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Miscellaneous Application No. 1477 of 1968/Suit No. 154 of 1968; decided on 25th July 1968.

, O. XXXV, rr. 1 & 2 Inteiloeutory application‑Injunction‑While considering interlocutory application for injunction Court permitted to evaluate merits of case as disclosed In plaint, affidavits of parties and documents on record, with a view to ascertaining if a "prima facie" case made out for grant of an injunction.

The Hotel Metropole Ltd. v. The Federation of Pakistan P L D 1954 Sind 61 ref.

‑.Equitable relief‑Seldom granted when to opinion of Court plaintiff able to remedy his own grievance.

Shaikh Haider for Plaintiffs.

A. K. Brohi for Defendants.

Date of hearing: 17th June 1968.

This interlocutory application under Order XXXIX, rules 1 and 2, C. P. C. duly supported by an affidavit, arises out of the suit filed by the plaintiffs for declaration that the defendants were not competent to claim the deposit of cash security instead of the existing arrangements of bank guarantee, and that their letter, dated 29th March 1968 was against public policy, opposed to the parties contract and the pro visions of Natural Gas Rules, 1960 (hereinafter called the Rules) and the Natural Gas (Control of Production and Distribution) Order, 1965 (hereinafter called the Order) and consequently void. As a consequential relief permanent injunction was sought against the defendants restraining them from discontinuing or dis connecting the gas supply to the plaintiff's factory and from demanding cash security in contravention of the terms of existing contract.

2. By way of objections the defendants filed their counter‑affidavit and in reply the plaintiffs filed their affidavit in rejoinder.

3. Briefly stated the facts alleged in the plaint were these :‑

That the plaintiffs are the owners of a big textile Mill and annually export goods of the value of approximately Rs. 1.25 crores. That until the year 1952, the plaintiff's mill was run by oil furnaces, but after the discovery of natural gas by P. I. D. C., they converted their mill to gas consump tion on or about 25‑8‑1964, after they entered into a contract for that purpose with Sui Gas Transmission Company Limited, who were then the sole distributors. The contract in question did not provide for any security deposit and hence no such deposit was paid by the plaintiffs.

4. On 28‑7‑1955, the defendant's company was incorporated and was appointed as the sole suppliers and distributors of gas by the Sui Gas Transmission Company Limited for the region of Karachi. On 19‑9‑1955, the said Transmission Company informed the plaintiffs of these facts and assured them that the defendants would continue supplying gas to their factory on the existing agreed terms and conditions. Consequent upon that assurance the plaintiffs agreed to these arrangements and when their initial contract, dated 25‑8‑1954 expired it was renewed on or about 24‑9‑1961. According to clause 12 of that contract it was to continue for a minimum period of four years, and even thereafter, unless determined by a notice of three months from either side.

5. That by way of security against the cost of gas consump tion the plaintiff's had furnished a bank guarantee of Rs. 50,000.00 to the defendants, but vide their letter dated 12‑2‑1968 they instead demanded cash security of Rs. 1,69,700.00 on the ground that in terms of the licence granted to them by the Government of Pakistan they were authorised to receive that amount as deposit against the estimated cost of gas consump tion for two months. On 29‑3‑1968, the defendants wrote another letter asking the plaintiffs to execute a fresh contract and to deposit Rs. 1,40,000.00 in cash. They were warned that in case they failed to comply wish the said requisitions, then the said letter was to be treated as giving three months notice under clause 12 of the contract whereafter they would be at liberty to discontinue the supply of gas to their factory with effect from 29th June 1968.

6. On the basis of these facts it was alleged that the defendants' threat to discontinue the supply of gas was illegal as during the continuance of existing contract they could not unilaterally impose new conditions on the plaintiffs. It was further alleged that the threatened action of the defendants was against the provisions of rules and the Order. The principles of estoppel and public policy were also canvassed by the plaintiff.

7. In their counter‑affidavit the defendants alleged that no "prima facie" case bad been made out for the grant of an injunction. They further alleged that the defendants had validly exercised their contractual power in giving three months notice for determining the existing contract and consequently the plaintiffs had no legal grievance to invoke the jurisdiction of the Court. They denied that the rules and the provisions of Order in any way affected their power and jurisdiction in so far as their right to demand cash security from the defendant was concerned. They lastly alleged that the plaintiffs were under no obligation to continue obtaining gas from the defendants and consequently it was not a fit case in which the remedy of injunction could be sought or granted. Reliance was also placed on rule 19 of the Rules, and it was contended that the alleged dispute should have been referred to Bureau of Mineral Resources, Government of Pakistan for decision and therefore, these proceedings were incompetent.

8. I have heard Mr. Shaikh Hyder, the learned counsel for the plaintiffs and Mr. A. K. Brohi, the learned counsel for the defendants.

It is axiomatic that in order to be able to obtain a temporary injunction from Court the plaintiff must show ;

(1) That there is a serious question to be tried at the hearing, and there is a probability that he will be entitled to the relief sought by him, or in other words that he has a "prima facie" case to go to trial.

(2) That the Courts' interference is necessary to protect him from that species of injury which the Court calls irreparable before his legal right can be established on trial, and

(3) That the comparative mischief from the inconvenience which is likely to arise from withholding the injunction will be greater than that which is likely to arise from granting it.

Before considering the merits of this application, in the light of these principles, it may be pointed out that there exists a common erroneous impression that while considering an interlocutory application for injunction the Court was not permitted to evaluate the merits of the plaintiff's case, as disclosed in the plaint, the affidavits of the parties and the documents filed on the record, with a view to ascertaining if a "prima facie" case had been made out for the grant of an injunction. It must be said that any such impression appeared to be wholly misconceived and in order to dispel it I would like to refer to a Division Bench Judgment of the former Sind Chief Court reported as‑‑

The Hotel Metropole Ltd v. The Federation of Pakistan P L D 1954 Sind 61.

where this aspect of the case was discussed in great detail, in light of the judgment of the House of Lords, the Privy Council and the Federal Court of India. At page 62 of the judgment the "prima facie" aspect of the case was described by their Lordships thus;

"For proper exercise of the discretion to grant an injunc tion it is necessary to examine into the case in the light of the allegations made, the affidavits and documents filed, the nature and extent of evidence indicated or which may be expected to be led at the trial and the contentions of law raised, before a Court can decide whether it is right that the status quo should be maintained and the defendant restrained in the manner prayed. It is on such an exami nation that the Court can ascertain whether the plaintiff has a prima facie case. An injunction is never granted as of course or on the consideration that it will do the defendant no harm, or on the ground, merely that withholding the injunction would render the suit infructuous and without going into the merits. It is all the more necessary under the Code of Civil Procedure, 1908, to examine into, the merits with some care, because once a temporary injunction is granted, it may take the suit a very long time to come up for hearing and be decided."

In view of these principles let us now examine if the plaintiffs have made out a "prima facie" case for the grant of temporary injunction. In the first place, it was alleged in the plaint and the various affidavits filed on behalf of the plaintiffs that the defendants had the "monopoly" of gas distribution in Karachi region and therefore they could not demand the deposit of cash security, as it would be against public policy. It may be mentioned, however, that the plaintiffs have not specified as to how the right of the defendants to distribute gas in the region of Karachi was tantamount to a "monopoly" nor have they specified whether the said "monopoly", if any, had any bearing on the formation of the parties contract. Admit tedly the defendants and their principles, namely, the Sui Gas Transmission Company Limited both enjoyed "monopoly" in the field of distributing gas in the region of Karachi and considering that the plaintiffs had initially entered into contract with the Transmission Company and. thereafter with the defendants it might reasonably be presumed that their grievance on the point of "monopoly" was meant to have a bearing upon the very formation of these contracts. That being the plaintiffs' case, as I have been able to understand it, the contention must at once be repelled. In the first place, it was wholly wrong to contend that the defendants' right to distribute gas in the region of Karachi amounted to a "monopoly" within the meaning of section 23 of the Contract Act, and in the second place the said right was granted to the defendants by the Government of Pakistan under a licence issued to them in line with the provisions of Gas Order, 1965, which in effect regulated the right to produce, transmit and distribute gas in the region of Karachi. In that view of the matter, no exception could be taken to the said right which was the creature of legislative instrument even assuming for the sake of arguments that any such right otherwise amounted to a "monopoly". Alternatively, if by 'attributing "monopoly" to the defendants the stand of the plaintiffs was that even in regard to fresh contracts the defendants could not demand the deposit of cash security on the ground of public policy then the said contention must be repelled as being devoid of force. Admittedly, the defendants had no authority to compel any consumer to purchase their gas, and consequently the consumer was at liberty either to accept their terms or to reject them as a matter of free volition.

9. The plaintiffs have next grounded their case on the parties' contract, the provisions of rules and of Order. After examining the last two instruments they appeared to have no relevancy to the point in issue. In fact, the provisions of these instruments were entirely silent in so far as the defendants' right to claim the deposit of cash security was concerned. The learned counsel for the plaintiffs, however, relied on rule 18 of the Rules which according to him provided the necessary guidelines as to how the defendants were required to exercise their right in so far as the demand of cash security was concerned. In order to appreciate his contention it would be expedient to reproduce the provisions of that rule which read:

"18. Rates and charges to be reasonable and undue prefer ences etc., not to be granted.‑(1) All rates and charges made, demanded or received by any licensee for, or in connection with, the transportation or sale of gas and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable.

(2) Except with the permission of the Authority, no licensee shall with respect to any transportation or sale of gas make or grant any undue preference or advantage to any person or subject any person to any undue prejudice or disadvantage or maintain any unreasonable difference in rates, charges, services; facilities either as between one locality and another or as between one class of consumers and another, when the gas is supplied in the same conditions of supply and for the same class of use."

It would be seen that the language of this rule does not in terms apply to the demand of cash security but assuming for the sake of arguments that it does even then the demand of cash security deposit for two months does not appear to be unjust or unreasonable nor was it tantamount to "making or granting any undue preference or advantage or subjecting any person to any undue prejudice or disadvantage . . . . . . . . either as between one locality or another or as between one class of consumer or another". Admittedly, the defendant's demand of cash security deposit for two months was uniform vis‑a‑'vis all its consumers which position was not controverted by the plaintiffs either in their pleadings or during the course of arguments at the Bar.

10. The learned counsel for the plaintiffs next argued that in terms of the provisions of section 5(3) of the Order the defendants could not withhold the supply of gas to the factory of the plaintiffs without the prior permission of the Chief Gas Controlling Officer, and consequently their threat to discontinue the .gas supply with effect from 29th June 1968, was illegal. In reply to this argument, Mr. A. K, Brohi, the learned counsel for the defendants clearly stated at the Bar that the defendants had no intention of withholding or discontinuing gas supply to the plaintiffs' factory without the prior permission of the Chief Gas Controlling Officer. In that view of the matter, the plaintiffs' grievance, based as it was, on the provisions of section 5, subsection (3) of the Order appeared to have been misconceived.

11. The last grievance of the plaintiffs was grounded on the parties' contract which according to them conferred no right upon the defendants to demand the deposit of cash security instead of the existing arrangements of a bank guarantee. In substance their contention was that so long as that contract continued the defendants could not unilaterally impose upon them new conditions. In order to‑ appreciate the said con tention it would be profitable to reproduce Article 12 (e) of that contract which reads:‑--

"This agreement shall continue in force for a minimum period of four years and may continue in effect there after unless determined by three months notice on either side."

It was an admitted position that the parties' contract had already run its course for four years, which was the prescribed minimum period, and consequently it was open to either party to determine it by giving three months prior notice. In the instant Case,' the defendants had invoked the provisions of that clause and had served the required notice on the plaintiffs on 29‑3‑1968 expiring on 29‑6‑1968. In so far as the legally of that notice was concerned, it was not open to any challenge in view of the clear provisions of Article 12(e) of the parties' contract, except that the defendants could not unilaterally impose any new conditions upon the plaintiffs until the 29th of June 1958; when the present contract was to validly determine. In that view of the matter, the objection of the plaintiffs, that during the subsistence, of the contract the defendants could not unilaterally impose upon them any new conditions, appeared to be more spacious than 'real inasmuch as the defendants neither intended to discontinue the gas supply to their mills within the notice period nor without the prior permission of the Chief Gas Controlling Officer. The fact that the defendants, in advance of 29th June 1968, had asked the plaintiffs to pay in cash the security deposit was a laudable gesture of which under the circumstances no undue advantage should have been taken. Admittedly, the plaintiffs could not claim any right to receive the supply of gas after the 29th of June 1968, as on that date the existing contract would finally come to an end, and con sequently it was left to their own judgment whether to accept or reject the defendant's demand. In point of fact the existing contract was already validly determined, after the defendants served a notice on the plaintiffs in line with the requirements of Article 12(e) of the existing contract, subject to the expiry of notice period of three months on 29th June 1968. Therefore, if the plaintiffs were anxious to keep the existing obligations under that contract in force it was still open to them to comply with the demand of paying cash security to the defend ants notwithstanding the fact that the last date of notice period has already passed as their present application, which was filed before that date, was pending decision. For all these reasons, I am of the view that the plaintiffs have failed to make out "prima facie" case so as to entitle them for the grant of temporary injunction.

12. The plaintiffs have also failed to show that the "balance of convenience" lies in their favour, or that they would suffer "irreparable injury" in case injunction was not granted in their favour. As already pointed out the existing contract between the parties stands terminated in the eyes of law, and consequently the demand of cash security by the defendants could be said to be only a fresh offer for, the formation of a new contract. That being the position, the question of "balance of convenience" does not appear to have any relevancy. In so far as the question of "irreparable injury" was concerned, there was no basis for any such presumption for the simple reason that the demand of cash security deposit appeared to be reasonable and consistent with the provisions of rule 18 of the Rules which the plaintiffs invoked in support of their own case. In any Base if the plaintiffs were to pay that amount in cash it would not cause them any "irreparable injury because if their suit is ultimately decreed they would be entitled to the refund of that amount with interest.

13. Lastly it may be mentioned that the equitable relief of injunction is seldom granted when in the opinion of the Court the plaintiff was able to remedy his own grievance.' According to their own showing the plaintiffs were owning a large Mill and were annually exporting goods of the approximate value of over rupees one crore, and consequently there appeared no difficulty in their way if they were to pay the cash security to defendants. After all the demand of cash security deposit for two months appeared to be reasonable and by paying that amount the plaintiffs would not only avoid any inconvenience to themselves but would also be able to run their mills uninterruptedly and without any loss.

14. In view of these conclusions, the plaintiffs have failed to make out a case for the grant of temporary injunction, and consequently this application is dismissed with costs.

Application dismissed.

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