2003 (9) TMI 541 - HC - Companies Law

Court grants interim injunction preventing defendants from hospital entry, rejects adverse possession claim. MOUs unenforceable.

The court granted an interim injunction in favor of the plaintiff, restraining the defendants from entering the hospital premises and interfering with its ... Offences - Wrongful withholding of property Issues Involved:1. Injunction against the defendants.2. Defendants' claim of settled possession.3. Validity and enforceability of the Memorandums of Understanding (MOUs).4. Allegations of misappropriation and misconduct.5. Requirement of due process of law for dispossession.6. Balance of convenience and irreparable loss.Issue-Wise Detailed Analysis:1. Injunction Against the Defendants:The plaintiff sought an injunction under Order 39 Rules 1 and 2 CPC to restrain the defendants from entering the hospital premises, committing illegal trespass, causing disruption, and carrying out any professional work from the hospital premises. The court granted the interim injunction, restraining the defendants from entering the hospital premises and interfering with its functioning during the pendency of the suit.2. Defendants' Claim of Settled Possession:The defendants argued that they were in settled possession of the hospital chambers and could not be removed without a court decree. The court held that the defendants' possession was not of the nature of adverse possession or settled possession as defined in Puran Singh v. State of Punjab. Instead, their possession was akin to that of ex-employees or agents whose permission to use the premises had been withdrawn.3. Validity and Enforceability of the Memorandums of Understanding (MOUs):The defendants based their claim on two MOUs dated 22-9-1992 and 3-8-1995, asserting rights in perpetuity to practice from the hospital chambers. The court noted that these MOUs were not incorporated into the Articles of Association of the company and, therefore, were not binding on the company. This position was upheld by the Division Bench in a previous order dated 20-6-2003, which rejected the defendants' claim for a right to practice from the hospital premises in perpetuity.4. Allegations of Misappropriation and Misconduct:The plaintiff alleged that the defendants had misappropriated income from patients and committed financial irregularities and breaches of fiduciary duty. These allegations were part of the basis for the defendants' removal from the Directorship and the withdrawal of permission to use the hospital premises. The court considered these allegations while granting the injunction.5. Requirement of Due Process of Law for Dispossession:The court examined whether the plaintiff's suit for perpetual injunction met the requirements of due process of law. It held that due process does not necessarily require a suit for possession if an injunction suffices. The court referenced Southern Roadways Ltd. v. S.M. Krishnan, where it was held that an agent or ex-employee's possession is considered that of the principal, and thus, an injunction could be issued without a suit for possession.6. Balance of Convenience and Irreparable Loss:The court considered the balance of convenience and irreparable loss, concluding that the plaintiff hospital would suffer greater harm if the injunction were refused. The defendants' claim to continue their profession from the hospital premises was rejected by the Division Bench, and some defendants had already started practicing elsewhere. The court found that the hospital would suffer irreparable loss if the defendants continued to disrupt its functioning.Conclusion:The court allowed the plaintiff's application for an interim injunction, restraining the defendants from entering the hospital premises and interfering with its operations. The order was made effective after one week to allow the defendants to seek relief from the Supreme Court. The court acknowledged the emotional and professional contributions of the defendants but emphasized the legal and procedural grounds for granting the injunction.