Interim injunction against creation of encumbrances upheld where earlier bond restrictions conflicted with a later security arrangement.

A prior investment and bond arrangement allegedly barred creation of liens, pledges, encumbrances and third-party rights during the bond period. A later facility agreement, proposed to be secured against group assets, was said to conflict with those restrictions and risk prejudice to the plaintiff. On that basis, the Court found a prima facie case for interim protection and granted an ex parte ad interim injunction restraining the defendants from creating encumbrances or otherwise acting on the impugned security arrangement until the next hearing, with compliance directed under Order 39 Rule 3.

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Issues: Whether the plaintiff had made out a prima facie case for grant of an ex parte ad interim injunction restraining the defendants from creating third-party interests in the assets and properties covered by the pleaded agreements.

Analysis: The pleadings disclosed an earlier investment and bond arrangement containing restrictions against creation of liens, pledges, encumbrances and third-party rights during the subsistence of the bonds. A later facility agreement, proposed to be secured by the assets of the group entities, was asserted to be contrary to those restrictions and capable of causing prejudice to the plaintiff. On this basis, the Court found a prima facie case for interim protection and granted restraint pending the next date of hearing.

Conclusion: Interim injunctive relief was granted in favour of the plaintiff, restraining the specified defendants from creating encumbrances or giving effect to the impugned security arrangement until the next hearing, with compliance directed under Order 39 Rule 3.

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