The Supreme Court set aside a Division Bench judgment that had overturned a trial judge’s interim injunction, reaffirming that appellate courts may not substitute their own view for a lower court’s discretionary grant of a temporary injunction unless the discretion was exercised arbitrarily or perversely.
Background & Facts
The Dispute
The dispute centres on the succession of a family estate created by a testator who died on 05.12.2009. The testator allegedly executed a Will on 26.03.2004 and a later Will on 04.10.2008. After his death, the original plaintiff, Mrs. Sita Chaudhary, transferred shares and capital of various family companies and LLPs to her granddaughter, Ms. Suna Nina Singh, and to Ms. Singh’s husband between 19.12.2018 and 06.06.2019. The transfers were accompanied by interest-free loans totalling approximately Rs. 50 crores, which were used to acquire high-value properties.
Key Facts
- 26.03.2004 - Will executed by the testator governing succession of his shares.
- 04.10.2008 - Subsequent Will purportedly executed; probate pending.
- 05.12.2009 - Testator died.
- 19.12.2018 - Transfer of 6,000 shares of Amba Promoters & Developers Pvt. Ltd. from Sita Chaudhary to Sunaina Singh.
- 19.12.2018 - Transfer of 18,012 shares of P.E. Manning Consultants Pvt. Ltd. from Sita Chaudhary to Sunaina Singh.
- 14.03.2019 - Transfer of 62% LLP capital of Ruchi Towers LLP from Sita Chaudhary to Sunaina Singh.
- 14.03.2019 - Transfer of 47% LLP capital of Rama Packing & Wires Industries LLP from Sita Chaudhary to Sunaina Singh.
- 24.04.2019 - Transfer of 38% LLP capital of Rajpura Steel Tubes Pvt. Ltd. to Ajay Kadyan.
- 06.06.2019 - Transfer of 2,21,240 shares of Industrial Cables (India) Ltd. from Sita Chaudhary to Sunaina Singh.
- 09.01.2025 - Original plaintiff died.
- 12.02.2025 - Family arrangement appointing six grandchildren and three children as legal representatives of the deceased.
- 20.11.2020 - Son Virender Singh filed CS (OS) No.382 of 2020 challenging the transfers.
- 21.10.2021 - Original plaintiff instituted CS (OS) No.589 of 2021 seeking declaration of nullity of transfers, permanent injunction, and restoration of shareholding.
- 12.11.2021 - Learned Single Judge issued an ad interim order directing status-quo and notice to defendants.
- 29.07.2022 - Learned Single Judge granted an interim injunction restraining defendants from alienating specified properties and shareholdings.
- 2022-2024 - Defendants filed appeals under Order XLIII Rule 1(r) (FAO (OS) Nos.96, 97, 98, 99 of 2022; FAO (OS) No.33 and No.49 of 2024).
- 20.03.2026 - Division Bench of the Delhi High Court set aside the Single Judge’s injunction.
- 12 August 2026 - Supreme Court delivered the present judgment.
Procedural History
- 20.11.2020: CS (OS) No.382 of 2020 filed by Virender Singh.
- 21.10.2021: CS (OS) No.589 of 2021 filed by the original plaintiff.
- 12.11.2021: Single Judge’s ad interim order (status-quo).
- 29.07.2022: Single Judge’s order granting interim injunction.
- 2022: Appeals filed under Order XLIII Rule 1(r) - FAO (OS) Nos.96-99 of 2022.
- 2024: Further appeals - FAO (OS) Nos.33 and 49 of 2024.
- 20.03.2026: Division Bench of Delhi High Court set aside the injunction.
- 12 August 2026: Supreme Court restored the injunction and set aside the Division Bench’s order.
Parties' Positions
- Appellants (Shruti Manav Sharma & Anr.): Seek restoration of the injunction, arguing that the Division Bench wrongly interfered with the Single Judge’s discretionary jurisdiction.
- Respondents (Suna Nina Singh & Ors.): Contend that the Single Judge’s order was perverse, that the plaintiff had no legal right to the transferred assets, and that appellate interference was justified.
Relief Sought
The appellants prayed for the restoration of the interim injunction dated 29.07.2022 and for the Division Bench’s order dated 20.03.2026 to be set aside.
The Legal Issue
Whether the Division Bench of the Delhi High Court was justified in substituting its own view for the learned Single Judge’s discretionary grant of an interim injunction under Order XLIII Rule 1(r) of the Code of Civil Procedure, 1908, or whether such appellate interference exceeded the limits prescribed by Wander Ltd. & Anr. and related precedents.
Arguments Presented
For the Appellant
The appellants, through senior counsel Kapil Sibal, argued that:
- The Division Bench misapplied the settled test for appellate interference laid down in Wander Ltd. & Anr. and subsequent cases.
- The Single Judge’s order was based on a prima facie case, balance of convenience, and irreparable injury, none of which were arbitrary, capricious, or perverse.
- The Division Bench’s detailed examination of the Will, the alleged undue influence, and the applicability of Section 89 of the Companies Act, 2013, amounted to a “mini-trial” inappropriate at the interlocutory stage.
- Restoring the injunction is essential to preserve the subject-matter of the suit pending trial.
For the Respondent
The respondents, represented by senior counsel Mukul Rohatgi, submitted that:
- The Single Judge erred in finding a prima facie case, given the plaintiff’s limited beneficial interest under the Will and the pending probate of the 2008 Will.
- The injunction extended beyond preservation, restraining the defendants from dealing with assets that were self-acquired, thereby causing undue hardship.
- The Division Bench correctly identified the lack of a clear prima facie nexus between the disputed transfers and the assets sought to be restrained, justifying reversal of the injunction.
The Court's Analysis
The Court began by reiterating the discretionary nature of interlocutory injunctions under Section 36 of the Specific Relief Act, 1963 and Order XXXIX Rule 1(a) of the Code of Civil Procedure, 1908. It emphasized that appellate courts may interfere only when the lower court’s discretion is exercised arbitrarily, capriciously, perversely, or in ignorance of settled principles.
"The order of the learned Single Judge, resting as it does on seven specific findings addressing the nature of the original plaintiff’s interest under the Will, the doubt surrounding its finality, the plea of undue influence, and the alter-ego character of the defendant entities, cannot be said to be arbitrary, capricious or perverse…"
The Court cited Wander Ltd. & Anr. and its progeny, noting that the test requires the appellate court to ask whether a reasonable person could have reached the same conclusion on the material before the trial court. The Division Bench, however, had undertaken a detailed construction of the 2004 Will, evaluated the effect of delay, and applied Section 89(8) of the Companies Act, 2013, all of which are matters for trial.
The Court further observed that the Single Judge had correctly applied the prima facie case standard as articulated in Dalpat Kumar v. Prahlad Singh and Gujarat Bottling Co. Ltd. - the plaintiff needed only to show a serious dispute worthy of trial, not to prove title at the interlocutory stage. The balance of convenience favored preservation because the defendants stood to lose nothing substantive by being restrained, while the plaintiff risked irreversible loss of control over the family assets.
Regarding irreparable injury, the Court accepted that loss of control over shareholdings and immovable property could not be adequately compensated by damages, satisfying the third limb of the American Cyanamid test.
Consequently, the Division Bench’s substitution of its own appreciation of the Will and the applicability of statutory provisions amounted to impermissible appellate overreach. The Court therefore restored the Single Judge’s injunction and set aside the Division Bench’s order.
The Verdict
The Supreme Court allowed the appeals, set aside the Division Bench judgment dated 20.03.2026, and restored the interim injunction dated 29.07.2022. The injunction remains in force until further orders of the Single Judge. The Single Judge is directed to dispose of CS(OS) No.589 of 2021 within eight months. No order as to costs was made.
What This Means For Similar Cases
Appellate Courts Must Respect Trial Court Discretion
- Interlocutory orders are discretionary; appellate courts may intervene only on a narrow ground of arbitrariness.
- Detailed merits-based analysis at the appellate stage constitutes a prohibited “mini-trial”.
The Prima Facie Test Remains the Threshold
- Plaintiffs need only demonstrate a serious dispute, not prove title, to obtain a temporary injunction.
- Balance of convenience and irreparable injury must be assessed contemporaneously, without delving into ultimate merits.
Practitioners Should Frame Injunction Applications Precisely
- Emphasise the three-fold test (prima facie, balance of convenience, irreparable injury) in pleadings.
- Anticipate appellate scrutiny by ensuring the discretion exercised is not arbitrary or capricious.
- Preserve clear documentary evidence to satisfy the prima facie requirement without over-reaching.
