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For grant of temporary injunction, the Court is only required to ascertain as to whether a prima facie case has been made out: High Court of Karnataka

Prima facie, it is the obligation of the defendant to disclose the details of all other movable and immovable properties held by him. He is under an obligation not to sell or transfer the same without the consent of the plaintiff bank. Thus, there is no manner of doubt that a prima facie case was established by the plaintiff. It is obvious that considering the extent of amounts payable by the companies/entities of the defendant and the defendant in his capacity of the borrower and guarantor, the balance of convenience is in favor of the plaintiff. It goes without saying that irreparable loss will be caused to the plaintiff which is nationalised bank, if injunction is not granted. This was held in Bank of Baroda v. Dr. Bavaguthu Raghuram Shetty, & ORS. And attached cases[OMAP NO. 26 OF 2020] in the High Court of Karnataka by division bench consisting of CHIEF JUSTICE MR. ABHAY S. OKA AND JUSTICE S. VISHWAJITH SHETTY.

Facts are that the appellant/original plaintiff has filed appeal against order passed by Judge of the Commercial Court at Bengaluru. The defendant is a businessman to whom, the plaintiff bank had sanctioned various credit facilities/loans for the companies which are now under distress. The appellant seeks the relief of temporary injunction for preventing alienation of the other assets such as shares, mutual funds, monies deposited in bank accounts held by the first defendant.

The counsel for the petitioner that the applications for interim relief being ought to have allowed in its entirety. The learned Judge of the Commercial Court has taken a very hyper-technical view. He submitted that the Rule 11 of Karnataka Civil Rules of Practice could not have granting injunction. The trial Judge ignored that a separate interlocutory application was filed by the plaintiff directing the first defendant to disclose his assets and properties. 

The counsel for the respondents submits that the defendant is only a guarantor and that public listed companies have taken the monies for their business purposes. The documents on which the plaintiff has relied have been executed in favor of the Branch of the plaintiff at UAE. The cause of action to file the present suit has arisen in UAE. Even a suit for specific performance of the Negative Lien Letter is not maintainable. Therefore, the prayer for injunction was not maintainable.

The court referred to the judgment of the Court of Appeal in the case of Mareva Compania Naviera SA v International Bulk carriers SA the Mareva1., wherein the following observations were made, “Mareva Injunction is an established feature of English Law and the English Court has been categorical enough to record that there should not be any hesitation in the matter of such a grant where it appears likely that the plaintiff would recover judgment against the defendant for a certain or approximate sum and there is reason to believe that the defendant has the assets within the jurisdiction to meet the judgment but may deal with the same, so that they would not be available or traceable when the judgment is given against him. One of the basic criteria for the grant of Mareva Injunction is that the assets must be located within the jurisdiction to confer jurisdiction on the Court to grant a Mareva Injunction”

The court also referred to the judgment of Division Bench of Calcutta High Court in the case of Santosh Promoters Private Limited and Others v. Intrasoft Technologies Limited., wherein it was held that “28. Simultaneously if we consider the provisions contained in Order 39 Rule 1(b), of the Civil Procedure Code we find that while passing an order of injunction, the Court is not required to find out as to whether there is every possibility of passing a decree in favor of the plaintiff in the suit. While considering the application for a temporary injunction, the Court is only required to ascertain as to whether a prima facie case has been made out by the plaintiff in the suit. Prima facie case means an arguable case meaning thereby that a reasonable dispute is raised before the Court which the Court is required to resolve ultimately in the suit. A prima facie case is distinguishable from a full-proof case.”

Considering the facts of the case and keeping in mind the settled position of law on the subject. The Court held that in the guarantee executed by the defendant there is a clause in respect of the liability of the defendant. It is provided that the plaintiff bank will have a lien on all securities belonging to him. Apart from the aforesaid guarantee, there is also a personal guarantee executed by the defendant in which he agreed not to sell, transfer otherwise dispose of whole or any part of his assets. As Prima facie, obligation existed on the accused, the appeal preferred by the Bank must succeed. Thus allowing the appeal.

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