The Andhra Pradesh High Court has set aside a temporary injunction protecting a plaintiff's alleged possession of property under a Rs. 1.5 crore sale agreement, holding that the trial court failed to record reasons establishing a prima facie case, balance of convenience and irreparable loss.

It also declined to grant status quo without determining who was in possession immediately before the suit was instituted. The Court further flagged that the plaintiff had filed the suit nearly 12 years after the alleged agreement without explaining the delay.

The observations came while the Court was deciding two appeals filed by the defendants against temporary injunctions granted in a suit for specific performance. One order restrained them from interfering with the plaintiff's alleged possession, while the other prohibited them from alienating the property during the pendency of the suit.

The principles governing temporary injunctions require courts to assess whether a prima facie case exists, whether the balance of convenience favours the applicant and whether refusal of relief would cause irreparable loss.

Against this backdrop, a Division Bench of Justice D. Ramesh and Justice Alapati Giridhar observed:

“The Orders show as rightly contended by the learned Counsel for the Appellants/Defendants that the Trial Court did not record reasons for its satisfaction on the pleadings or documents of the parties to record its satisfaction on prima facie case and balance of convince but the Trial Court merely referred to their pleadings, exhibits and documents, and passed orders. It is needless to mention that the Courts should not go for a 'mini trial' in a petition filed for temporary injunction, but the Courts are supposed to record its satisfaction on prima facie case, balance of convenience and irreparable loss.

This Court could not grant status-quo without recording a finding qua the possession, further the order of the Trial Court also could not show prima facie satisfaction with reasons on who is in possession of the property immediately prior to the institution of the suit, thus, this Court is not inclined to order status-quo in the circumstances of the case, leaving the issue open to the Trial Court to examine the material and dispose the same as per law.”

The case arose from a suit for specific performance based on an alleged agreement of sale executed in October 2009. The plaintiff claimed to have paid ₹1.5 crore to the defendants and that possession of the property had been delivered to him.

The defendants denied executing the agreement and alleged that the plaintiff had fabricated it using signed blank stamp papers allegedly obtained as security for a Rs. 3 lakh loan. They also disputed the plaintiff's possession, relying on a surveyor's report indicating that one of the defendants was in possession of the property.

During the pendency of the suit, the plaintiff filed applications before the trial court seeking temporary injunctions against interference with his alleged possession and alienation of the suit property.

The trial court allowed both applications, prompting the defendants to file appeals before the High Court.

On examining the material, the High Court observed that, apart from the plaint and the alleged agreement of sale, no other material had been produced to establish the plaintiff's possession.

It held that the trial court had placed the burden on the defendants to establish possession through revenue records and title deeds without first requiring the plaintiff to discharge his initial burden of establishing a prima facie case.

The Bench also noted that the plaintiff had not explained why he had waited nearly 12 years to institute the suit and seek registration of the property. In the absence of a reasoned finding as to who was in possession immediately before the institution of the suit, the Court declined to grant an order of status quo.

Accordingly, the High Court set aside the injunction concerning possession and remitted the application to the trial court for fresh consideration.

In the appeal concerning alienation, the Court recorded the defendants' undertaking not to alienate the property without the trial court's permission and disposed of the appeal.

The Court also referred to Section 52 of the Transfer of Property Act, 1882, which deals with transfers of immovable property during the pendency of litigation concerning rights in that property.

It left the parties at liberty to raise their respective contentions regarding the alleged payment of Rs. 1.5 crore and its implications under the Income Tax Act before the appropriate forum.

Clarifying that it had not expressed any opinion on the merits of the dispute, the High Court directed the trial court to decide the suit on its merits, uninfluenced by the observations made in the judgment.

It also directed the trial court to dispose of the suit preferably within four months of receiving the judgment.

Both parties were directed to cooperate. If either party delays the proceedings or fails to assist, the trial court may proceed further or impose appropriate costs, depending on the circumstances.

Counsel for Appellants/Defendants: Sri P.S.P. Suresh Kumar

Counsel for Respondent/Plaintiff: Sri P. Rajasekhar