007-SLLR-1984-V1-SUBRARMANIAM-v.-SHABDEEN.pdf
48
Sri Lanka Law Reports
(1984] 1 S.L.R.
SUBRAMANIAM
v.SHABDEEN
COURT OF APPEAL
TAMBIAH, J. AND T. D. G. DE ALWIS. J,C.A.-L.A. 9/83-D.C. COLOMBO 2209/SPECIALJUNE 10. 1983 AND NOVEMBER 8. 1983.
Application for dissolution of interim injunction in a suit for ejectment and recoveryof the business and appurtenant furniture and fittings and damages. -Principlesgoverning the exercise of discretion to grant an injunction.
The plaintiff (respondent) was the tenant of premises No. 249, Galle Road.Koljupitiya. where he ran a hotel business using his own furniture, (jttings andequipment. On 4.6.1977 he entered into an Agreement (X2) with the defendant(appellant) whereby he permitted the defendant to^carry on the hotel business forhve^ears from 4.6.1977 to 4.6.1982 in return foPtRe 'payment of a mbntKfycommission of Rs. 859 and a deposit of Rs. 10.000 refundable at the expiry of theAgreement, The defendant paid the deposit of Rs. 10,000 and the plaintiff handedover the business with the furniture, fittings and equipment.
The defendant .however, failed to pay the water rates and electricity dues and themonthly payments due for the period 4.10.1981'to 3.6.1982. He also failed tohand back the business with the furniture, fittings and equipment on 4.6.1982 andwas arranging to hand them over to a third party. The plaintiff then filed the presentsuit for the payment of the money due and for the recovery of the premises,.business with equipment and fittings and damages in a sum of Rs. 5,000 per monthfrom 4.6.1982. He sought an interim injunction restraining the defendant fromcarrying on the said business or handing over the business to any third party.
On30.8.1982, the District Judge granted the Dlaintiff an interim injunction ex parteas prayed for. On 3.9.1982, the defendant filed petition and affidavit and prayed forthe dissolution of the interim injunction.
The District Judge refused the application to dissolve the injunction.
Held-
The principles which govern the exercise of the discretion to grant an interiminjunction are-
< 1) The person who seeks an interim injunction must show Court that there is aserious matter to be tried at the hearing and that on the facts before it there isa probability that the plaintiff is entitled to relief. In other words, he mustestablish a prime facie case. He must first show the prime facie existence of alegal right and that tfiere was an infringement or invasion of that legal right.
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Subramaniarri'V. Shabdeen
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The plaintiff must show that irreparable injury will bp caused to him if the''injunction is not granted. Where damages are an adequate- remedy, noinjunction will lie. The test to be applied is, 'is it just that the plaintiff shouldbe confined to his remedy in damages ?'
The balance of convenience should favour the grant of the interim injunctionand here the test is 'how does the injury that the defendant will suffer if theinjunction is granted and he ultimately comes out victorioua weigh against theinjury which the plaintiff will suffer if the injunction is refused and he wins ?'Where any doubt exists as to the plaintiff's right or if his right is not disputedbut its violation is denied the court will take into consideration the balance ofconvenience. If the plaintiff establishes his right and its infringement thebalance of convenience need not be considered.
The plantiff had established a strong prime facie case to his entitlement tocarry on the business and the violation of his rights. It would not be just toconfine the plaintiff to his remedy in damages. An interim injunction must begranted to stop the wrong doer from obtaining the benefits arising from hisown wrongful conduct. The application to dissolve the injunction thereforecould not succeed.
Cases referred to
(11 Jinadasa v. Weerasinghe (1929) 31 NLR 33, 35.
Wickramaratne v. Thavendrarajah S.C. 17/82 – CA. -L.A. 6/82. S.C.
Minutes of 25.9.81.1
Seelawathie Mallawa v. Millie Keerthiratne, C.A. – LA 103/81 C.A. Minutesof 25.9.81.
Yatoaduwe Sri Pragnarama Them v. Minister of Education (1969) 71 NLR506.
Seelawathie Mallawa v. Millie Keerthiratne, S.C. 80/81 S.C. Minutes of12.5.82.
Pounds etalv. Genegama(1939) 40NLR 73.
APPEAL from an Order of the District Court of Colombo.
H. W. Jayewardene, Q.C., with N. S. A. Goonetilleke and N. Mahendran for thedefendant-appellant.
Eric Amerasinghe, S. A. with Jabolyn Serteviratne and Miss Duniyangoda for theplaintiff-respondent.
Cur, adv. vuft.
60
Sri Lanka Law Reports
{1984} 1 SLR.
January 13,1984.
TAMBIAH, J.
This appeal is from an order of the learned Additional DistrictJudge, dated 31st January. 1983. refusing thedefendant-appellant's application for dissolution of the interiminjunction issued by him.
The plaintiff-respondent filed action and prayed for ejectment ofthe defendant, his agents, servants, and others holding under him,from a portion of premises No. 249, Galle Road, Kollupitiya, wherethe business of 'Hotel de Liberty' is carried on, for their ejectmentfrom the aforesaid business, for recovery of a sum of Rs.50,000/-being the value of furniture, equipment and fittings, of a sum ofRs.6.800/- being arrears of monthly payment and of a sum ofRs.5,000/- per month as damages from 4.6.82 until restoration ofpossession of the said premises and of the said business. Theprayer also contained an application for an interim injunctionrestraining and preventing the appellant, his agents and servantsand others holding under him from carrying on the said business of'Hotel de Liberty' in a portion of the said premises and fromsubletting, subleasing or parting with the possession of the saidportion of the premises, of the said business, and of the saidfurniture, equipment and fittings. *
* The facts set out in the plaint and affidavit which are relied on bythe plaintiff in support of his application for an interim injunctionwe^e as follows: That the plaintiff is a tenant of premises No. 249,under one Mrs. Fatha Rally ; that he was carrying on a Hotelbusiness under the name ‘Rex Cafe’, which was registered in hisname (XI); that he was the owner of all the equipment and fittingsof the said Hotel business ; that by an Agreement dated4.6.77(X2), the plaintiff permitted the defendant to carry on thesaid business for the period commencing 4.6.77 up to 4.6.82 ;that the said Agreement provided, inter alia, (1) that the defendantshall deposit Rs. 10,000/- which was refundable on the expiry ofthe Agreement after deducting unpaid monthly commission, (2)that the defendant shall pay Rs..850/- as monthly commission, (3)that the defendant shall hand back all articles, furniture and fittingsvalued at Rs.50,000/- on the expiry of the Agreement, (4) that theplaintiff shall pay the rent due in respect of the premises and the
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Subramaniam v. Shabdeen (Tambiah, J.)
51
Hotel licence fee, while-the defendant will be responsible for thepayment of salaries to the employees, the water, tax, and theelectricity bills in respect of the premises, (5) that the defendantshall hand back possession of the premises and the business on orbefore 3.6.1982 pnd that if the defendant fails to hand back thebusiness and the articles by the said date, the plaintiff will beentitled to damages at Rs.55/= a day as from 3.6.82 ; that thedefendant paid the deposit of Rs. 10,000/-, and the plaintiff handedover to him the said Hotel business, the premises together with thefittings and equipment; that on or about 28.10.1977, thebusiness name was changed to "Hotel de Liberty’ with the consentof the defendant, that the registration of the business wasaccordingly amended (X3), and the plaintiff continues to be theowner of 'Hotel de Liberty*; that the Eating-House licences havebeen issued in the plaintiff's name (X6); that the defendant hasfailed to pay the water rates up to July, 1982, amounting to aboutRs. 1,000/-, and the electricity bills up to June, 1982, amountingto Rs. 23,485/-; that the defendant has failed to make themonthly payment due under the said Agreement for the period4.10.1981 to 3.6.1982, amounting to Rs.6,800/-; that on3.6.1982, the plaintiff called upon the defendant to hand overpossession of the said business, premises and equipment andfittings of the said business, but the defendant has failed to complywith the said request and is, wrongfully and unlawfully possessingthe said business, premises and equipment, thereby causing lossand damage to him which he estimates at Rs. 5,000/- per month ;.that the defendant is making arrangements to sublease or part withpossession of the said business, premises and equipment to a thirdparty ; that grave and irreparable loss is being suffered by theplaintiff by the defendant carrying on the said business and thatirreparable loss arid damage will be suffered by him in the event ofthe defendant subletting or parting with the possession of the saidbusiness, premises and equipment and fittings . that a judgmententered in plaintiff's favour would be rendered nugatory, futile andineffective by the defendant carrying on the said business and if thedefendant sublets or parts with the possession of the saidbusiness, premises and equipment and fittings.
On this material, the learned Additional District Judge on
granted ex-parte, the interim injunction prayed for. On
the defendant filed petition and affidavit and prayed for the
52Sri Lanka Law Reports(1984] 1 S.LR.
dissolution of the interim injunction on the grounds, inter alia, thatthe plaintiff has in his plaint estimated his claim by vtey of damages,that on a balance of convenience no interim injunction would beissued, that since March. 1971, the defendant has been carryingon business in the said premises, and that the business is his solelivelihood as his only income is from the said business, that at theplaintiff's request and on a promise by him to extend the lease for afurther period of five years, the defendant had expended a sum ofRs. 141, 250/= in repairing the portion of the premises in which thebusiness was carried on, and that the plaintiff agreed to give himcredit for the amount so expended, that certain items of equipmentand fittings have been replaced by him at a cost of Rs.52.500/-and therefore it would be unjust and inequitable to issue an interiminjunction restraining the defendant from carrying on the businessand that grave and irreparable loss would be suffered by him, andnot by the plaintiff, if the interim injunction is allowed to stand.
In the said petition and affidavit, the defendant admitted the'execution of the agreement dated 4.6.77, and that there was acontract between him and the plaintiff; he admitted the payment ofRs. 10,000/- as deposit; he admitted that the business of 'RexCafe ' was, and the business of' Hotel de Liberty' is, registered inthe name of the plaintiff; he also admitted that the said agreementexpired in June 1982. The petition and affidavit go on to state thatno payments were made for the period October 1981 to June1982 by reason of the fact that he had to pay Rs. 10,000/- aslicence fees for 1981 and 1982, (' B " and ' C '), and that the•plaintiff requested him to set off the amount due for the said periodagainst the sum of Rs. 10,000/- ; that he has paid the licence feesin respect of some of the earlier years. The receipts ' B * and ' C 'have been issued in the plaintiff's name. The defendant states thatall electricity bills and water rates have been paid by him.
In the answer dated 17.12.82 filed by the defendant, he took upa new position- that he was a tenant of the plaintiff in respect of aportion of the premises and that the Agreement (X2) was a shamand did not represent the true nature of the transaction betweenthe parties.
The application for dissolution of the interim injunction came up.for inquiry on 10.1.83 and after hearing Counsel for the parties, thelearned Additional District Judge delivered his order dated31.01.83. refusing the defepdant's application to dissolve theinterim injunction. The learned Judge ordered the plaintiff to giveRs.5,000/- as security.
CASubramaniam v. Shabdeen (Tambiah, J.)53
The question that arises in this appeal is whether the learnedJudge had correctly exercised his discretionary powers inrestraining the defendant, his servants and agents from carrying onthe business of 'Hotel de Liberty* at a portion of premises No. 249.It would appear that at the inquiry, the defendant gave anundertaking that he would not sublet or hand over possession of theportion of the premises, the business and furniture, equipmentsand fittings to a third party. Learned Queen's Counsel for theappellant stated that he was not contesting that part of the interiminjunction which related to subletting or parting with possession toa third party.
It was the learned Queen's Counsel's submissions that
the learned Judge has misdirected himself when he held thatif an interim injunction is not issued, irreparable damage willbe caused to the plaintiff. The plaintiff has quantified hisdamages in the plaint at Rs.5,000/- per month ; in theAgreement (X2). the damages have been estimated at Rs.55/- per day. The learned Judge has not addressed his mindto the fact that the plaintiff has assessed his damages.Where a plaintiff himself has assessed his damages, noinjunction will We-Jinadasa v. Weerasinghe (]),
on a balance of convenience, no interim injunction shouldissue. In view of Ganegama’s Case (6) the plaintiff cannotobtain an interim injunction to prevent the defendant fromentering the premises. The injunction issued does notdeprive the defendant of possession of the premises nor of*possession of the business and the articles and theequipment. The defendant cannot carry on the business, qprcan the plaintiff carry on the said business. Until the case isdecided both parties cannot carry on the business. Whatpractical benefit does the plaintiff get by the issue of theinterim injunction ? If the defendant runs the business untilthe case is decided and in the event of his losing the casefinally, the plaintiff would not lose . he will get back- hisbusiness as a going concern and the articles, equipment andfittings or its value estimated at Rs. 50,000/=, plus get his’monthly commission and his damages. On the other hand.‘ifthe defendant is restrained from carrying on the saidbusiness until the case is decided. he.would suffer loss andwill be deprived of his sole means of livelihood. Equitydemands that the status quo be maintained until the Courtdecides that the defendant be ejected.
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Sri Lanka Law Reports
[1984] 1 S.LR.
The Agreement (X2) is a sham and was entered into to evadethe provisions of the Rent Act. It was a subterfuge or acamouflage to cloak the subletting and the recovery of rent inexcess of the authorised rent. A Court is entitled to gobehind the veil and say that there is in fact and in truth noagreement as is recited in the Agreement X2- Wickremaratnev. Thavendrarajah (2). This is a triable issue to bedetermined at the trial. An interim injunction would not issuepending the determination of this issue.
The interim injunction was asked for in the plaint. It is s. 54(a) ofthe Judicature Act No. 2 of 1978 that is applicable. The sectionstates that the Court may grant an injunction where it appears fromthe plaint that the plaintiff demands and is entitled to a judgmentagainst the defendant, restraining the commission or continuanceof an act or nuisance, the commission or continuance of whichwould produce injury to the plaintiff.
The principles which govern the exercise of the discretionconferred by this section have been set but in several cases and areto the following effect
A person who seeks an interim injunction must satisfy theCourt that there is a serious matter to be tried at the hearingand that on the facts before it, there is a probability that theplaintiff is entitled to relief-Jinadasa v. Weerasinghe (1).
' In other words he must establish a prima facie case. Thismeans that he must show that there is a serious matter inrelation to his legal rights to be tried at the hearing and thatthe probabilities are that he will win.' (Soza, J. in SeelawathieMaltawa v. Millie Kee'rthiratne (3)).
The plaintiff therefore must first show the prima facieexistence of a legal right and that there was an infringementor invasion of the legal right.
The plaintiff must next satisfy Court that irreparable injury willaccrue to him if the injunction is not granted. The term' irreparable injury " means an injury that cannot beadequately compensated for in damages.
Where damages are an adequate remedy, no injunction willlie (Jinadasa's case (supra)).
The principle has b$en reformulated by Soza, J. inSeelawathie MSiawa’scase (supra) as follows-' Is it just that the plaintiff should be confined to his remedyin damages ?'
CA
Subramaniam v. Shabdeen {Tambiah, J.f
55
The third condition is the principle of the ' balance ofconvenience How does the injury which the defendant willsuffer if the injunction is granted and he ultimately comes outvictorious# weigh against the injury which the plaintiff willsuffer if the injunction is refused and he wins ? (Soza, J. inSeelawathie Mallawa's case (supra)). Where any doubtexists as to the plaintiff's right, or if his right is not disputed,but its violation is denied, the Court, in determining whetheran interlocutory injunction should be granted, takes intoconsideration the balance of convenience to the parties.(H.N.G. Fernando, C.J., in Yakkaduwe Sri Pragnarama Therov. Minister of Education (4)).
If the plaintiff establishes his right and its infringement, the' balance of convenience ’ need not then be considered.
In the present case, no oral evidence was led at the inquiry.Whether an interim injunction should issue or not depended onfacts supported by affidavits. The defendant, in his petition andaffidavit, admitted that he took the business from the plaintiff underthe Agreement (X2); that the business of 'Rex Cafe' was registeredin the plaintiff's name ; that the new business of 'Hotel de Liberty'is also registered in the plaintiff's name ; that he paid Rs. 10,000/-in terms of the Agreement; that at least for the period June 1977to September 1981. the monthly payments as commission payableunder the Agreement were paid to the plaintiff; that the receipts forthe licence fees have been jssued in the plaintiff's name ; that theAgreement expired in June 1982. These are uncontested facts. Interms of the Agreement, the defendant was liable to hand overpossession of the business at the expiry of the lease. It is notdisputed that he has refused to do so. The plaintiff has thereforeestablished a prima facie right to the possession of the business of'Hotel de Liberty', and a violation of this right, when the defendantfailed to hand over the possession.
The plaintiff's position is that the defendant's right to carry on thebusiness came to an end when the Agreement X2 expired on
The Agreement is not disputed by the defendant. Thedefendant's position, however, is that on account of an oralpromise given by the plaintiff that he woulChgrve an extension for afurther period of five years at the expiry of the Agreement X2, heexpended a sum of Rs. 141,250/- in effecting repairs, for which
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Sri Lanka Law Reports
(1984} 1 S.L.R.
amount credit was to be given to him. There is not a word in thewhole of the petition and affidavit filed by the defendant that theAgreement X2 was a sham and that the defendant, in truth and infact, was a tenant of the plaintiff in respect of»a portion of thepremises. For the first time, this position was taken up in theanswer. It remains a bare statement of the defendant in theanswer, unsupported by an affidavit. No evidence was led at theinquiry. Parties chose to rely on the affidavits filed. Though thelearned Judge adverted to the submission of learned Counsel onthis matter, he correctly did not deal with the submission at thisstage of the case as it is only an assertion in the answer which wasnot proved. On the defendant's own admissions, the AgreementX2 was one which was acted upon by him. It seems to me that theplaintiff has established a strong prima facie case, on the materialbefore the learned Judge.
Prima facie, therefore, after the Agreement X2 expired on
the defendant is in wrongful and unlawful possession of thebusiness. It will take a long time for the case to be finally disposedof. Is it just that the plaintiff should be confined to his remedy indamages? I do not think so. Until the case is finally disposed of, thedefendant will be wrongfully earning a large income from thebusiness; while the plaintiff, who has established prima facie hisright to carry on the said business, will be deprived of his right toearn the same income during the same period. The learned Judgehimself took the same view. There is this further principle that aninjunction would issue to stop a wrong doer from obtaining benefitsarising out of his wrongful conduct. If a person in unlawfulpossession could not be ejected pending trial, he could still berestrained from taking any benefits arising out of such wrongfulpossession, otherwise the Court would be a party to the preservingfor such person a position of advantage brought about by his ownunlawful or wrongful conduct (Victor Perera, J. in SeelawathieMallawa v. Millie Keerthiratne (5))
I confirm the order of the learned Judge dated 31.1.1983 anddismiss the appeal with costs. In view of my judgment, I proforma, dismiss the Revision Application. No. 115/83, filed by theappellant in regard to this same matter, but make no order as tocosts.
T. D. G, DE ALWIS. J.-l agree.
Appeal dismissed with cos ts.