Case Note & Summary
The dispute arose from a family estate matter concerning the estate of Shri Devinder Singh Chaudhary, who died on 05.12.2009. The original plaintiff, his widow, alleged that after his death, her granddaughter Sunaina Singh and her husband Ajay Kadyan, taking advantage of her old age, procured execution of gift deeds and transfer of shareholding and LLP interests in various family-owned companies and LLPs. The original plaintiff filed CS (OS) No.589 of 2021 on 21.10.2021 seeking declarations that the transfers were null and void, permanent and mandatory injunctions, and restoration of shareholding and LLP interests. She also filed an application under Order XXXIX Rules 1 and 2 CPC for interim injunction. The learned Single Judge, by order dated 29.07.2022, granted injunction restraining defendant Nos.4 and 9 from transferring specified properties and creating third-party interests, and restrained alienation of properties of defendant Nos.13 to 17. The Single Judge held that the original plaintiff had only a limited beneficial interest under the Will dated 26.03.2004, that transfers were procured by undue influence, and that defendant companies were alter egos. Aggrieved defendants filed appeals under Order XLIII Rule 1(r) CPC. The Division Bench of the Delhi High Court, by impugned judgment dated 20.03.2026, set aside the injunction, holding that the Single Judge's order lacked prima facie case, extended to self-acquired properties, ignored Section 89(8) of Companies Act, 2013, and that Section 14 of Hindu Succession Act interpretation was pending before a Larger Bench. The original plaintiff's legal representatives filed special leave petitions, which became civil appeals before the Supreme Court. The Supreme Court examined the scope of appellate interference with discretionary injunction orders, reiterating that an appellate court cannot substitute its own view unless the discretion was exercised arbitrarily, capriciously, perversely, or contrary to settled principles. The provided text does not contain the final decision of the Supreme Court on the appeals.
Headnote
A) Civil Procedure - Interlocutory Injunctions - Appellate Review - Code of Civil Procedure, 1908, Order XLIII Rule 1(r) - The Supreme Court examined the scope of appellate interference with discretionary grant of temporary injunction; an appellate court does not undertake fresh reconsideration or substitute its own view merely because a different conclusion is possible; interference is warranted only if discretion was exercised arbitrarily, capriciously, perversely, mala fide, on irrelevant/extraneous considerations, or contrary to settled legal principles; the guiding test is whether a reasonable person could have reached the same conclusion. (Paras 2, 13) B) Hindu Succession - Section 14 - Limited Beneficial Interest - Hindu Succession Act, 1956, Section 14 - The learned Single Judge held that under the Will dated 26.03.2004, the original plaintiff did not acquire absolute right but only limited beneficial interest which had not matured into absolute interest under Section 14; the Division Bench noted that interpretation of Section 14 is pending before a Larger Bench and any definitive or prima facie conclusion would be premature. (Paras 10, 13) C) Company Law - Declaration of Beneficial Interest - Section 89(8) - Companies Act, 2013, Section 89(8) - The Division Bench held that Section 89(8) expressly provides that no right in relation to any share in respect of which a declaration is required but not made shall be enforceable by the beneficial owner or any person claiming through him; the statutory embargo cannot be diluted by treating non-compliance as a mere procedural lapse; the learned Single Judge could not have brushed aside the respondents' reliance on Section 89. (Para 13) D) Equity - Undue Influence and Fraudulent Transfers - Alter Ego and Quasi-Partnership - No specific Act - The learned Single Judge found that transfers of shareholding and LLP interests were procured by undue influence and that defendant companies/LLPs were alter egos of defendant Nos.4 and 9, partaking of quasi-partnership nature; the Division Bench considered factors such as delay, absence of criminal complaint, and continued participation in corporate affairs as relevant to existence of prima facie case. (Paras 10, 13) E) Injunctions - Prima Facie Case, Balance of Convenience and Irreparable Injury - Code of Civil Procedure, 1908, Order XXXIX Rules 1 and 2 - The learned Single Judge granted injunction preserving properties of defendant companies/LLPs and restraining alienation of certain properties; the Division Bench held that the injunction extended even to self-acquired properties without clear prima facie nexus, would stall development projects affecting third-party purchasers, and that preservation of subject-matter cannot substitute for foundational requirement of prima facie case; the grant travelled beyond preservation and risked conferring unwarranted advantage. (Paras 10, 11, 13)
Issue of Consideration
Whether the Division Bench of the High Court, while exercising jurisdiction under Order XLIII Rule 1(r) CPC, was justified in substituting its own view for that of the learned Single Judge in granting temporary injunctions, and the extent of appellate interference with discretionary orders.
Law Points
- Appellate court under Order XLIII Rule 1(r) CPC does not substitute its own view unless discretion exercised arbitrarily
- capriciously
- perversely
- mala fide or contrary to settled principles
- guiding test is whether reasonable person could have reached same conclusion
- interim injunction requires prima facie case
- balance of convenience and irreparable injury
- Section 14 Hindu Succession Act interpretation pending before Larger Bench
- Section 89(8) Companies Act creates statutory embargo on undeclared beneficial interest
- preservation of subject matter cannot substitute prima facie case
