This article has been published by Legal Era at Supreme Court Clarifies Right to Appeal in Ex-Parte Ad-Interim Injunctions under Commercial Courts Act.

The Supreme Court judgment is a welcome step in the right direction towards upholding the autonomy of an aggrieved party to choose the remedy it seeks to avail and grants much needed clarity on the scope and tenets of Section 13 of the CC Act.

The scope and rationale of an ex-parte ad-interim injunction has been subject to lengthy judicial discussions in India. Pertinently, the Code of Civil Procedure, 1908 (“CPC”) provides a party with two statutory remedies to impugn the interim injunction i.e., either by an application under Order 39 Rule 4 of the CPC or by way of appeal under Order 43 Rule (1)(r) of the CPC. Despite the legislative intent which confers both the distinct remedies upon the aggrieved party, judicial trends have shown a flavor of preference to the remedy under Order 39 Rule 4 of CPC before resorting to an appeal. A fortiori, the remedy provided under Order 39 Rule 4 of CPC ensures to maintain judicial efficiency and aims to avoid a burden on higher appellate courts.

Judicial trend and interpretation

Time and again, emphasis has been laid by courts to follow the established practice of exercising the remedy provided under Order 39 Rule 4 to an interdicted party prior to moving to an appellate court. The plausible judicial justification was also premised on the pretext that the court which has passed the ex-parte injunction ought to be given an opportunity to take into account the submissions of the aggrieved party, once present before it, and accordingly, modify the injunction, if required; prior to moving to the appellate court.

Although maintaining judicial efficiency and consistency within the same court is necessary to avoid judicial frustration and forum shopping, the statutory rights of parties ought to be maintained above any judicial fettering. The legislative intent behind Order 43 Rule 1(r) of CPC clearly evidences that there is neither any restriction nor any negative covenant qua Order 39 Rule 4 or Order 43 Rule 1(r). The CPC itself does not imply a stricture to prefer an application over appeal, and the Supreme Court of India has also pronounced that “…the choice is for the party affected by the order either to move the appellate Court or to approach the same Court which passed the ex parte order for any relief”. (Ref: Venkatasubbiah Naidu vs S. Chellappan and Ors., 2000 (7) SCC 695).

Intersection of Commercial Courts Act, 2015 (“CC Act”) and CPC

Brought in with the objective of expeditious disposal of commercial matters, the CC Act under Section 13 grants an aggrieved party the statutory right to file and maintain an appeal before the ‘Commercial Appellate Court’. This provision is a structured appellate mechanism enacted with the legislative rationale to streamline and expedite commercial suits.

More prominently, Section 13(1A) of CC Act specifically mentions Order 43 of the CPC, which lists the range of appealable orders under CPC and includes within its fold, an order issued under Order 39 Rule 1 and 2 of CPC. On a plain reading, the proviso to Section 13 (1A) of CC Act is an enabling, rather than a disabling, provision. However, the said provision is to be read in conjunction with the caveat which specifically states that an appeal ‘shall’ lie only from orders which are ‘specifically’ enumerated under Order 43 of the CPC. The occurrences of the expression ‘shall’ and ‘specifically’ in the proviso has to be noted to have a correct understanding the legislative import in framing the scheme of Section 13 of the CC Act. (Ref: Bank of India v. M/s. Maruti Civil Works, 2023 SCC OnLine Bom 2667)

The Distinction

Albeit courts have preferred that parties ought to exhaust their right of application before the same court prior to appealing in the appellate court, the distinction in the CC Act and CPC lies in their scope, procedure, and ambit of rights available to seek a remedy.

Under CPC, an aggrieved party has two remedies against a positive order (order granting injunction) i.e., application under Order 39 Rule 4 and/or appeal under Order 43 Rule 1(r); while there exists only one remedy against a negative order (order refusing injunction) i.e., appeal under Order 43 Rule 1(r). Therefore, this dichotomy tends to afford to the courts the discretion to determine and interpret whether a party must first exhaust the former before availing the latter.

Per contra, under Section 13(1A) of the CC Act, there is a clear legislative mandate that an appeal lies exclusively in terms of Order 43 of CPC, without any scope of interpretation or prerequisite to first approach the trial court for modification under Order 39 Rule 4. Consequently, if a party chooses to file an appeal under Section 13(1A) of the CC Act, the question of whether an application under Order 39 Rule 4 must be pursued beforehand does not arise for consideration, as the right to appeal is unfettered and independent in commercial matters.

Can the right to appeal be restricted?

Right to appeal conferred by Order 43, Rule 1 (r) of CPC is a statutory right which cannot be and ought not be restricted when no restriction is found in Order 43, Rule 1 (r) of the CPC itself. The legislature created an unqualified right of appeal against any order, passed under Order 39, Rules 1, 2, 2-A, 4 and 10 of CPC, whether inter partes or ex-parte, by a speaking or non-speaking order.

The statutory provisions for obtaining reliefs, both under Order 43, Rule 1 (r) and Order 39, Rule 4 of CPC is legislative will. The intention is clear, precise and direct and this should end all judicial speculations. In Shri Mandir Sitaramji v. Lt. Governor of Delhi (AIR 1974 SC 1868), Justice K. K. Mathew observed that the well-established rule of law is that where the legislature has spoken, the judges cannot afford to be wiser. What has been given by the legislature to the litigants by way of additional and multiple remedies, cannot be taken away by the courts in the name of its interpretative power or function.

Conclusion: Striking the Right Balance

The function of any legislation, other than its objective, is to grant certainty. The two remedies provided under CPC are concurrent in nature and not restrictive to one another’s nature. (Ref: N Lakshmana Doss v. Secretary to Government of Tamil Nadu, 2009 SCC OnLine Mad 56) The language employed in Section 13(1A) of the CC Act read with Order 43 Rule 1 (r) of the CPC makes it unambiguously clear that an appeal lies against the ex-parte order of injunction.

It is trite that courts should follow the principle of stare decisis, however, taking into account the contemporary developments and maturity of the judicial system, the Supreme Court of India, recently, in the case of Qatar National Bank Alahli v. Man Industries (India) Limited & Ors., SLP (C) No. 9747-9748 of 2024, has settled the dust as to whether an appeal is maintainable under Section 13 of the CC Act when the aggrieved party had not moved to the same court first. The Supreme Court set aside the decision of the commercial appellate division of the Bombay High Court and held that the High Court was in error in dismissing the commercial appeal on the basis that the ‘proper course of action…would be to move an application for vacating such order.’ The Supreme Court further clarified that an injunction order is independently amenable to the appellate jurisdiction of the commercial appellate court under Section 13 of the CC Act and is not subject to any fetters.

What follows is that judicial discretion is like any discretionary power and is to be exercised in a reasonable manner. When Order 43 of the CPC itself confers a statutory and substantive right of appeal without any fetters, then it ought not be whittled down by taking recourse to the ‘established practice’ and creating artificial judicial barriers when there exist none. The practice of adhering to ‘established judicial trend’ may have some application in respect of procedural matters as contra-distinct from substantive matters. The Supreme Court judgment is a welcome step in the right direction towards upholding the autonomy of an aggrieved party to choose the remedy it seeks to avail and grants much needed clarity on the scope and tenets of Section 13 of the CC Act.