Date of Judgement:
Appellant – Ramdas Khatau
Respondent – Atlas Mills Co. Ltd.
In order that a party may be entitled to relief, he must show that he has suffered some legal wrong.
- Section 38 of the Specific Relief Act, 1963 – Perpetual injunction when granted
- Section 42 of the Specific Relief Act, 1963 – Injunction to perform negative agreements
- The agreement to which the appellant and the respondent entered had an arbitration clause. A dispute arose between the parties wherein the appellants alleged that the respondent is guilty of misrepresentation and hence not bound by the contract. Further the appellants urged the dispute to be referred to an arbitrator.
- The respondent contended that the appellant cannot both refute the contract and demand for the dispute to be referred to arbitration according to the agreement. Hence, the respondent initiated a suit for injunction against the arbitration proceedings.
- The counsel for the appellants argued that, even if the arbitration proceedings is alleged to be futile the court has no jurisdiction to grant injunction over an arbitration proceeding. His case was that the specific relief act is an exhaustive act and English jurisprudence cannot be relied upon. The right to an injunction is governed by the provisions of the Specific Relief Act. Later during the appeal, the contention that the contract was invalid on ground of misrepresentation was receded and confined the arbitral dispute to whether the contract can be withdrawn.
- On the other hand, the respondents argued that points out that when an award is made it shouldbe enforced unless somebody takes steps for a set asideand therefore, it is not like in the English cases in which it is said that, if futile proceedings for arbitration are taken, the party against whom they are taken is to do nothing, and he will suffer no loss. In India the party has to take proceedings to prevent the award becoming enforceable. The respondent also contended that a prayer for perpetual injunction can be granted when breach of an obligation is in favour of an applicant to the arbitration.
- Whether a perpetual injunction can be granted against the arbitral proceeding.
- This court accepted the contention of the appellant that the appellant did not owe any obligation and hence will not fall under the section for perpetual injunction.
- The court also held that the specific relief act is not exhaustive by referring to the preamble of the Indian Contracts Act and also observed that there was no express provision by the parliament to deal with this case, hence it needs to look at English cases to ascertain whether the courts have right to restrain an arbitral proceeding.
- Referring and examining the various English cases it held that courts have no jurisdiction to grant an injunction against an arbitral proceeding in respect of a dispute outside the agreement to refer, even though the proceeding may be futile as there is no legal damage caused.
- Hence the court allowed the appeal and held that the lower court was wrong in granting a perpetual injunction.
When no legal damage or injury is caused, no party can approach a court for injunction for that act.
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