Balancing Equity in Commercial Recovery: Conditional Leave to Defend Upheld

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This common judgment disposes of two cross-petitions filed under Article 227 of the Constitution of India, challenging an order passed by the learned Senior Civil Judge, Shimla, in a summary suit for recovery amounting to ₹52,00,000/- filed under Order 37 of the Code of Civil Procedure (CPC). The civil suit arose from an agreement to sell land and a building for ₹4,00,000,000/-, out of which an advance payment of ₹52,00,000/- was made by the plaintiff. The plaintiff subsequently terminated the agreement due to alleged non-cooperation by the defendant in obtaining statutory permissions under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972, and sought a refund of the advance. The trial court had granted the defendant conditional leave to defend upon furnishing security equivalent to the entire claim amount. Both parties challenged this order—the plaintiff argued that no leave to defend should have been granted, while the defendant contended that the leave ought to have been unconditional. The High Court dismissed both petitions, holding that the trial court’s exercise of discretion was sound, balanced, and warranted no interference under supervisory jurisdiction.

  • Nature of Defense and Triable Issues: The High Court noted that the defendant raised plausible, albeit arguable, contentions regarding whether the plaintiff made active efforts or written requests to obtain the mandatory Section 118 permissions before unilaterally terminating the agreement, thereby establishing a triable defense.
  • Application of Apex Court Principles: Relying on the landmark frameworks in IDBI Trusteeship Services Limited v. Hubtown Limited and L. Kashyap and Sons Limited, the Court affirmed that where a defense is plausible but leaves the court with reservations regarding the absolute probability or immediate clarity of the claims, imposing conditions of furnishing security is entirely appropriate.
  • Validity of Conditional Leave: The trial court acted well within its legal discretion by permitting the defendant to defend the suit subject to furnishing security to the extent of the claimed amount, ensuring that commercial expedience is balanced without shutting out legitimate triable issues.
  • Scope of Article 227: Reaffirming recent precedents such as Nandi Infrastructure Corridor Enterprises Ltd. v. B. Gurappa Naidu, the High Court reiterated that its supervisory jurisdiction under Article 227 cannot be invoked as an appellate forum to re-weigh evidence or alter findings of fact unless there is a gross abuse or unwarranted assumption of jurisdiction.

Final Outcome: Both CMPMO No. 355 of 2025 and CMPMO No. 255 of 2025 were dismissed, and the record was ordered to be sent back to the trial court.

STPL (Web) 2026 HP 399

Narip Bajwa V. Sanjeev Maria (D.O.J. 21.07.2026)

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Discretion, Equity, and Perversity: Appellate Interference in Injunction Orders

July 22, 2026 No Comments

The High Court of Himachal Pradesh set aside a judgment of the First Appellate Court that had granted a temporary injunction against the construction of a petrol pump on joint land. The Court ruled that an Appellate Court, while exercising jurisdiction under Order 43 of the CPC, cannot substitute its own discretion for that of the Trial Court unless it specifically records a finding that the original order was perverse, arbitrary, or based on a misreading of evidence. Furthermore, the Court held that the plaintiffs were ineligible for the equitable relief of an injunction because they had unconditionally withdrawn a previous suit on the same cause of action without seeking liberty to file afresh and had failed to approach the Court with clean hands. Consequently, the High Court restored the Trial Court’s order, allowing the ongoing development of the petrol pump to proceed.

  1. The Dispute Over Joint Land and Petrol Pump Installation The case involved a dispute among co-sharers over a piece of land in Village Rehuta. Defendant No. 1 (the petitioner) was allotted a petrol pump dealership by an oil company and began developing the site in 2019, asserting he had obtained a No Objection Certificate (NOC) from the other co-sharers. The plaintiffs (respondents) challenged this, claiming the land was unpartitioned, the NOC was forged, and that the installation would interfere with their rights as co-sharers.
  2. Procedural History and Reversal of Injunction
  • The Trial Court: Dismissed the plaintiffs’ application for a temporary injunction, noting that they had concealed the withdrawal of a previous suit and that the defendant had already invested heavily in the project based on an NOC.
  • The First Appellate Court: Reversed the Trial Court’s decision and restrained the defendants from further construction until a legal partition took place.
  • The High Court: Quashed the Appellate Court’s decision, finding it had exceeded its jurisdiction by substituting its own view without proving the Trial Court’s view was impossible or perverse.
  1. Limits of Appellate Jurisdiction Under Order 43 CPC The High Court emphasized a fundamental principle of civil law: an Appellate Court should not interfere with the discretionary orders of a subordinate court merely because a different view is possible.
  • The Perversity Test: Interference is only justified if the Trial Court’s order is “palpably perverse”—meaning it is distorted, ignores settled law, or is altogether against the weight of the evidence.
  • Findings: The High Court found that the First Appellate Court failed to record any such finding of perversity before setting aside the Trial Court’s order.
  1. Impact of Withdrawing a Suit (Order 23 Rule 1 CPC) A critical factor in the High Court’s reasoning was the conduct of the plaintiffs.
  • Plaintiff No. 2 had previously filed and unconditionally withdrawn a similar suit for a permanent injunction regarding the same project.
  • Because the plaintiffs did not obtain permission from the court to file a fresh suit on the same cause of action, the High Court ruled that this withdrawal was “fatal” to their case for equitable relief.
  1. Equity and the Balance of Convenience The Court noted that the relief of an injunction is equitable and discretionary.
  • Laches and Investment: The defendant had been developing the plot and incurring heavy expenses since 2019 without a prompt or timely objection from the plaintiffs.
  • Failure to Seek Partition: The plaintiffs had not initiated any formal legal proceedings to partition the land, yet they sought to stop the defendant’s use of it. The Court held that the balance of convenience favored the defendant, who had acted upon a sanctioned project and validly issued certificates.
  1. Final Verdict The High Court allowed the petition, set aside the judgment of the First Appellate Court, and restored the Trial Court’s order. The defendants are permitted to continue their work, and the temporary injunction was vacated.

STPL (Web) 2026 HP 398

Manmohan Chandel & Another V. Prem Kumar & Others (D.O.J. 21.07.2026)

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Liberty Beyond Borders: Anticipatory Bail Granted in Money Laundering

July 22, 2026 No Comments

This common judgment delivered by the High Court of Himachal Pradesh addresses twin bail applications filed under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) by Mandeep Rana and Ashoni Kanwar. The applicants—apprehending arrest by the Directorate of Enforcement (ED) under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA) in connection with the Manav Bharti University fake degree scam—sought protection to facilitate their return from Australia using emergency travel documents. The ED strongly opposed the applications, raising preliminary objections regarding maintainability, the applicability of the stringent twin conditions under Section 45 of the PMLA, and the applicants’ status as proclaimed offenders and Fugitive Economic Offenders.

The High Court meticulously evaluated the conduct of the investigating agency, noting that despite having knowledge of the applicants’ foreign residence since February 2021, the ED continued issuing summons to an Indian address to secure proclamation orders. Emphasizing that personal liberty is a vital constitutional mandate and that the ED had previously consented before the Special Court to keep look-out circulars and non-bailable warrants in abeyance to let them return, the High Court held that the twin conditions under Section 45 stood satisfied. Consequently, the Court allowed the applications, granting anticipatory bail subject to specific stringent conditions.

  • Background and Allegations:
    • The case originates from multiple FIRs registered against the Manav Bharti University fake degree scam, leading to an ECIR registered by the ED under the PMLA.
    • The ED alleged that key conspirator Raj Kumar Rana laundered proceeds of crime through trusts and universities, and that the applicants (his son and wife) assisted in concealing proceeds, projecting illicit funds as salary, and acquiring properties.
  • Contentions of the Applicants:
    • The applicants maintained their innocence, asserting they had no direct role in university admissions, were residing in Australia, and were eager to return to India via emergency Travel Certificates after their passports were revoked.
    • They highlighted that the Special Judge had previously kept look-out circulars (LOC) and non-bailable warrants (NBW) in abeyance to enable their return.
  • Contentions of the Respondent-ED:
    • The ED argued that economic offences form a separate class, the rigorous twin conditions under Section 45 of the PMLA apply, and the applicants deliberately evaded the process of law, resulting in them being declared Fugitive Economic Offenders.
    • The ED contended that custodial interrogation was essential to unearth the full money trail running into hundreds of crores.
  • Court’s Observations and Findings:
    • Flawed Service of Process: The Court severely criticized the ED, noting that the investigating agency was aware as early as February 2021 that the applicants were in Australia, yet deliberately continued issuing summons to a domestic address in Rajasthan solely to secure proclamation orders.
    • Estoppel against ED: The Court emphasized that since the ED had earlier conceded before the Special Judge to keep LOCs and NBWs in abeyance for a one-time return, they were legally estopped from turning around to oppose the bail applications on grounds of evasion.
    • Satisfaction of Section 45 PMLA: Relying on Supreme Court precedents (Vijay Madanlal Choudhary and Tarsem Lal), the Court ruled that Section 45 does not impose an absolute restraint on bail and that reasonable grounds existed to rule in favor of the applicants based on broad probabilities.
  • Final Directions:
    • Both bail applications were allowed.
    • The applicants were ordered to be released on bail in the event of their arrest upon furnishing personal bonds of Rs. 2,00,000/- each with two sureties of the like amount, subject to conditions including joining the investigation, not leaving India without prior judicial permission, attending trial regularly, and filing a monthly affidavit of non-involvement in other cases.

STPL (Web) 2026 HP 397

Mandeep Rana V. Directorate of Enforcement (D.O.J.21.07.2026)

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Appeal: To Decide Additional Evidence Applications Along with the Main Appeal

July 22, 2026 No Comments

The petitioner, Dina Nath, filed a petition under Article 227 of the Constitution of India challenging the order dated 08.09.2025 passed by the First Appellate Court, which had prematurely dismissed his application under Order 41 Rule 27 CPC for producing additional evidence during the pendency of a civil appeal. The High Court examined whether an appellate court can dismiss an application for additional evidence before hearing and deciding the main appeal on its merits. Setting aside the lower appellate court’s order, the High Court held that applications to lead additional evidence under Order 41 Rule 27 CPC must be considered and adjudicated alongside the main appeal to properly assess the document’s relevance for a satisfactory judgment.

  • Challenge to Lower Appellate Court Order: The petitioner challenged the dismissal of his application under Order 41 Rule 27 CPC, wherein he sought to place on record a subsequent demarcation report dated 08.06.2019 concerning Khasra Nos. 6407 and 6408 to demonstrate no encroachment existed on the disputed land.
  • Premature Adjudication: Relying on supreme court precedents including State of Rajasthan v. T.N. Sahani and Eastern Equipment & Sales Limited v. Ing. Yash Kumar Khanna, the High Court established that taking a view on an additional evidence application prior to hearing the appeal is inappropriate.
  • Evaluation of Relevance: The appellate court must evaluate at the time of hearing the appeal on merits whether the documents sought to be filed are necessary to pronounce judgment in a more satisfactory manner.
  • Final Outcome: The petition was allowed, the impugned order dated 08.09.2025 was set aside, and the application under Order 41 Rule 27 CPC was restored to its original number with a direction to the First Appellate Court to decide it along with the main appeal.

STPL (Web) 2026 HP 396

Dina Nath V. Amin Chand (D.O.J. 21.07.2026)

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Curbing Prolonged Cross-Examinations and Witness Recalls

July 22, 2026 No Comments

The petitioner, Dinesh Chander Sharma, challenged an order dated 06.03.2026 passed by the Chief Judicial Magistrate, Una, which had dismissed his application seeking to recall prosecution witness Vinod Kumar Kapila for further cross-examination. The High Court evaluated whether the trial court’s refusal to recall the witness warranted interference under its inherent jurisdiction. Ultimately, the High Court upheld the trial court’s decision, emphasizing that cross-examination cannot be stretched indefinitely and that a witness cannot be recalled merely to build a foundation for compensation claims under Section 250 of the Cr.P.C.

  • Scope and Purpose of Cross-Examination: The High Court observed that the cross-examination of the witness had already spanned three days and filled 35 pages of trial court records. Citing precedents such as Public Prosecutor High Court of A.P. Hyderabad v. Repalli Ramadoss and State of Punjab v. Gurmit Singh, the Court reiterated that cross-examination is a serious professional duty aimed at discovering the truth and exposing falsehood, rather than a tool for harassment, humiliation, or unnecessary prolongation.
  • Control by Trial Courts: Magistrates and Sessions Judges must exercise vigilant and effective control over the manner and extent of cross-examination to prevent the abuse of court time and records through repetitive or irrelevant questioning.
  • Inadmissibility of Recall for Collateral Motives: The sole objective cited by the petitioner for recalling the witness was to gather material to claim compensation under Section 250 of the Cr.P.C. The Court held that this does not justify recalling a witness, noting that an aggrieved party seeking damages can pursue independent remedies like a suit for malicious prosecution.
  • Limits of Inherent Jurisdiction (Section 482 Cr.P.C.): Referencing landmark principles on the scope of quashing and inherent powers (such as State of Haryana v. Bhajan Lal), the Court underscored that extraordinary jurisdiction must be exercised sparingly and only in the rarest of rare cases to prevent abuse of process, rather than to interfere with discretionary trial management orders that do not cause a miscarriage of justice.

Final Outcome: The petition was dismissed, with a clear clarification that any observations made by the High Court would have no bearing on the final merits of the ongoing trial.

STPL (Web) 2026 HP 395

Dinesh Chander Sharma V. State of H.P. (D.O.J. 21.07.2026)

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