST H MAIN,
BENGALURU-560 085
REPRESENTED BY ITS PARTNERS SMT. KALAVATHI C PATEL, W/O CHANDULAL N PATEL,
AGED ABOUT 53 YEARS.
SRI. SAGAR C PATEL, S/O CHANDULAL N PATEL, AGED ABOUT 31 YEARS.
SMT. BHAVANI C PATEL, D/O CHANDULAL N PATEL, AGED ABOUT 28 YEARS.
ALL RESIDING AT SITE NO. 41/9, DODDAKANNAHALLI VILLAGE, VARTHU HOBLI, BENGALURU EAST TALUK, BENGALURU -560 035.
...RESPONDENTS
(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE A/W SRI. MANU K., ADVOCATE FOR C/R1 TO C/R3)
THIS MFA IS FILED UNDER ORDER 43 RULE 1(r) OF CPC, AGAINST THE ORDER DATED 27.06.2024 PASSED ON I.A. NO.2 IN O.S.NO. 3378/2024 ON THE FILE OF THE XXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU (CCH-36), DISMISSING THE I.A. NO.2 FILED UNDER ORDER XXXIX RULE 1 AND 2 READ WITH SECTION 151 OF CPC.
THESE APPEALS, COMING ON FOR ADMISSION, THIS
DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
ORAL COMMON JUDGMENT
Aggrieved by the orders passed on I.A.Nos.2 and 3 in O.S.No.3378/2024 dated 27.06.2024 by the XXXV Addl. City Civil & Sessions Judge, Bengaluru (CCH-36), the plaintiff is before this Court by filing two appeals. Against the order passed on I.A.No.2, MFA No.5886/2024 is filed and against order passed on I.A.No.3, MFA No.5885/2024 is filed. As the trial Court had disposed of the applications by way of a common order, this Court is passing a common order in both the appeals.
He had filed the suit seeking permanent injunction restraining defendant Nos.1 and 2 from interfering with the plaintiff’s right to enter in the property and inspect the books of accounts and also he is seeking direction to defendant Nos.1 and 2 not to operate the Restaurant and
Bar constructed over the property without giving the rightful share of profits to the plaintiff and permanent injunction restraining defendant No.3 – Company from
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managing and operating the Restaurant and Bar constructed over the property and permanent injunction restraining defendant No.3-Company from entering into any agreement/s with third parties with respect to the Restaurant and Bar constructed over the suit schedule property and direct defendant No.4-firm from not to enter into any agreement/s with defendant No.3 to operate in Restaurant and Bar constructed over the schedule property. It is the case of the plaintiff that the plaintiff and defendant Nos.1 and 2 with an objective to start an establishment comprising of Bar and Restaurant, suitable premises for doing the business, they approached defendant No.4 which is the partnership firm and they have entered into a lease agreement dated 27.01.2023 with defendant No.4-Firm, which was registered in the office of Sub-Registrar, Shivajinagar, Bangalore. As per the lease agreement, the rent for the property is
Rs.6,51,600/- and security deposit is Rs.58,64,400/-. As per the agreement, the share of the security deposit paid by the plaintiff is Rs.19,54,800/-. Thereafter, they have
jointly opened the Bank Account with HDFC Bank on 30.01.2023. Under the lease agreement, defendant No.4 has permitted the plaintiff and defendant Nos.1 and 2 to put up the construction after obtaining sanction plan and necessary permissions from the BBMP authorities. Accordingly, they have jointly applied to the BBMP for the sanction plan and license was granted on 24.03.2023. They have also obtained commencement certificate from the BBMP on 22.06.2023 and also permission from the Karnataka State Pollution Control Board. The plaintiff and defendant Nos.1 and 2 have equally contributed for all the affairs. At paragraph No.11 of the plaint, it is stated that for the purposes of running the Restaurant and Bar, the plaintiff and defendant Nos.1 and 2 have decided to open another account in HDFC Bank under the name and style of M/s. Hyperion Hospitality Ventures Pvt. Ltd. The plaintiff and defendant Nos.1 and 2 have jointly obtained Pan Card from the Income Tax Department in the name of said M/s. Hyperion Hospitality Ventures Pvt. Ltd. dated 07.12.2023. It is the case of the plaintiff that the total estimated cost
of the project was Rs.7 to 8 crores. The plaintiff had invested an amount of Rs.2,74,00,000/- (Rupees Two Crores Seventy Four Lakhs only) and defendant No.1 had invested an amount of Rs.2,64,00,000/- (Rupees Two Crores Sixty Four Lakhs only) and also defendant No.2 had invested an amount of Rs.2,40,00,000/- (Rupees Two Crores Forty Lakhs only). The plaintiff during the month of February and March 2024 was busy with his wedding and defendants have assured that they will look after the project works and at that juncture, the construction work of Restaurant and Bar was almost completed and interior work has commenced. The defendant Nos.1 and 2 with a mala-fide intention to remove the plaintiff from the project disassociated the plaintiff with the present works. On further investigation, it was revealed that defendant Nos.1 and 2 had incorporated a company under the name and style of M/s. Hyperion Hospital Ventures Pvt. Ltd. In the month of April, when the plaintiff came to oversee the project, the Watchmen and the Construction Engineers restricted the plaintiff from entering into the property
under the instructions of defendant Nos.1 and 2, which made the plaintiff to come before the Court by filing the present suit.
statement. It is the case of the defendants that as the plaintiff had not shown any interest to continue with the business. They have completed the construction and they
have moved on and they have established the business and according to them, the suit i.e., filed by the plaintiff in the present form is not maintainable. The plaintiff also filed IA Nos.2 and 3. I.A.No.2 is filed seeking an adinterim order against defendant Nos.1, 2 and 3 from continuing with the construction of the Restaurant and Bar over the schedule property, till the disposal of the suit and
I.A.No.3 is filed seeking an ad-interim injunction against defendant Nos.1, 2 and 3 from entering into any type of agreement or contract with the third parties for the operation and management of the Restaurant and Bar constructed over the schedule property, till the disposal of
the suit. By the order impugned, the trial Court had dismissed both the applications filed by the plaintiff. While dismissing those applications, the Court had specifically observed that there are claims and counter claims regarding involvement of the parties to the suit in the development of the project that can be probed in the full fledged trial. At this juncture, the relief as claimed in I.A.No.2 is granted and continued to remain in the force, it will cause monetary loss to the defendants as well as entire project will not be materialized. Substantial mischief
will be caused to the defendants. The Court has also observed that even the relief that is sought in I.A.No.3 cannot be continued because, in order to run a Bar and Restaurant, the defendant Nos.1 to 3 require to enter into contract with the third parties for supply of beverages and
for supply of food, etc. They have invested money to obtain the DIN license. Some works are to be assigned to
the third parties by way of contract for which, the defendants required to enter into contract with third parties. The plaintiff might have invested his money in the
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project, his remedy is to seek for the accounts. If the entire project is stalled by way of injunction, ultimate loss will also cause to the plaintiff and accordingly, both the applications were dismissed.
appearing for the appellant-plaintiff submits that it is an admitted fact that the plaintiff and defendant Nos.1 and 2 have taken the property on lease and all the parties have contributed equally for the same and in respect of the said premises, he is also co-owner and the purpose of taking the said premises on lease is to establish a Bar and Restaurant. Now, defendant Nos.1 and 2 have colluded together and they themselves formed into a Company and they are going ahead with the business excluding the plaintiff. The defendants cannot be permitted to exclude the appellant/plaintiff. It is submitted that even as of now the plaintiff is co-owner along with defendant Nos.1 and 2.
The trial Court without considering all these aspects, had given a finding that the relief should have been something
else but not an injunction. Learned Senior Counsel submits that if the defendants are permitted to go ahead with the construction and operation and also if they are permitted to enter into an agreement with the third parties, it would cause lot of hardship and the purpose for which the suit is filed will be frustrated. He has relied on the judgment of the Hon’ble Apex Court in case of Julien Educational Trust vs. Sourendra Kumar Roy and Others reported in (2010)1 SCC 379 . He relied on paragraph Nos.17 to 27, which reads as under:
"17. Mr Ghosh urged that on the basis of the evidence on record, a prima facie case had been made out to go to trial and if the nature and character of the suit properties were allowed to be altered during the pendency of the suit, the very purpose for which the appellant had filed the suit for specific performance would be rendered nugatory.
18. Mr Ghosh emphasised that unless specific orders were passed to a restrain the respondents, and in particular Respondents 9 to 11, from altering the nature and character of the suit property, including the erection of
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constructions thereupon, the appellant Trust would suffer irreparable loss and injury which, in this particular case, could not be compensated in terms of money.
19. Mr R.F. Nariman, learned Senior Advocate, who appeared for the subsequent purchasers and later on impleaded as Respondents 9 to 11, submitted that at this stage of the proceedings, in the absence of any evidence it would not be possible for this Court to arrive at a conclusion that a concluded contract had been arrived at between the parties, particularly when the case made out on behalf of the appellant that the draft deeds of conveyance had been approved by the respondents, was strongly disputed.
20. Mr Nariman urged that till such time as it was not established that the handwriting and the signatures on the draft deeds were those of the respondents, no reliance could be placed on them. Mr Nariman urged that had there been any agreement between the appellant and Respondents 1 to 8, there would have been evidence of at least some amount being paid by way of earnest money. In this case, however, there is no evidence that even a single farthing was paid by the appellant Trust to the
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respondents in pursuance of the proposed agreement for sale.
21. Apart from the above, Mr Nariman also submitted that even the balance of convenience and inconvenience lay in favour of the respondents since if an order of injunction was passed, as prayed for by the appellant, the respondents would not be able to utilise the land which they had purchased till the disposal of the suit. On the other hand, if ultimately the appellant succeeded, it could always be compensated in terms of money.
22. Mr Kalyan Bandopadhyaya, learned Senior Advocate, appearing for Respondents 1 to 8, adopted the stand taken by Mr Nariman and added that the appellant Trust had shown no interest in purchasing the suit property since at no point of time had they shown their readiness and willingness to complete the sale transaction. The appellant Trust neither paid any amount by way of earnest money nor had it ever intended to do so. As a result, it did not lie in the mouth of the appellant Trust to seek a decree for specific performance when it had failed to take any positive steps in that regard.
23. Since the suit for specific performance is pending before the trial court, we can consider the materials before us and the arguments
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advanced only for the limited purpose of deciding the question of granting interim orders during the pendency of the suit.
24. We are satisfied from the materials on record that a prima facie case has been made out by the appellant Trust as to the agreement for sale, which has to go to trial. Whether there was a concluded contract or not between the appellant Trust and Respondents 1 to 8 is a matter of evidence and can only be gone into during the trial of the suit. This brings us to the all important question as to whether the balance of convenience and inconvenience lay in favour of the grant of an interim order of injunction in favour of the appellant Trust and as to whether the appellant Trust would suffer irreparable loss and injury, if no such interim order was passed.
25. Although, it has been submitted by Mr Nariman as well as Mr Bandopadhyaya that loss, if any, to the appellant Trust could be compensated in terms of money, the said submission does not appear to hold good in the instant case. Equally important is the question of balance of convenience and inconvenience since the principal object of the appellant Trust in wanting to acquire the suit property was to extend its school unit at Kolkata. If the suit property is allowed to be commercially exploited
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by raising multi-storeyed structures thereupon, the entire object of the suit filed by the appellant Trust will be rendered meaningless and the purpose for which the suit had been filed would be completely defeated.
26. In such circumstances, we are of the view that this is one such case where an interim order is required to be passed to maintain the status quo of the suit property, during the pendency of the suit for specific performance filed by the appellant Trust, but at the same time appropriate directions should also be given so that the suit is disposed of expeditiously. At this stage, it would not be appropriate on our part to express any further opinion on the merits and demerits of the suit.
27. Having found a prima facie case in favour of the appellant Trust, it is our view that in the light of the principles of balance of convenience and inconvenience, interim relief should be granted to the appellant Trust. Accordingly, we allow the appeals and set aside the order of the High Court and direct that the respondents shall not alienate or encumber the suit property or change the nature and character thereof till the disposal of the suit for specific performance filed by the appellant Trust."
Relying on this judgment, learned Senior Counsel submits that unless and until an injunction is granted, lot of prejudice will be caused to the plaintiff and the plaintiff could make out a prima facie case and also balance of convenience lies in his favour.
is stated that he is not interested to go ahead with the business. Further, learned Senior Counsel has drawn the attention of the Court to the plaint and submits how from one paragraph to the other inconsistent stands have been taken by the plaintiff. At one breath, it is stated that he is
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aware of the said Company floated i.e., M/s. Hyperion Hospitality Ventures Pvt. Ltd. At paragraph No.15 of the plaint, it is stated that as if the said Company is floated behind the back of the plaintiff. It is submitted that as rightly observed by the Court, the suit in its present form the plaintiff cannot have any relief from the Court. Learned Senior Counsel submits that the plaintiff cannot seek an order from the Court restraining the defendants from carrying on the business. If the main relief that is sought is injunction and it appears that he is not continuing the
business or if he is not made as partner, defendants can continue with the business and there cannot be any injunction restraining the defendants from continuing the business or entering into contracts with the third parties. It is submitted that they have already invested huge amount and they are carrying out the business and the trial Court had rightly considered all the aspects and refused to grant injunction. A well considered order passed by the trial Court requires no interference of this Court
while exercising the jurisdiction under article 227 of the Constitution of India.
perused the plaint. As rightly pointed out by the learned Senior Counsel for the respondents, at one stretch, at paragraph No.11, it is stated that the plaintiff and defendant Nos.1 and 2 have decided to open another account in HDFC Bank in the name and style of M/s. Hyperion Hospitality Ventures Private Limited and they have jointly obtained the Pan Card from the Income Tax Department dated 07.12.2023. When it comes to paragraph No.15, it is stated that on further investigation, it was revealed that defendant Nos.1 and 2 had
incorporated a Company wherein the defendant No.2 and the wife of defendant No.1 are the Directors of the said Company. Defendant Nos.1 and 2 with an intention to remove the plaintiff from the project had formed a Company with 50% of share each, thereby excluding the plaintiff. It is the case of the defendants that the plaintiff is not interested to join the business. In that regard, they
have filed before this Court the WhatsApp chat in the group. The trial Court had rightly held that an injunction as sought for by the plaintiff cannot be granted. The relief
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that is sought is a bare injunction. He is not seeking any relief from the defendants. He has not sought for any other relief except saying that the defendants shall be stopped from doing the business until the plaintiff is part of it. The interim relief that is sought by virtue of I.A.Nos.2 and 3 is in the same nature. While granting injunction, the Courts have to look at the prima facie case, balance of convenience and irreparable loss. It is submitted that everything is ready and defendants are yet to start the business and they have invested an amount of Rs.16 crores and according to the plaintiff, he had invested an amount of Rs.2,74,00,000/-. Now looking at all these aspects, this Court is of the view that the balance of convenience is in favour of the defendants and in fact, if the injunction is granted as sought for by the plaintiff, it would cause irreparable loss to the defendants. According to the plaintiff, he is also a part of the Company. The Court has observed that even if such an order is passed, it would also have an effect on the plaintiff. In that view of the matter, this Court is of the view that there are no
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reasons to interfere with the well considered order passed by the trial court. Accordingly, this Court is passing the following:
ORDER
(ii) All IAs. in the appeals shall stand closed.
SD/(LALITHA KANNEGANTI) JUDGE
KA List No.: 1 Sl No.: 29
2 issues framed by the court
Whether ad-interim injunctions restraining defendants from constructing/operating the Restaurant and Bar and from entering into third-party agreements should be granted.
Whether the trial court's dismissal of the plaintiff's interim injunction applications warranted interference.
Colour shows how this judgement treated each authority
Julien Educational Trust vs. Sourendra Kumar Roy and OthersReferred
(2010)1 SCC 379 · Who else cites this
2 provisions across 1 enactments
Shreyas A.
Dhanashankara Reddy B.N.
Prasad Ramappa
M/s Hyperion Hospitality Ventures Pvt. Ltd.
M/s Bangalore Timber and Plywoods
Lalitha Kanneganti
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
