BBA.LL.

B (H) Neeraj Lalwani Roll No: 29

Project Report

Winter Semester 2009-2010

Course: General Principles of Contract Law

(Law of Contract- I)

Title: Temporary Injunctions and Breach of

Contract

Submitted to:

Mr.ML Shankar Kaarmukilan

Mr. Abhik Majumdar

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Table of Contents
BREACH OF CONTRACT.....................................................................................................................3

REMEDIES.......................................................................................................................................3

ORIGIN OF INJUNCTIONS....................................................................................................................4

TEMPORARY INJUNCTIONS.................................................................................................................4

RESEARCH METHODOLOGY...................................................................................................................5

OBJECTIVES.....................................................................................................................................5

SCOPE............................................................................................................................................5

APPROACH......................................................................................................................................5

RESEARCH QUESTIONS......................................................................................................................5

THE PURPOSE OF AN INTERIM INJUNCTION IN BREACH OF CONTRACT..........................................................6

AN APPROPRIATE EQUITABLE REMEDY...............................................................................................6

1. FOR PROTECTION OF INTEREST IN PROPERTY.............................................................................6

2. INJUNCTION TO RESTRAIN REPETITION OR CONTINUANCE OF A BREACH............................................7

THE IMPORTANCE OF STATUS QUO.........................................................................................................7

STATUS QUO: MEANING AND IMPORTANCE..........................................................................................7

TEMPORARY INJUNCTION: CRITERIA.......................................................................................................8

A) A PRIMA FACIE CASE..............................................................................................................9

B) IRREPARABLE INJURY...........................................................................................................10

C) BALANCE OF CONVENIENCE..................................................................................................10

INTERIM INJUNCTION: A SUBSTITUTE FOR FINAL RELIEF..........................................................................10

CONCLUSION.....................................................................................................................................11

SOURCES CITED................................................................................................................................12

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CASES..........................................................................................................................................12

BIBLIOGRAPHY...............................................................................................................................12

Bibliography

Introduction

Breach of Contract

A contract, as defined in the Indian Contract Act, 1872, is “An agreement enforceable by
law”.1 The law of contract limits itself to those kinds of agreements which the law has
recognized as “worthy of protection”2. There exists a binding obligation or vinculum juris3
between the two parties bound by contract. Thus, the “law insists on the performance”4 of such
agreements and when the performance of the agreement is not made the contract is said to be
breached.

Remedies

In case of a breach of contract, the claimant is permitted some remedies which may help
him mitigate his losses. One of the most common remedies available to the claimant in such a
situation is damages, both liquidated5 and unliquidated6. These are provided for in chapter VI of

1 THE INDIAN CONTRACT ACT, Section 2(h) (1872)

2 BM Gandhi, TR DESAI'S THE INDIAN CONTRACT ACT AND THE SALE OF GOODS ACT 4 (2009)

3 A legal tie or a legal knot

4 Supra note 2, at p.4

5 Supra note 1, at Section 74

6 Id., at Section 73

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the Indian Contract Act, 1872. However, damages are not the only kinds of remedies available
in case of a breach. The claimant has the option of availing equitable remedies too. Equitable
remedies are awarded at the discretion of the court in a situation where the legal remedies, in
form of damages, would be inadequate i.e. “where the substitutionary remedy of money is
insufficient to make the injured party whole”7 Equitable remedies can be of two types; specific
performance or injunctions. “An injunction is a court order ordering a defendant to do or not do
a certain act”8 Injunctions can be of two types; perpetual injunctions or temporary injunctions.

Origin of Injunctions

An injunction is a preventive remedy which is defined as a ‘judicial process by which

one that has invaded or is threatening to invade the rights, legal or equitable of another’ is
prevented from doing so”9. Law relating to injunctions originated in England. “The remedy of
injunction was available only in the Courts of Chancery and it had been based on the ‘interdict’
of Roman law. It is said to have been called interdict because it was originally interposed in the
nature of an interlocutory decree between two parties contending for possession, until the title to
property could be tried. Interdicts consist of certain forms of words by which the praetor either
commanded or prohibited something from being done”10

Temporary Injunctions

Temporary injunctions can also be referred to as preliminary or interlocutory injunctions.

Temporary injunctions “are such as are to continue until the hearing of the cause upon the
merits, or generally until further order. The temporary injunction is merely provisional in its

7 Smith, Craig A. "Equitable Remedies." BarristerBooks.com. 3 2 2010

accesed at < http://www.west.net/~smith/equity.htm>

8 Ellis, Leigh. "Remedies for Breach of Contract- UK Law." ArticleAlley.com. 2 2 2010

accessed at < http://www.articlealley.com/article_577398_18.html>

9 Infra note 10, at p. 286

10 C.M.Row, LAW OF INJUNCTIONS 1-2 (2007)

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nature, and does not conclude a right. The effect and object of the interlocutory injunction is
merely to keep matters in status quo until the hearing or further court order.”11

11 Paterson, J.M, KERR ON INJUNCTIONS 2 (2008)

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Research Methodology

Objectives: This paper will try and explore:

• The laws relating to temporary injunctions.

• The laws relating to breach of contracts
• The ways in which temporary injunctions can employed as a remedy in
case of a breach of contract.

Scope: The researcher has mainly focused on the Indian jurisdiction regarding the topic.
However, some British and American cases have also been used by the researcher to
present a better understanding of the topic.

Approach: The researcher has used an analytical approach in writing this paper. The researcher
has thoroughly explored the laws of injunctions and contracts and answers the
research questions objectively by having no pre-conceived notions of the subject.

Research Questions:

• What purpose do temporary injunctions accomplish help in case of breach of a

contract?
• Why is it important to maintain status quo before the trial?
• In what cases of breach of contract a temporary injunction is granted?
• When criteria are considered before granting temporary injunctions in case of a
breach of contract?
• Can a court grant final relief in the name of interim injunction?

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The Purpose of an Interim Injunction in Breach of Contract

An Appropriate Equitable Remedy

An equitable remedy is considered to be desirable by most parties when they feel that
damages would not be enough to compensate for the breach of contract. This may be so because
in some cases a monetary compensation cannot restitute as effectively as an equitable remedy
can. Considering this distinction generally in terms of contracts to produce goods and contracts
to convey property, it can be summarized that “conclusion for breach of contracts to produce
goods is that parties would tend to prefer the remedy of damages, essentially because of the
problems that would be created under specific performance if production costs were high. In
contrast, parties would often favor the remedy of specific performance for breach of contracts to
convey property, in part because there can be no problems with production cost when property
already exists”12. In such cases the claimant would generally have an option to choose between
the equitable remedies of specific performance or injunction. Specific performance would be
preferred by parties when they desire a remedy which would compel the defendant to indulge in
a particular action while an injunction may be preferred when they seek the defendant to restrain
from committing a certain act. As Lord Halsbury said “An injunction is a judicial process
whereby a party is ordered to refrain from doing a particular act.” An interim injunction, in
particular is granted “for protection of legal rights pending litigation”13 An interim or temporary
injunction can be granted in the following cases.

1. For Protection of Interest in Property

12 Steven Shavell, Specific Performance versus Damages for Breach of Contract: An Economic Analysis, 84 TEX.
L. REV. (2006)

13 S.C. Sarkar, WOODROFFE: LAW RELATING TO INJUNCTIONS 55 (1992)

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An exhaustive list of situations which come under this category was laid out by the
Bombay High Court in the case of Volition Investments (P) Ltd. v Madhuri Jitendra14.

a) “that any property in dispute in a suit is in danger of being wasted, damaged or

alienated by any party to the suit, or wrongfully sold in execution of a decree, or
b) that the defendant threatens, or intends, to remove or dispose of his property with a
view to defraud his creditors,
c) that the defendant threatens to dispossess the plaintiff or otherwise cause injury to the
plaintiff in relation to any property in dispute in the suit”

1. Injunction to restrain repetition or continuance of a breach

a) “In any suit for restraining the defendant from committing a breach of contract or
other injury, of any kind, whether compensation is claimed in the suit or not, the
plaintiff may, at any time after the commencement of the suit, and either before or
after judgment, apply to the court for a temporary injunction to restrain the defendant
from committing the breach of contract or injury complained of, or any breach of
contract or injury of a like kind arising out of the same contract or relating to the
same property or right.
b) The court may by order grant such injunction, on such terms as to the duration of the
injunction, keeping an account, giving security, or otherwise, as the court thinks
fit.”15

The Importance of Status Quo

“Where other factors appear to be evenly balanced it is a counsel of prudence to take such
measures as are calculated to preserve the status quo”16

14 AIR 2003 Bom 360

15 Avtar Singh, CONTRACT AND SPECIFIC RELIEF 923 (10th edition, 2007)

16 American Cyanamid Co v Ethicon Ltd., [1975] A.C. 396

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Status Quo: Meaning and Importance

“The relevant status quo is the state of affairs existing during the period immediately
preceding the issue of proceedings or, if there is unreasonable delay between the issue of the
claim and the application for an interim injunction, the period immediately preceding the
application. The duration of that period since the state of affairs last changed must be more than
minimal, having regard to the total strength of the relationship between the parties in respect of
which the injunction is granted; otherwise the state of affairs before the last change would be the
status quo.”17

Its importance steams from the concept of restitution which seeks to undo what has been
done wrongly. A plaintiff can only be considered to have been compensated adequately for a
breach when there is minimum difference between his positions before and after the breach.

Temporary Injunction: Criteria

Discretion of the Court

The exercise of the jurisdiction to grant relief by the issue of an injunction is “purely
within the discretion”18 of the court.19 Yet “that discretion is not arbitrary.”20 “The power which
the court possesses of granting injunctions should be cautiously exercised, and only upon clear
and satisfactory grounds; otherwise it may work the greatest injustice.”21 Consequently, it can be
inferred that the power to grant an interim injunction is a discretionary power vested in the
courts who may exercise it as they see fit but while keeping note of certain guidelines and
criteria set by earlier judges.

17 David Bean, INJUNCTIONS 37 (10th edition, 2007)

18 Supra note 13, at 54

19 SPECIFIC RELIEF ACT, Sec. 36 (1963)

20 Supra note 18

21 Supra note 13, at 55

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The American Cyanamid Case22

This decision, according to various academicians and law practitioners, “revolutionized

the approach of the courts to interim applications on notice for prohibitory injunctions. The
guidelines laid down by Lord Diplock are still regarded as the leading source of law on the
subject”23 This House of Lords judgment laid out the situations when “it is just and
convenient”24 to grant an injunction. The criteria given in the American Cyanamid case for
granting a temporary injunction are:

a) “A serious question to be tried

b) Inadequacy of Damages
c) The balance of convenience”25

The Indian Context

The Indian courts have also been active in laying out certain criteria for the grant of
temporary injunctions so as to assist the judges in the future cases and prevent abuse of the
discretionary power that is available to the judges. The landmark Indian case in this regard is the
case of Gujarat Bottling Co v Coca Cola Co26. In this case Coca Cola the plaintiff entered into a
contract with Gujarat Bottling Co. (henceforth referred as GBC) giving it the rights to bottle,
seal and distribute its beverage. However, the contract had a specific negative stipulation
through which GBC had agreed not to deal with any other company apart from Coca Cola. After
a while, GBC started providing the same service to Coca Cola’s rival brand Pepsi. Coca Cola,
then, requested for a temporary injunction from the court in order to restrain GBC from

22 Supra note 16

23 Supra note 17, at 32

24 Cambridge Nutrition Ltd v BBC, [1990] 3 All E.R. 523

25 Supra note 23

26 (1995) 5 SCC 545

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breaching the contract further. The court granted the interim injunction requested by Coca Cola
and laid out the following criteria.

a) A prima facie case

This criteria is similar to the first criteria in the American Cyanamid case which
requires the presence of a serious question to be tried. “To entitle a plaintiff to a Rthe
plaintiff is entitled to relief.”27 “The real question is not how the question ought to be
decided at the hearing of the case, but whether there is a substantial question to be
investigated and whether matters should not be preserved in status quo until that question
is finally disposed off.”28 However, the judge must feel satisfied that the success at the
eventual trial is “probable”29.This criteria is also validated by the Order XXXIX, rr1 and
2 of the Code of Civil Procedure, 1908 .and sec. 20, 37 and 41 of the Specific Relief Act,
1963. So the courts in India are obligated to consider this.

b) Irreparable Injury
Irreparable injury in terms of the context of interim injunctions refers to a
harm which might render, at a serious loss, the plaintiff, if the requested interim
injunction is not granted. “Irreparable injury does not mean that there must be no
physical possibility of repairing the injury, but that the injury must be a material
one, and one that cannot be adequately compensated for in damages.”30 A
relevant case in this regard is Sky Petroleum Ltd v VIP Petroleum Ltd.31In this
case, the plaintiff had entered into a contract with defendant to buy diesel and

27 2 RG Padia, POLLOCK & MULLA INDIAN CONTRACT AND SPECIFIC RELIEF ACTS 2827 (13th edition, 2009)

28 Ibid.

29 Re Lord Cable, Garratt v Waters, [1976] 3 All E.R. 417

30 Supra note 27, at 2829

31 [1974] 1 All ER 954

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petrol for his filling stations. However, the defendant stopped supply and the
plaintiff was granted an injunction restraining the defendant from withholding
supply.

c) Balance of Convenience
Under these criteria, the court compares the threatened loss to the plaintiff with
the loss to be caused to the defendant as a result of the interim injunction. In order to
determine the balance of convenience the court weighs two matters. “The first is to
protect the plaintiff against injury by violation of his rights for which he could not be
adequately compensated in damages recoverable in the action if the uncertainty were
resolved in his favour at the trial. The second matter is the defendant’s need to be
protected against injury resulting from his having been prevented from exercising his
own legal rights….if the uncertainty were resolved in the defendant’s favor at the
trial.”

A similar set of criteria was laid down by the Bombay High Court in Zaheer Khan v
Percept D’Mark (India32). However, here the court added another criterion. This concerned the
conduct of the plaintiff. Had his conduct been blameworthy the injunction wouldn’t have been
granted.

Interim Injunction: A Substitute for Final relief

It is often claimed that interim injections are never really interim or temporary in
practice. They retain their true nature only in theory. So the courts end up granting a lot more
interim injunctions than permanent injunctions. As Lord Denning mentioned: “Nearly

32 AIR 2004 Bom 362

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Always….these cases do not go to trial. The parties accept the prima facie view of the court or
settle the case. At any rate, in 99 cases out of 100 it goes no further.”33

Conclusion
The study mainly analyzed the granting of temporary injunctions in practice. The
evolution of this practice was traced from its Roman roots to present day India and England. The
purpose of this doctrine, the criteria for its grant and its finality, all in relation to breach of
contract, was studied through an array of secondary sources.

33 Fellowes & Son v Fisher, [1976] Q.B. 122

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Sources Cited:

Cases

Volition Investments (P) Ltd. v Madhuri Jitendra AIR 2003 Bom 360

American Cyanamid Co. v Ethicon Ltd. [1975] A.C. 396

Cambridge Nutrition Ltd v BBC [1990] 3 All E.R. 523

Gujarat Bottling Co v Coca Cola Co (1995) 5 SCC 545

Re Lord Cable, Garratt v Waters [1976] 3 All E.R. 417

Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 All ER 954

Zaheer Khan v Percept D’Mark (India) AIR 2004 Bom 362

Fellowes & Son v Fisher [1976] Q.B. 122

Bibliography

THE INDIAN CONTRACT ACT, (1872)

BM Gandhi, TR DESAI'S THE INDIAN CONTRACT ACT AND THE SALE OF GOODS ACT (2009)

Smith, Craig A. "Equitable Remedies." BarristerBooks.com. 3 2 2010

accesed at < http://www.west.net/~smith/equity.htm>

Ellis, Leigh. "Remedies for Breach of Contract- UK Law." ArticleAlley.com. 2 2 2010

accessed at < http://www.articlealley.com/article_577398_18.html>

C.M.Row, LAW OF INJUNCTIONS (2007)

Paterson, J.M, KERR ON INJUNCTIONS (2008)

.C. Sarkar, WOODROFFE: LAW RELATING TO INJUNCTIONS (1992)

Steven Shavell, Specific Performance versus Damages for Breach of Contract: An Economic
Analysis, 84 TEX. L. REV. (2006)
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Avtar Singh, CONTRACT AND SPECIFIC RELIEF 923 (10th edition, 2007)

David Bean, INJUNCTIONS 37 (10th edition, 2007)

2 RG Padia, POLLOCK & MULLA INDIAN CONTRACT AND SPECIFIC RELIEF ACTS 2827 (13th edition,
2009)

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