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The Court found that there was "total non-application of judicial mind" by the appeals court in extending the operation of an injunction order even after the suit was dismissed for non-prosecution by an attempt court.
The District Judge has been ordered to file an in-depth explanation for the supposed favours, within 30 days.
During the course of hearing, Justice Sangwan took note that case proceedings were also being delayed on account of the time taken to exchange case records between the court and therefore the District Court. The case records had not been exchanged despite the lapse of months and despite the actual fact that both Courts were housed within an equivalent building. The high court has now directed the transfer of the case to a further District Judge.
The case came out of a suit filed by SEL Manufacturing Company Limited and Neeraj Saluja praying for the restructuring of a loan availed from SBI. When the Civil Court turned down this prayer, the plaintiffs approached the District Judge who granted the plaintiffs relief in ad interim proceedings.
When the Bank seemed to argue the matter, the plaintiffs did not appear. As a result of the plaintiffs’ non-appearance, the suit was dismissed for non-prosecution. Despite this, the District Court, on appeal, extended the interlocutory injunction. The Bank challenged the District Judge's order during a petition filed under Article 227 of the Constitution before the high court.
SBI informed the Court that recovery proceedings had already been initiated under the Insolvency and Bankruptcy Code which the plaintiff had already unsuccessfully assailed an equivalent before the National Company Law Tribunal, the National Company Law Appellate Tribunal. The high court found that the Bank's appeal deserved to be allowed since there was "total non-application of judicial mind" on the part of the appeals court (District Judge) in continuing the injunction order even after the first suit was dismissed for non-prosecution.
The high court noticed that the order granting such injunction didn't spell out reasons for grant of the same, while overturning the lower court’s order. The high court added that the District Judge's order was passed without heed to the actual fact that recovery proceedings had already been initiated. The Judge emphasised that detailed reasons should be provided for granting an injunction in an appeal when the court had refused to grant an equivalent.
In this regard, the order reads,
"It is a well-settled principle of law that if an injunction application filed by the plaintiffs is dismissed by the Civil Court, the appellate court unless by recording detailed reason of urgency may grant an interim injunction for a brief period or in ordinary course, after giving a brief notice to the contesting defendants may pass an interim order. Both these principles of law are ignored by the District Judge."
Holding that that the continuation of the interim order wasn't publicly interest, the Court allowed the Bank's appeal.
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