2002 (7) TMI 812 - SC - Indian Laws

Summary

Issues Involved:
1. Grant of interim injunction.
2. Possession and termination of dealership agreement.
3. Adherence to principles of natural justice.
4. Balance of convenience and irreparable injury.
5. Validity of the revocation order.

Detailed Analysis:

1. Grant of interim injunction:
The appeals were filed by the defendant against the High Court's order allowing the plaintiff's appeal under Order 43 Rule 1(r) C.P.C. The plaintiff sought an interim injunction to restrain the defendants from interfering with the possession and operation of a petrol pump. The Trial Court denied the interim injunction, noting the factual position and documents indicating that the defendant had taken possession of the petrol pump on 22nd September 2000. The High Court, however, reversed this decision, granting the interim injunction on the grounds that the termination of the dealership agreement was prima facie illegal and that the plaintiff was in possession of the property at the time of filing the suit.

2. Possession and termination of dealership agreement:
The Trial Court found that the plaintiff failed to prove possession of the petrol pump after 22nd September 2000 and that the defendant had legally taken over possession. The High Court, however, observed that the plaintiff was in possession when the suit was filed and that the termination of the dealership agreement was not conducted in accordance with the principles of natural justice, as the plaintiff was not given an opportunity to rectify the alleged breach before termination.

3. Adherence to principles of natural justice:
The High Court noted that the Corporation did not follow the procedure outlined in the agreement, which required giving the dealer an opportunity to rectify any breaches before terminating the agreement. This failure led the High Court to conclude that the termination was prima facie illegal, thus justifying the grant of an interim injunction.

4. Balance of convenience and irreparable injury:
The Trial Court held that the plaintiff did not demonstrate a strong prima facie case, balance of convenience, or irreparable injury, as the plaintiff could be compensated with damages. The High Court disagreed, finding that the plaintiff would suffer irreparable injury if the interim injunction was not granted, as the termination without an opportunity to rectify the breach caused serious prejudice.

5. Validity of the revocation order:
The Supreme Court emphasized that the grant of an interlocutory injunction requires the exercise of judicial discretion, applying tests such as prima facie case, balance of convenience, and irreparable injury. The Court found that the High Court had overstepped by treating the matter as if deciding the suit, rather than focusing on the interim relief criteria. The Supreme Court noted that the High Court failed to consider the Trial Court's reasons for denying the interim injunction and the adequacy of damages as a remedy.

Conclusion:
The Supreme Court concluded that the High Court's order granting the interim injunction was unsustainable. The appeals were allowed, the High Court's order was set aside, and the Trial Court's order was restored. The Supreme Court clarified that its observations would not affect the merits of the case during the trial.