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SUPREME COURTSeelawathie MallawaVs.Millie Keerthiratne
.SVC". No. 80/81 – ('.A. Application No. I03I8L D.C. KandyCase No. I2934IL
Injunction – Circumstances when it will he granted – suspension — trespasser.
Ptff. R. was owner of premises, known -as Kccrthi Cinema. Accordingto Lease Agreement dated 1st March 1979 Plaintiff leased Kecrthi CinemaHall for a period of 2 years till 28.2.81. There was a reference in theschedule to the machinery and equipment which were to be used for thebusiness of exhibiting films. The Defendant A. having registered thebusiness name of New Kccrthi Cinema carried on the business of exhibitingfilms at the premises using the machinery and equipment in the Hall.
Sometime before the lease expired the Ptff. R advertised the premisesin the hope of obtaining a higher rent and inquired from the DefendantAppellant whether she would make a higher offer.
As the Defendant Appellant by her action made it known that she wasgoing to continue occupation on the earlier terms Ptff. R. becameapprehensive and brought this action, seeking a declaration that she wasentitled to possession of the premises and also sought an injunction tohe operative till the final determination of the said action restraining theDefendant A from entering Kecrthi Cinema Hall, to hand over theequipment and machinery and to prohibit her from exhibiting any filmat the said Cinema pending final determination of action. –
The D.J. after inquiry only restrained Deft. A. from exhibiting anyfilms at the Hall.
Deft. A. appealed against this order.
Held I. That the order made by District Judge in restraining theDefendant Appellant from taking any benefits arising out ofwrongful possession after expiring of lease was justified.
2. That the District Judge was also justified in refusing to grantan injunction removing, the Defendant from the premisespending determination of trial.
Seelawalhie Mallawa r. kcerthinune tVUtnr I’erern, J. I
APPEAL from judgment of Court of Appeal.
Wanasundera, J.. Wimalaratne. J. and VictorPercra.J.
H.L. dc Silva. Senior Attorney-at-law withT.B. Dillimuni for the defendant-appellant.
K.N. Choksy, Senior Attorney-at-law with L.C.Scneviratne and L. Perera for plaintiff-respondent.
11.03.1982. & 31.03.19.82
■Cur. adv. vult.
VICTOR PERERA, J.,
This is an appeal from the judgment of the Court of Appeal dated25th September 1981 affirming the order of the District Court of->Kandy, granting an interim injunction restraining the •defendant-appellant, her licensees, agents, servants and workmen.,from exhibiting any film in the Cinema which was the subject matter,of the dispute till the final determination of the action on theplaintiff-respondent furnishing security in a sum of Rs. 5000/-.
The plaintiff-respondent was admittedly the owner of the landcalled Rajatotam Estate alias Rajawatte presently known as KecrthiCinema and Grounds in extent two roods and twelve decimal fiveperches (OA. 2R. 12.50). According to the Indenture of Lease No.6107 dated 26th August 1971 (PI0) the plaintiff-respondent had leasedthe said land and buildings for the first time to one A.P. Mallanavakc.vThe Indenture is clearly a lease of the land and the buildings andnot of a business and the lessee was given a licence to use theCinema Hall, machinery and equipment for him to run the businessof a Cinema for exhibiting fifms. Though this lease of the premiseswas for a period oi ten y :ars, it would appear that there has beenan earlier termination cf the lease, as the plaintiff-respondent had,:
by Lease Bond No. 2033 dated 15th May 1975 (P6) leased the said-
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land. Cinema Hall and buildings appurtenant thereto .to thedefendant-appellant for four years from 1st March 1975 till 28thFebruary 1979. At the expiry of this second lease, the plaintiff-respondentby indenture No. 10 dated 1st March 1979 (PI) leased the said landand buildings once again to the defendant-appellant for a furtherperiod of two years from .1st March 1979 till 28th February 1981.
On a careful examination of the Lease Bonds there is no doubtwhatsoever that the leases were in respect of the land, together withthe Cinema Hall and other buildings standing thereon. The Schedulesthereto do not refer to any business. There is reference to a separateinventory to be made of machinery, equipment, furniture and fittingsinstalled and lying in the premises which were to be used for thebusiness of a Cinema for exhibiting films. The Lessee had to useher capital and her employees, she was responsible to their employment,payment of wages and also the running of the. Liquor Bar in accordancewith Excise Regulations. There is nothing in the Leases to justifyeven an inference that what was let was a business as a going"concernor the goodwill of a business. The facts are similar to the lease ofa building described as a "workshop” which was the subject matterof the case of Nicholas Hamy v. James Appuhamy (52 NLR 137)where the Supreme Court held that there was the lease of thebuilding along with the machinery, tools and implements but not alease of a business. It is therefore clear that , the defendant-appellantwas given a lease of the premises described in the Schedule and alicence to use the Cinema Hall to run the only business that couldbe run in the premises, namely that of exhibiting films during thependency of the lease. This licence was ancillary to the lease of thepremises and could not exist without the lease. Therefore when thelease expired in terms of the Indenture of Lease on 28.2.81 thelicence to exhibit films ceased to exist and there was no furthercontractual relationship between the parties.
The business belonged to the defendant-appellant and she in 1977had quite legitimately registered the business'name of "New KeerthiCinema" on 6th March 1977 according to document “A" filed withher statement of objections, claiming the business as one belongingto her and started by her on 6th January 1977 though the buildingleased to’ her was the ;,Keerthi Cinema Hall."
In anticipation of the termination of the lease on 28th February1981 and the consequent lapse of the licence to exhibit films thereafter,the plaintiff-respondent had from about November 1980 taken steps
Seelawathie Matlawu i>. Keenhiratne l Victor 1'crcrn. J.).
to invite tenders for a new lease of the land and buildings from 1st.March 1981. She had caused the publication of an .advertisement inthe Newspapers on the 2nd November 1980 calling for such tenders.The plaintiff-respondent had by letter dated 19th Novcjnber 1980(P2) through her Lawyer written to the defendant-appellant herselfadverting to the said advertisement, intimating to her that she hadreceived several offers of leases at a much higher rent then whatthe defendant-appellant was then paying, invited her to make anoffer of a higher rent if she was interested and notifying to her thatshe will have to hand over the premises on the 28th February 1981in the event of the plaintiff-respondent leasing the same to another.The defendant-appellant by letter dated 28th November 198ri .(.F|3jsent through her Lawyer to the plaintiff-respondent expressed tier,willingness to take a new lease for 5 years at the' reptal of Rs.
1,500/-"per month and stating that she was ready to sign a leasebond with the necessary conditions. The defendant-appellant was thusfully aware of the intentions and actions of the plaintiff-respondent,’but docs not appear to have pursued her own intention or desire torenew the lease.
The,,plaintiff-respondent had however in the .meantime acceptedan offer by one R.M. Sencviratnc who was preparedilo pay a rentalof Rs. 3,500/- per month and she and Sencviratnc had duly executedIndenture of Lease No. 24 dated 27th January 1981 (P9) with newterms and conditions to be effective from 1st March 1981. Curiously,on. the very next date, that is, on 28th January 1981. thedgfsndant-appellant had sent, an application, to the Rent ControlBoard, Kadugannawa, in an attempt to "forcibly continue in occupationof the leased premises. In her application she had stated that theland owner was maintaining that the premises are excepted premisesand that they did not come within the operation of the provisionsof the Rent Act. The relief sought for by the defendant-appellantby that application was to have the premises declared not to beexcepted premises as the fair rental value did not exceed Rs. 1.500/-per month in terms of the Schedule 4 to the Rent Act No. 7 of1972. Having forwarded this application to the Board thedefendant-appellant, through her Lawyer, sent a letter dated 29.1.81(P4) to the plaintiff-respondent stating that she was a statutorymonthly tenant and demanding a certificate of tenancy, but makingno reference to her application to the Rent Control Board. ThePlaintiff-respondent by letter dated 5.2.81 (P5) repudiated this assertionand noticed the defendant-appellant to hand over the premises toher on 28.2.81.
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The plaintiff-respondent becoming apprehensive of the threat bythe defendant-appellant to continue in forcible occupation of theleased premises after 28.2.81 in defiance of her rights thereby thwartingher implementation of her contractual obligations towards R.M.Seneviratnc, the new lessee, filed this action on 16th February 1981before the expiry of the lease, as a quia timet action, in the DistrictCourt of Kandy seeking a declaration that she was entitled to thepossession of the leased premises from 1st March 1981. She also inher affidavit dated 23.2.81 applied for an interim injunction to beoperative till the final determination of the said action restrainingthe defendant-appellant from entering the “Keerthi Cinema Hall”and directing the defendant-appellant to hand over the Cinema Halland the equipment therein to her or to prohibit the defendant-appellantfrom exhibiting any film at the said Cinema pending the final .determination of the action. After inquiry the District Judge did notrestrain the defendant-appellant from entering the premises but onlystopped her from obtaining any benfits from her unlawful acts byexhibiting films at the Cinema Hall.
These being the facts established both by the plaintiff-respondentand the defendant-appellant, it will be necessary to ascertain whetherthe District Judge had correctly used his discretionary powers inrestraining the defendant-appellant in this particular manner.
The power to grant injunctions is now governed by Section 54 ofthe Judicature Act No. 2 of 1978 read along with Sections 662 to667 of the Civil Procedure Code. Section 54 has merely re-iteratedthe powers referred to in Section 86 of the Courts Ordinance No.
I of 1889.
The principles which the Court must take into account whendeciding whether to grant an injunction or not have been formulatedfrom time to time in decisions of our Courts and have sometimesbeen re-formulated on the basis of decisions of the English Courts.Generally the line of approach in exercising the Court’s discretionwhether to grant an interim injunction or not has been, first to lookat the whole case before it. The primary consideration was therelative strength of the parties cases. The Court must haveregard not only to the nature and strength of the plaintiff’s claimand demand but also to the strength of the defence. It is when theCourt has formed the opinion that the plaintiff had a strong prima
SCSeelawalhie Mallawa r. Kceriliiratite I Victor I'crrrti. J.l389
facie case, that the Court had then to decide what was best to bedone in the circumstances. No doubt this exercise entailed a closeexamination of the merits at times almost bordering on a trial ofthe action, but without deciding the main issues that will be raisedat the trial. In deciding on the nature or terms of such an interiminjunction, the underlying principle to be considered is that the statusquo must be maintained. Initially the plaintiff therefore needs onlyto satisfy the Court that there is a serious matter to be tried at thehearing. This was what was laid down hv the Supreme Court in thecase of Jinadasa v. Weerasinghe (31 NLR 33). In the later case ofDissanayake v. Agricultural anil Industrial Credit Corporation (64NLR 283) the Supreme Court held that if it appears from thepleadings already filed that such a matter does exist, the furtherquestion to be considered was whether the circumstances are such,that a decree which may ultimately be entered in favour of the partyseeking the injunction would be nugatory or ineffective if the injunctionis not issued. It is in considering this second matter that the questionof balance of convenience or the damages are taken into accountwith a view to ascertain the probable consequences to both partiesof granting or refusing an injunction and to decide whether there isan alternative remedy other than an interim injunction.
Much of the argument before us was based on the plea that theplaintiff-respondent could be compensated by damages for the wrongfulpossession of the land and buildings by the defendant-appellant eventhough the plaintiff-respondent had made out a strong prima faciecase in regard to her claim. It was therefore contended that theorder issuing an interim injunction was not justified.
In the present case, the defendant-appellant being an over-holdinglessee is a trespasser in regard to the land and buildings leased toher and will be liable to pay damages for wrongful possession thereof,but there is the further fact that she was trying thereby to keepajive a licence to run a business which licence had ceased.to existand to derive for herself the sole benefit therefrom as long as thelitigation lasted.
An injunction is the normal way of stopping a wrong doer fromobtaining the benefit of such wrong doing to the detriment of theaggrieved party. In the case of Re W.J. King A Sons Lid’s Application(1976 1 AER 770) cited to us by Counsel for the plaintiff-respondent..
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the appellant's father was the owner of a quarry and certain landadjoining-'1 it. He had leased the said quarry and the land to'[aCompany which carried on its business of quarrying hardstone. Thelease expired on 25th December 1974. After the expiry of the leasethe lessee Company continued to extract hardstone from the appellant'squarry. The lessee Company made an application to court pendingthe determination of: the matters in dispute for an interim orderpreserving the status quo and .obtained an interim order granting thelessee Company the' right to continue the searclvifor hardstone atthe appellant's quarry until the trial.-In appeal, the Court of Appealheld that since the lease granted to. the lessee Company had alreadyexpired, the Company was acting unlawfully by jcontinuing'to workthe quarry which was the property of the appellant and that theCourt had no inherent power by way of an interim order to overridethe rights of the appellant.
The principle enunciated in that case could be applied with fullforce in this case. Here the defendant-appellant’s lease in respect tothe land and buildings including the Cinema Hall came to an endon the 28th February 1981. After the expiry of this lease, if. shecontinued to use the Cinema Hall, machinery and equipment-in thepremises and exhibited films on the screen, she would be doing sowithout any right whatsoever and unlawfully in the absence of avalid contract or licence and the continuation thereof will not preservethe status quo at least as regards the machinery and equipment whichbelong to the plaintiff-respondent and which were not regarded asthe leased premises. The District Judge- was therefore justified inexercising his discretion in issuing an interim injunction only restrainingthe'exhibition of films pending the hearing-of the action, but notdisturbing her possession of the leased premises.
It was contended for the defendant-appellant that the District Judgehaving refused to restrain the defendant-appellant from entering theleased premises, was not justified in preventing the defendant-appellantexhibiting films in the Cinema. The defendant-appellant had duringthe period covered by the lease a licence to use the Cinema Hall,machinery and equipment for the Cinema business of exhibiting'films.But with the expiry of the lease the licence ceased to exist. On theauthority of the case of Pounds v. Ganegama (40 NLR 73) theDistrict Judge could not possibly have placed the plaintiff-repondentin possession of the leased premises pending the trial. The SupremeCourt in that case clearly held, that a Court by an interim injunction
Seetuwmhie Maltawa r. Keerthiralm• (Vidor t’crvra. J.)
had no power to remove a defendant in possession pending the resultof an action. The District Judge quite correctly refused to grant suchan injunction. However, the District Judge had addressed his mindto the underlying principle that if a person in unlawful possessioncould not he ejected pending trial, he could still he restrained fromtaking any benefits arising out of such wrongful possession, otherwisethe Court would he a party to the preserving for the defendant-appellanta position of advantage brought about by her own unlawful orwrongful conduct.
The order of the District Judge is hereby affirmed. The order otthe Court of Appeal suspending the operation.of the interim injunctionis vabated. The appeal is dismissed with costs.
WANASUNDERA, J. – I agree.
WIMALARATNE, J. – I agree.
Order of Court ofAppeal suspendingoperation of interim injunctionvacated.
Seelawathie Mallawa Vs. Millie Keerthiratne