Appeal Allowed Due to Failure to Establish Prima Facie Case

The appeal was found maintainable as the application under Order XXXIX Rule 4 CPC was not disposed of within 30 days. The Court noted suppression of material facts by the plaintiff, leading to the vacation of the ad interim injunction. It was held that no prima facie case was established for the injunction. The suit was deemed not maintainable under Section 41(d) of the Specific Relief Act, and the plaintiff's unwillingness to provide security led to the dismissal of a conditional order of injunction. The Court allowed the appeal, setting aside the impugned order and directing costs to be paid by the respondent plaintiff to the appellant defendant.

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Issues Involved:
1. Maintainability of the Appeal
2. Suppression of Facts
3. Prima Facie Case
4. Maintainability of the Suit
5. Plaintiff's Willingness for Conditional Order of Injunction

Detailed Analysis:

1. Maintainability of the Appeal

The Court examined whether the appeal was maintainable given that the application under Order XXXIX Rule 4 CPC was still pending before the learned Single Judge. The Court referred to Rules 3A and 4 of Order XXXIX CPC and the judgment of the Hon'ble Supreme Court in *A. Venkatasubbiah Naidu v. S. Chellappan* (AIR 2000 SC 3032). The Supreme Court had held that if an application under Order XXXIX Rule 4 is not disposed of within 30 days, the aggrieved party is entitled to file an appeal. The Court found that the application filed by the defendant under Order XXXIX Rule 4 was not disposed of within the stipulated 30 days, and thus, the appeal was maintainable. The Court also rejected the plaintiff's argument that the appeal was barred by limitation, noting that the defendants had a reasonable expectation that their application would be disposed of and filed the appeal within a reasonable time.

2. Suppression of Facts

The Court found substance in the defendants' submission regarding the suppression of material facts by the plaintiff. The plaintiff had failed to disclose the Founders' Agreement dated 15.7.2004 and its amendment, as well as the fact that pay orders had been sent in lieu of dishonoured cheques. More critically, the plaintiff did not disclose the covering letters with which the 16 cheques were issued, which indicated that the cheques were for the repayment of a loan and not as collateral security. The Court concluded that this suppression of facts warranted the vacation of the ad interim injunction.

3. Prima Facie Case

The Court held that the plaintiff had not established a prima facie case for the grant of an ad interim injunction. The covering letters accompanying the cheques unequivocally stated that the cheques were for the repayment of a loan, contradicting the plaintiff's claim that they were issued as collateral. The Court found that the plaintiff's e-mail correspondence did not support the claim that the cheques were not to be encashed. The Court concluded that the plaintiff had not made out a prima facie case for the grant of an ad interim injunction.

4. Maintainability of the Suit

The Court examined whether the suit itself was maintainable under Section 41(d) of the Specific Relief Act, 1963, which bars the grant of an injunction to restrain any person from instituting or prosecuting any proceeding in a criminal matter. The Court referred to precedents, including *In Re N.P. Essappa Chettiar* (AIR 1942 Mad. 756) and *Atul Kumar Singh v. Jalveen Rosha* (AIR 2000 Del 38), and concluded that a suit to restrain criminal proceedings, such as those under Section 138 of the Negotiable Instruments Act, was not maintainable. The Court held that the suit was prima facie barred under Section 41(d) and thus, the ad interim injunction could not be granted.

5. Plaintiff's Willingness for Conditional Order of Injunction

The Court considered the possibility of granting a conditional order of injunction. However, the plaintiff was unwilling to secure the interest of the defendant by depositing a reasonable sum in the Court. Consequently, the Court was not inclined to pass such a conditional order.

Conclusion

The Court set aside the impugned order dated 28.3.2007, allowing the appeal with costs of Rs. 10,000 to be paid by the respondent plaintiff to the appellant defendant within 10 days. The learned Single Judge was directed to pass consequential orders when the suit was listed before the Court on 2.7.2007.

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