Description
Pre-conditions for grant of a temporary injunction – debenture – Accrual of right to appoint a receiver by the debenture-holder – object of interlocutory injunction – court’s jurisdiction to interfere in the case of a contract by granting an interlocutory injunction – temporary injunction against a lender/bank.
- Temporary injunction – proper enabling provision – Order XXXVII Rules 1 and 3 of the Civil Procedure Code.
- Principles guiding the courts in the grant of a temporary injunction – Attilio v. Mbowe and Giella v. Cassman Brown followed.
- In an application for a temporary injunction it is not proper to go into the merits of the case.
- Accrual of right to appoint a receiver by the debenture-holder – the right accrued to the respondent as debenture-holder immediately upon default being made by the appellant in repayment of the principal and interest.
- The court’s jurisdiction to interfere in the case of a contract by granting an interlocutory injunction is limited to cases where it is clear that a breach must result from the acts of the defendant. In the instant case no breach will result from the act of the defendant/respondent of appointing a receiver as it is his contractual right.
- Object of interlocutory injunction.
- Applicant failed to satisfy the 2nd principle for grant of an interlocutory injunction since it was apparent that the respondent would be in a financial position to pay any damages that may be awarded to the applicant if his suit succeeds.
- If a bank does not recover loans it will be an obvious candidate for bankruptcy.
- The law is that banks/lenders and their customers/borrowers must fulfil and enforce their respective contractual obligations under the various lending/securities agreements entered into by the parties. To restrain a debenture holder from exercising his contractual rights and enforcing his security is not only unreasonable but contrary to the express contractual terms of the agreements entered into by the parties which were clearly admitted by the applicant himself.
- Courts have no jurisdiction to interfere into the express contractual terms of the parties by forcing the parties to negotiate when clearly there is a default entitling the respondent to enforce his security.
- A grant of a restraining order in this case would be contrary to generally established banking principles and securities laws.
