Judgment :- 1. These four appeals are by the defendant in the trial court calling in question the common order passed on I.As 1 to 5, during the pendency of the suit filed by the respondents-plaintiffs. 2. I.A.No.1 was filed by the plaintiffs restraining the Appellant-Bank herein namely Hongkong Shangai Bank Corporation Ltd., (for short ‘HSBC’) from acting upon cheques issued by the plaintiffs drawn on State Bank of India. I.A.No.2 was to restrain the appellant-Bank from acting upon On Demand Promissory Notes. I.A.No.3 was to restrain the appellant-Bank from acting upon Memorandum of Agreement (MOA) dated 2.7.09 and I.A.No.4 was to restrain the appellant-Bank from acting upon the Invoice Discounting/Factoring Agreement dated 27.3.2008. All these I.As 1 to 4 were allowed by the trial court and I.A.No.5 which was filed by the appellant seeking permission to file written statement was also allowed. But in these appeals, the challenge is to the order of the trial court allowing I.As 1 to 4. 3. Brief facts for the purpose of this judgment are; That the 1st plaintiff namely the LISA Apparels (Pvt.Ltd.,) is a Company registered under the Companies Act and is in the business of manufacturing garments of various brands such as Madura Garments, Aravind Brands, Turtle, Mante Carb, Basics and Life Style etc., and plaintiffs 2 and 3 are the Promoters and Directors of the 1st plaintiff-Company. The plaintiff-Company claims a high reputation and has cash credit limit of Rs.17 crores from State Bank of India and it is the case of the plaintiff-Company that the defendant-Bank (appellant herein) approached the plaintiff-Company and offered “Domestic Factoring facility and the said service of factoring, allows the entity to convert its accounts receivables into cash and thereby, resolving cash generation, potential of the business of the clients and thus factoring facility enables the clients to raise instant cash against their invoice which in turn enables the clients to concentrate on the core business activities”. 4. 4. According to the plaintiff-Company, under the Factoring Agreement, the defendant-Bank would buy the debts of 8 customers of the plaintiff-Company namely Aditya Birla, Aravind Brands etc., at 85% of the invoice value for an aggregate sum not exceeding of Rs.50 million (Rs.5 crores) and it is also the case of the plaintiff-Company that the invoice value would be covered by insurance for which the plaintiff-Company was to pay to the defendant-Bank 0.14% of gross invoice value and a sum of Rs.15,000/- was collected by the defendant from the plaintiff. The plaintiff-Company also contended that apart from the Factoring Agreement, the defendant-Bank also obtained an irrevocable Power of Attorney from the plaintiff and several other documents. Thereafter, the plaintiff-Company also signed the Memorandum of Agreement (for short ‘MOA’) dated 02.07.2009 and also furnished to the Bank, the Company’s Board of Resolution of the same date. The Factoring limit was also raised to Rs.10 crores and according to the plaintiff-Company, the Factoring facility is limited only to Aravind Brand and Hasbro and the insurance cover was also revised in respect of these two brands at 0.14% and 0.24% of the invoice value respectively. 5. The plaintiff-Company also contended in its plaint that due to recession in the market, there was slow down of repayment of debt and the plaintiff-Company also tried to help the Bank to recover the money from the customers of the plaintiff-Company and the said act of the plaintiff-Company was not one of creating the relationship after borrower and lender between the plaintiff-Company and the defendant-Bank. It is also the case of the plaintiff that the defendant-Bank instead of invoking the claim against the Insurance Company for the risk covered, threatened to harass the plaintiff-Company and also threatened to inform to the Credit Information Bureau of India Limited (‘CIBIL’ for short) and apprehending that the Bank would take steps to encash the cheques issued by the plaintiff-Company and also to press upon On Demand Promissory Note and following the Bank also having indicated to the plaintiff-Bank that the Bank would initiate recovery proceedings before the Debt Recovery Tribunal, a suit was filed by the plaintiff-Company and its Directors praying for the following reliefs; a) Declare the Invoice Discounting/factoring agreement dated 27.03.2008 and other connected documents dated 27.03.2008 at Annexure-K as null and void, b) Declare as void and revoke the power of attorney issued by the Plaintiff-Company in favour of the defendant pursuant to the factoring agreement dated 27.03.2008. c) Issue/Grant Permanent Injunction restraining the defendant from acting upon the Memorandum of Agreement dated 02.07.2009 in Annexure-AK. d) Restrain the defendant from encashing/acting upon the 22 post dated cheques listed in Annexure-1 to Annexure AK. 6. The appellant-Bank on its part defendant the said suit of the plaintiff by contending that it was the 1st plaintiff-Company which had approached the appellant-Bank and the plaintiff-Company was fully aware of the concept of Factoring and had executed not only the invoice discounting/Factoring Agreement, but also executed MOA on 2.7.2009. It was also the stand of the appellant-Bank that all the documents were executed by the plaintiff-Company as part of the commercial transaction and the plaintiff-Company is fully aware of the concept of Factoring which is internationally accepted as a financing soluting that allows the entity (plaintiff-Company herein) to convert its account receivables into cash, so that the core business activity of the plaintiff-Company goes on uninterrupted. The Bank also contended that the Factoring Agreement also provides what is known as “Domestic Factoring with Recourse” which implies that in the event of the Bank being not able to realise the invoice amounts, the Bank would take recourse to the client namely the Plaintiff-Bank for recovery of the amount due to the Bank. 7. The Bank also contended that the Factoring Agreement also provides what is known as “Domestic Factoring with Recourse” which implies that in the event of the Bank being not able to realise the invoice amounts, the Bank would take recourse to the client namely the Plaintiff-Bank for recovery of the amount due to the Bank. 7. According to the appellant-Bank, the plaintiff-Company had admitted when it signed the Memorandum of Agreement, the amount due by the plaintiff-Company, Aravind Brands and Hasbro and the plaintiff-Company had also issued voluntarily 27 numbers of post dated cheques which form annexure to the Memorandum of Agreement and even after the MOA, the plaintiff-Company made several payments. It was also the contention of the appellant-Bank in its written statement that Factoring is also a para banking activities authorised by Reserve Bank of India and the cheques issued by the plaintiff-Company on behalf of Aravind Brand and Hasbro are not the security cheques, but they are the cheques issued by the plaintiff for liquidation of the entire outstanding debt of Rs.8,02,08,272/-. It was also the contention of the appellant-Bank after signing of the Memorandum of Agreement on 2.7.2009, the plaintiff-Company had repurchased invoice on Hasbro and Aravind Brand and made payment to the defendant-Bank till 28.08.2009. As far as Rs.15,000/- amount is concerned, it is the stand of the Bank that the said amount was adjusted towards the facility set up fee as per the Factoring Agreement dated 27.3.2008. 8. It was the specific stand of the appellant-Bank in its written statement that in the Factoring Agreement (Annexure-J Document No.5) that there was no mention whatsoever of the alleged “Insurance Cover premium” and no insurance charge was ever collected by the Bank from the plaintiff-Company. It was the stand of the appellant-Bank in its written statement that the payment due to the Bank from the plaintiff-Bank after the adjustments of the payments received from LISA Apparels, Aravind Brand and Hasbro was a follows:- Principal Outstanding Rs.4,09,28,609,13/- Interest till August 2009 Rs.75,60,360,66/- Total outstanding Rs.4,84,88,969,79 9. Therefore, the appellant-Bank sought for the dismissal of the suit by contending that in respect of the contractual and commercial transaction entered into between the parties, the plaintiff is legally liable to make payments and the suit is filed only to defeat the terms of the agreement between the parties. 10. Therefore, the appellant-Bank sought for the dismissal of the suit by contending that in respect of the contractual and commercial transaction entered into between the parties, the plaintiff is legally liable to make payments and the suit is filed only to defeat the terms of the agreement between the parties. 10. It is on the basis of the aforesaid stand taken by the respective parties in essence in the respective pleadings, that the order passed by the trial court on I.As.1 to 4 will have to be viewed or examined. 11. Learned Senior Counsel Sri.S.S.Nagananda for the appellant-Bank while assailing the order of the trial court on I.As1 to 4 at the outset submitted that though this Court had passed an interim order on 23.4.2010 directing the respondent-plaintiff to deposit Rs.2 crores before 15.5.2010, the respondent-plaintiff has failed to deposit the said amount even as on date. 12. Prefacing the arguments with the above submissions, learned Senior Counsel contended that entering into a Factoring Agreement by the parties is not in dispute and so also the subsequent MOA dated 2.7.2009 and a careful reading of the terms and conditions of both the Factoring Agreement and the MOA would make it clear that the respondent-Company admitted its liability and pursuant to the same, executed certain documents and apart from the cheques numbering 27, the plaintiff-Company had also furnished security and no where in the two documents namely Ex.D5 and Ex.AK (Page 242 of paper book Vol.I) has there been any mention of insurance coverage or the Bank collecting any premium and therefore the question of the Appellant-Bank invoking the insurance policy does not arise. All that the Factoring Agreement (Ex.D5) mentions is that there will be service charge or factoring service charges of 0.14% of the invoice value and therefore the contention of the plaintiffs and the view taken by the trial court with regard to the insurance policy, is without any basis and lacks necessary foundation in this regard. 13. Further submission made is that even prior to and after the Memorandum of Agreement, the plaintiff-Company made several payments and these are reflected in the E-mail correspondence between the parties to which learned Senior Counsel drew my attention. 14. 13. Further submission made is that even prior to and after the Memorandum of Agreement, the plaintiff-Company made several payments and these are reflected in the E-mail correspondence between the parties to which learned Senior Counsel drew my attention. 14. It is also argued by him that the Factoring business is also recognized and approved by the Reserve Bank of India as could be seen from various circulars issued from time to time and apart from this, learned Senior Counsel also referred to the Notification dated 2.7.1990 issued under Section 6(1) (o) of the Banking Regulation Act, 1949 (for short ‘B.R.Act’) to submit that Factoring is a form of business which is lawful for a Banking Company to engage. Therefore, it is contended that the question of Factoring Agreement or subsequent MOA being against statutes does not arise. Reference was also made by the senior Counsel to the terms and conditions of the Factoring Agreement and in particular to the nature of service offered i.e., ‘Domestic Factoring with Recourse’ and emphasizing on the expressing recourse, it is contended that it was open to the Bank to take recourse to the client i.e., the plaintiff-Company herein to recover the amount due to the Bank and therefore the question of the Bank not taking any recourse to the plaintiff-Company and only to go after the insurance company also cannot be accepted as being permissible within the frame work of the nature of the agreement entered into between the parties. 15. Therefore, the learned Senior Counsel contended that the entire agreement of the insurance coverage has no legs to stand and the respondent-Company having signed the agreement and having acted upon it and further having entered into a MOA and having made several payments and also having issued the cheques cannot now turn around and find loopholes in the Factoring Agreement or in the MOA nor can it be permitted to take a stand that the Factoring Agreement is void. In other words, the respondent-plaintiff cannot approbate and reprobate at the same time. 16. Learned senior counsel for the appellant also pointed out that in the Factoring Agreement which is produced at Document No. 5 (Vol. II paper book), the term ‘recourse’ appears along with preceding word ‘Domestic Factoring’ and there is no parenthesis within which the word ‘recourse’ is found. 16. Learned senior counsel for the appellant also pointed out that in the Factoring Agreement which is produced at Document No. 5 (Vol. II paper book), the term ‘recourse’ appears along with preceding word ‘Domestic Factoring’ and there is no parenthesis within which the word ‘recourse’ is found. Whereas in the document produced by the plaintiff-Company, the word ‘recourse’ appears within parenthesis and therefore there is tampering of the Factoring Agreement by the plaintiff-Company. 17. As far as the plaintiff-Company being put under pressure namely economic duress is concerned, submission made by the learned Senior Counsel is that MOA is a valid agreement and R.B.I. guidelines are followed by the Bank and the Factoring Agreement’s terms and conditions themselves provided various remedies available to the Bank to choose in the event of termination taking place and therefore the question of there being any economic duress also cannot be conceived of and moreover, the respondent-Company had signed all the documents and was fully aware of the terms and conditions of the Factoring agreement as well as the MOA. 18. As far as the amount due to the Bank is concerned, learned Senior Counsel referring to the legal notice issued on behalf of the Bank and also the reply received from the plaintiff, contended that no material is placed by the plaintiff-Company to show that the insurance premium is paid, and it is not permissible for the plaintiff-Company to say that the service charge is nothing but the insurance coverage. 19. Assailing the impugned order of the trial court, learned Senior Counsel Sri. S.S. Nagananda, further argued that the entire approach of the trial court is one of perverse nature, in the sense without looking to the documents namely Factoring Agreement and MOA as a whole and without noticing the fact that the plaintiff-Company had admitted in its plaint about signing the Factoring Agreement as well as the MOA, the trial court could not have doubted the Factoring Agreement merely because the signature of the appellant-Bank was not found in each page of the Factoring Agreement. Pointing to the very document, it is argued the trial court lost sight of the fact that both the parties have signed the Factoring Agreement as well as the MOA and therefore the question of doubting Factoring Agreement, when the plaintiff-Company itself does not dispute the subsistence of the Factoring Agreement which is clear from the very act of the Plaintiff-Company signing the MOA dies not arise and the trial Court’s reasoning cannot be sustained in law. 20. The trial court also did not consider the two documents in question from proper angle and has gone on to observe that there is no completed contract because of the signature of the bank being not found in each page of the Factoring Agreement and this finding of the trial court is against the very stand taken by the plaintiff company itself in as much as the plaintiff-Company does not dispute the fact of entering into the Factoring Agreement and thereafter making payments and signing the MOA subsequently. Pointing to the above, learned senior counsel contended that, the view taken by the trial court is perverse, arbitrary, capricious and when the plaintiff-Company was not able to place any material to show that premium was paid towards the insurance policy and when the documents in question themselves do not speak of any insurance coverage at all, the trial court could not have held to be otherwise. Referring to the observations of the trial court, with regard to the element of fraud, misrepresentation etc., the learned Senior Counsel submitted that the trial court has recorded a positive finding to the effect that there is no allegation of fraud and misrepresentation against the Bank in obtaining the Factoring Agreement and other documents. 21. In the face of such observations, it is argued that there was no occasion for the trial court to have doubted either the Factoring Agreement of the MOA. As such, the entire reasoning of the trial court cannot be accepted as having been based on any material to arrive at such a finding. 21. In the face of such observations, it is argued that there was no occasion for the trial court to have doubted either the Factoring Agreement of the MOA. As such, the entire reasoning of the trial court cannot be accepted as having been based on any material to arrive at such a finding. Under these circumstances, the trial court could not have granted the injunction as sought for by the plaintiff by allowing I.As.1 to 4 and the relief granted by the trial court has the effect of preventing the creditor from taking recourse under Section 138 of N.I.Act or from taking necessary acting in appropriate judicial proceedings and also has the effect of preventing the Bank from initiating the proceedings for recovery of public money. Therefore, the impugned order of the trail court in unsustainable as no prima facie case is made out by the plaintiffs. 22. In support of the aforesaid submission, learned Senior Counsel Sri. Naganada for the appellant placed reliance on the following decisions and also referred to the definitions of the Contract of Insurance etc., in the book of “INSURANCE LAW relating to all risks other than marine” Eighth Edition, General Editor MICHAEL PARKINGTON. AIR 1993 SC 352 , AIR 1993 SC 356 , AIR 2003 SC 858 , AIR 2003 SC 886 , AIR 2006 SC 2432 , AIR 2006 SC 2446 , AIR 1969 SC 297 (V 56 C 57), AIR 1969 SC 299 , (1992) 3 SCC 159 , (1992) 3 SCC 169 , AIR 1992 SC 1740 , AIR 1987 SC 1078 Overruled, AIR 1992 SC 1746 , AIR 1977 KARNATAKA 204, AIR 1977 KARNATAKA 209, AIR 1995 SC 2372, AIR 1994 SC 2778 , AIR 1994 SC 2783 , (1997) 6 SCC 450 , AIR 2003 SC 1177 , AIR 2003 SC 1191 , AIR 1960 ALLAHABAD 254 (V 47 C 58), AIR 1971 MADHYA PRADESH 65 (V 58 C 17), AIR 1971 MADHYA PRADESH 69 (V 58 C 18), (1993) 2 SCC 199 , (1993) 2 SCC 213 , ILR (2007) I DELHI 864, ILR (2007) I DELHI 869, AIR 1983 SC 1272 , AIR 2002 SC 3014 , AIR 2002 SC 3018, AIR 1978 CALCUTTA 177, AIR 1978 CALCUTTA 189, 23. Learned counsel Sri.B.C.Thiruvengadam appearing for the first Respondent argued at great length and also referred to various terms and conditions of the Factoring Agreement as well as other documents and correspondence between the parties and contended that the appellant-Bank cannot recover the amount due to the Bank from the plaintiff-Company and remedy is to go before the Insurance Company as there is insurance coverage in respect of each invoice and therefore, the question of Bank proceeding against the plaintiff by invoking the cheques, on demand promissory notes, etc., will not arise. 24. Learned counsel appearing for the respondent Company relying on the Factoring Agreement contended that there is no relationship of lender and borrower between the Bank and plaintiff-Company and also contended that despite the insurance coverage risk taken by the appellant-Bank, the plaintiff-Company was threatened by stating that the Bank would proceed against the Plaintiff-Company before the Debt Recovery Tribunal (‘the DRT’ for short). Learned counsel also argued that once the client i.e. the plaintiff-Company has assigned the debt to the Factor (appellant-Bank), the Bank should proceed to claim the amount from the buyer not from the Plaintiff-Company. 25. It is then argued that the question of taking recourse to the provisions of Negotiable Instruments Act will arise only in respect of the debt, but the cheques given to the appellant-Bank are for security purpose and therefore, the question of recourse to Section 138 of Negotiable Instruments Act will not arise. 26. It is the specific stand of the learned counsel for the first Respondent that the entire invoice value would be covered by insurance, for which, the plaintiff-Company has to pay to the defendant-Bank 0.14% of the invoice value. Referring to certain errors, omissions in the Factoring Agreement it is contended by the learned counsel that the Factoring Agreement itself is void and signature of the appellant-Bank is not found in all the pages of the Factoring Agreement, and hence the said agreement cannot be acted upon. 27. Learned counsel then submitted that the Bank threatened to initiate proceedings before the civil Court stating that the plaintiff-Company which enjoys credit facility of around 19.60 crores, should have credited the amount and the Bank has also threatened to go before the DRT. Under these circumstances, the plaintiff-Company had to sign the MOA. In other words, it was under the economic duress, the appellant-Bank got the MOA from the plaintiff-Company. Under these circumstances, the plaintiff-Company had to sign the MOA. In other words, it was under the economic duress, the appellant-Bank got the MOA from the plaintiff-Company. Such an act on the part of the Bank cannot be allowed. Contending that the appellant-Bank is acting as an insurance broker, it is argued by the learned counsel Sri.B.C.Thiruvengadam that without a valid license as required under Regulation 17 of the Insurers Regulatory Development Authority (Insurance Brokers) Regulations 2002, the appellant-Bank cannot act as insurance agent. 28. As far as cheques issued are concerned, it is contended by the learned counsel for the Respondent that those cheques were not given towards discharge of debt, but only as security and in this connection he referred to page 406 of Volume No.I of Paper Book. Further submission made is that, as and when the appellant-Bank was able to realise the amount under the invoice, the cheques were returned and therefore, the question of Bank invoking the cheques will not arise. 29. Another limb of the argument of the learned counsel for the first Respondent Sri. B.C.Tiruvengadam is that purchase and repurchase of debt is prohibited under Section 6(1) of the B.R.Act and he invited my attention in this context to Section 6(1) provisions (a) and (o) as well as to sub-Section (2) of Section 6 of the B.R.Act. Relying on a decision of the Gujarath High Court, it is argued by him that the RBI guidelines also cannot be up held in law as the said guidelines are against the provisions contained in Section (6) of the B.R.Act. It is also argued by him that without correctly ascertaining the actual amount due, right of recourse cannot be determined. It is his submission that the MOA is a document for re-purchase of debt. Both the Factoring agreement as well as MOA are hit by B.R. Act is his submission. Attention of the Court was also drawn to Section 17 of the B.R. Act. 30. Referring to the documents obtained by the appellant-Bank which are mentioned in the MOA, learned counsel argued that the documents sought under the MOA are of such a nature which cannot be enforced and referring to Section 23 of Indian Contract Act, it is argued that both the Factoring Agreement as well as MOA cannot stand in the eye of law as valid documents. Learned counsel also referred to the discrepancy in the amount claimed by the appellant-Bank. Learned counsel for the first Respondent also contended that nothing prevented the appellant-Bank from approaching the DRT and contended that the appellant-Bank had not approached with clean hands and therefore, no relief can been granted to the appellant-Bank. In support of the above submissions, learned counsel for the first Respondent/ plaintiff-Company placed reliance on the following decisions: “ AIR 1970 SC 564 (V 57 C 122), AIR 1970 SC 645 (V 57 C 123), AIR 1986 SC 515=1985 Tax L.R.2451, AIR 1986 SC 555 =1986 Lab I.C.I, AIR 2004 SC 3957 , AIR 2004 SC 3962 , AIR 1975 SC 1223 , AIR 2008 SC 2911 , AIR 2008 SC 2918 , AIR 2008 SC 2919 , AIR 1992 BOMBAY 309, AIR 1992 BOMBAY 341, AIR 2006 SC 3366 , AIR 2006 SC 3376 , AIR 1983 MADRAS 368, ILR 2006 KAR 130, [2007] 135 Comp Cas 123 (Karn) (In The Karnataka High Court), (2007) 135 Comp Cas 135 (CLB) (Before The Company Law Board – Principal Bench), ILR 2005 KAR 395, 2006 CRI.L.J. 820, 2006 CRI.L.J.824, 1993 Supp (4) SCC 46, 1993 Supp (4) SCC 53, AIR 1960 SC 571 (V 47 C 89), AIR 1960 SC 576 (V 47 C 90), AIR 1967 SC 295 (V 54 C 59), AIR 1967 SC 330 (V 54 C 60), AIR 1974 SC 1957 , AIR 1974 SC 1967 (V 61 C 367), AIR 1962 ALLAHABAD 407 (V 49 C 100), AIR 1962 ALLAHABAD 412 (V 48 C 101), AIR 1962 ALLAHABAD 413 (V 49 C 102), AIR 1995 SC 2372, AIR 1995 SC 2390 , (1994) 1 SCC 1 , (1994) 1 SCC 6 , ILR 2008 KAR 4495.” Therefore, relying on the aforesaid rulings, the learned counsel sought for the rejection of all the appeals. 31. Learned Senior Counsel Sri. Sreevatsa appearing for Respondents 2 and 3 who are plaintiffs 2 and 3 in the Trial Court contended that the said respondents cannot be proceeded with by the Bank, unless the Bank is able to exhaust the remedy available to it, moreover, the Respondents 2 and 3 are not the Guarantors for the whole amount and the appellant-Bank has proceeded against Respondents 2 and 3 only on the basis that they are debtors. It is also argued by him that when the very Factoring Agreement itself has not been terminated, the question of proceeding against Respondents 2 and 3 does not arise. 32. Learned Senior Counsel also contended that the document namely the MOA is inadmissible as some of the documents which are sought as collateral security are in contravention of Section 17 of the Registration Act and therefore, it is argued that there is no estoppel against the Statute. It is also argued that the MOA is compulsorily registerable and for want of that, the said document becomes inadmissible and consequently the Factoring Agreement also has to fall. The learned Senior Counsel pointed out certain discrepancies in the amount claimed by the appellant-Bank as could be seen from the letter dated 19-6-2009 and 2-7-2009, to contend that between 19-6-2009 and 2-7-2009 the Bank had received Rs.8.00 crores for which, the Bank has not given any explanation and hence the learned Senior counsel argued that where there is fraud and lack of transparency, there can be no bar from preventing a person from getting an injunction order. Moreover, no counter claim has been made by the Bank against Respondents 2 and 3. The learned Senior Counsel also adopted the argument of Sri.B.C.Thiruvengadam in respect of the Factoring Agreement being contrary to the Provisions of B.R. Act. In support of the above said submissions, the learned Senior Counsel placed reliance on the following decisions: “ AIR 2004 SC 1344 , AIR 1963 MADRAS 412 (V 50 C 142), AIR 1963 MADRAS 419 (V 50 C 144), AIR 1962 MADRAS 44 (V 49 C 8), AIR 1962 MADRAS 49 (V 49 C 9).” 33. In the light of the contentions put forward by the learned counsel for the parties and the decisions cited by them, the point that arise for consideration is as to whether the order passed by the Trial Court in allowing I.A.Nos. I to IV can be said to be sustainable in law? 34. Existence of prima facie case is sine qua non for grant of an injunction. This is the fundamental principle upon which the court has to consider the impugned order of the Trial Court. 35. I to IV can be said to be sustainable in law? 34. Existence of prima facie case is sine qua non for grant of an injunction. This is the fundamental principle upon which the court has to consider the impugned order of the Trial Court. 35. Four points to be considered, from the angle of prima facie case, in the light of the contentions put forward by the learned counsel for the parties are: (i) Whether there is insurance coverage in respect of the Factoring services rendered by the appellant-Bank; (ii) Whether the MOA was obtained by the Bank under economic duress; (iii) Whether the cheques issued by the plaintiff-Company are issued by way of security; and (iv) Whether the factoring services rendered by the appellant-Bank is contrary to the provisions of B.R.Act, 1949? Sustainability of the order of the Trial Court as well as the arguments put forward by the learned counsel for the parties mainly depend upon the answer to the aforesaid points. 36. In order to answer first of the four points, it is necessary to understand as to what is meant by the factoring and factoring services. At page 123 of the Paper Book, Volume-I, the appellant-Bank has produced the relevant information from the internet. The said document is Annexure-G produced before the Trial Court by the plaintiff and factoring services are explained as under: “FACTORING SERVICES: HSBC provides finance solutions for all your sales and purchases requirements on the domestic front, and various export-factoring product services on the international level. Our factoring services offer a comprehensive receivables and payables management solution which includes transaction financing, credit protection, sales ledger administration and payment collection. At HSBC, our ability to be the comprehensive provider of Trade Solutions makes us a leading player in the Trade & Factoring market in India. We have dedicated Relationship Managers to provide any assistance that you may require with respect to your business and your trade needs.” The definition of Factoring is as under: “The selling of a company’s accounts receivable, at a discount, to a factor, who then assumes the credit risk of the account debtors and receives cash as the debtors settle their accounts, also called accounts receivable financing. FACTORING: Factoring is a service that covers the financing and collection of account receivables in domestic and international trade. FACTORING: Factoring is a service that covers the financing and collection of account receivables in domestic and international trade. It is an ongoing arrangement between the client and Factor, where invoices raised on open account sales of goods and services are regularly assigned to “the Factor” for financing, collection and sales ledger administration. The buyer and the seller usually have long term relationships. The client sells invoiced receivables at a discount to the factor to raise finance for working capital requirement. The factor may or may not accept the incumbent credit risk. Factoring enables companies to sell their outstanding book debts for cash. The factor operates by buying from the selling company their invoiced debts. These are purchased, usually with credit protection, by the factor who then will be responsible for all credit control, collection and sales accounting work. Thus the management of the company may concentrate on production and sales and need not concern itself with non-profitable control and sales accounting matters. By obtaining payment of the invoices immediately from the factor, usually up to 80% of their value the company’s cash flow is improved. The factor charges service fees that vary with interest rates in force in the money market. HSBC currently offers both domestic and international factoring products.” 37. The next document which will have to be looked into is the very invoice discounting/factoring agreement entered into between the parties. The said Factoring Agreement has been produced a page No.32 of Volume – II of paper book and is marked as Annexures-D.5 and D.6. The said Factoring Agreement is dated 27-3-2008. The first document Annexure-D.5 mentions about the services provided by the factor and the relevant page for our purpose will be the first page of the said document Annexure-D.5 and it is necessary to refer to the same: SERVICES Structure Domestic Factoring with recourse Purpose Receivable Financing Funds in Use Limit INR 50.0 million Prepayment Percentage 85% of invoice value Interest Charge Interest will be as mutually agreed rates and will be charged on the daily balances, but subject to fluctuation at our discretion and payable monthly in arrears to the debit of your Factoring current account. Interest Rate 11.0% p.a. compounded monthly Overdue Interest +3% p.a. above the agreed interest rate on the amount overdue Factoring service charges 0.14% of the invoice value Accepted Credit Period As detailed in Annexure I Facility Set-up Fee 1.00% of the facility set up Customers Sub-limit As detailed in Annexure I Conditions of Offer Factoring Agreement along with Board Resolution. Irrevocable Power of Attorney duly notarized. Notice of Assignment duly accepted by the debtors. Accepted facility Advice Letter. Demand Promissory Note of INR 50M Personal Guarantee of Mr.Subrahmanyam Iyer and Mrs.Desima Subrahmanyam Iyer with CA certified net worth statements. Undated cheques for FIU limit (in multiple of INR 2.50 Mn) Undertaking letter stating that:- The debtors proposed factoring shall be excluded from the book debt statement provided to working capital bankers. All sales and payments of the proposed debtor will be routed through HSBC only. Lisa Apparels Private Limited, its promoters and associated companies have never defaulted on its obligation to any of the banks/financial institutions, and that they do not appear in the CIBIL/RBI’s Wilful defaulters list. Approved debtors (as per Annexure I) is not related to firm or any of its promoters. Lisa Apparels Private Limited will not enter into LC based transactions or have no adcance terms with any of the approved debtors. Credit period agreed with approved debtor as per Annexure I. The Invoice Discounting/Factoring Agreement is at Annexure-D.6 mentions the following under the heading Schedule: SCHEDULE Client Name: Lisa Apparels Private Limited, No.191, 3rd Cross, Panduranga Nagar, Off Bannerghatta Road, Bangalore-560 076. Commencement Date As mutually agreed Concentration Percentage As per Fal Credit Cover Percentage As per Fal Discounting Charge 11.0% Overdue Charge 3% over the interest rate for bilis overdue Facility Set Up Fee 1.0% of the limit Service Charge 0.14% Report Date Last Day of the month 38. The above said Factoring Agreement is also accompanied by the conditions of Invoice Discounting/Factoring Agreement and various terms have been defined in the definition at paragraph (1). The relevant definitions and other clauses for our purpose are extracted hereunder: “Associated Rights” means, in relation to a Debt, all the Clients rights provided by or retained under the Contract of Sale, all instruments, securities, insurances, guarantees, indemnities and negotiable instruments and all rights to any ledger, computer or electronic data or any document recording or evidencing the same. The relevant definitions and other clauses for our purpose are extracted hereunder: “Associated Rights” means, in relation to a Debt, all the Clients rights provided by or retained under the Contract of Sale, all instruments, securities, insurances, guarantees, indemnities and negotiable instruments and all rights to any ledger, computer or electronic data or any document recording or evidencing the same. “Credit Cover” means, subject to the terms herein, the amount shall be due to the Client from the Bank on the Insolvency of the Customer by applying the Credit Cover Percentage to the amount of any unpaid Debt but after deducting from such Debt any tax payable by the Customer. “Credit Cover Percentage: means the percentage specified in the Schedule which shall be applied in determining Credit Cover. “Debit” means all payment obligations of a Customer under a Contract of Sale and, where the context permits, a part or balance of such obligations: “Approved Debt” means a Debt which is within a Permitted Limited and which has not become an Unapproved Debt, “Unapproved Debt” means a Debt which is outside a Permitted Limit; “Recourse” means the right of the Bank to require the Client by notice, which may be oral, to repurchase an outstanding Debt at a price specified in Condition 9.02; 3. Vesting and Collection of Debts 3.01 – The Client agrees and undertakes that upon by the Bank to do so, the Client shall execute all such documents so as to vest legal ownership of Debts in the Bank. 3.02 – Any Debt and its Associated Rights which fail, for any reasons, to vest in the Bank effectively shall be held by the Client on trust for the Bank. 3.02 – The Bank shall have the exclusive right to collect and enforce payment of any Debt and its Associated Rights in such manner as it may decide and, for such purpose, to appoint collection agents, legal advisers and others and to institute, conduct, defend or compromise in the name of the Bank or the Client, on such terms as the Bank thinks fit, any legal proceedings in relation to such Debt and its Associated Rights; for any such purpose, the Client shall provide such assistance as the Bank may request. 3.03 – In the event that the Bank at its discretion agrees that notice of the Bank’s ownership of a Debt and its Associated Rights need not be given to the related Customer for the time being (each a “Non-disclosed debt”), subject as provided below, the Bank hereby appoints the Client as its agent to collect and enforce payment of such Debt and its Associated Rights, at the Client’s expense, and the Client shall act promptly and efficiently for such purpose. If a Termination Event happens, the Bank shall be entitled immediately (a) to terminate the Client’s agency, (b) to give notice to all or any of the Customers of the assignment of Non-disclosed Debt that have become or any become due and payable by the relevant Customers, including Non-disclosed Debts not then in existence, and (c) to collect and enforce payment or any Non-disclosed Debts and its Associated Rights in such manner at it may decide and, for such purpose, to appoint collection agents, legal advisers and others and to institute conduct, defend or compromise in the name of the Bank or the Client, on such terms as the Bank things fit, any legal proceedings in relation to such Debt and its Associated Rights; for any such purpose, the Client shall provide such assistance as the Bank may request and shall pay to the Bank, on demand, a collection and enforcement charge of 5% of the relevant Debt. 4.10 Where the Credit Cover facility is being made available by the Bank subject to the assignment of a credit protection insurance policy taken out by the Client, the maximum total amount payable to the Client under conditions 4.01 (a) and 4.01(c) in relation to an Approved Debt or under Condition 4.02 in relation to an Unapproved Debt shall not exceed the sum received by the Bank under such insurance policy with respect to such Debt and shall not exceed times the Maximum Loss Liability under the Credit Insurance Policy. Any excess payment made to the Client by the Bank shall be repaid by the Client to the Bank on demand. 9. Any excess payment made to the Client by the Bank shall be repaid by the Client to the Bank on demand. 9. Right of Recourse 9.01 – The Bank shall have the right to immediate Recourse:- (a) in respect of each unapproved Debt, following non-payment by its due date for payment; (b) of all outstanding Debts, upon the happening of a Termination Event or the giving of a notice to terminate this Agreement under Condition 2.01; (c) where the Credit Cover is neither zero nor 100% in respect of the amount of each Approved Debt that exceeds the Credit Cover to the extent that it does so on the 60th day after its due date for payment or, if earlier, the date of Insolvency of the relevant Customer and 9.02 – The amount payable by the Client to the Bank in accordance with Condition 9.01 (a), (b) or (c) shall be the amount prepaid (if any) by the Bank to the Client in respect of the Debt in question pursuant to Condition 4. The amount payable by the client to the Bank in accordance with Condition 9.01(d) shall be the purchase price of the debt in question. The client shall pay all such amounts on receipt of demand for payment from the bank. 13 (u) where the Client has assigned to the Bank an insurance policy as referred to in Condition 4.10; (i) to provide to the Bank with the original or a copy (as required by the Bank) of the insurance policy; (ii) to punctually pay the premium or other money payable under the insurance policy, and provide the Bank with the original or a copy (as required by the Bank) of the receipt for the payment; (iii) if the Client receives payment of any claim under the insurance policy, to hold any money so received on trust for the Bank; (iv) to comply with the terms and conditions of the insurance policy; and (v) not to do, or cause or allow to be done, anything which may; (1) reduce the scope of insurance cover or the insured amount under the insurance policy; (2) increase the premium of the insurance policy; (3) prevent or hinder any claim being settled in full under the insurance policy; (4) cancel, end or invalidate the insurance policy; or (5) adversely affect the insurance policy. 39. 39. In the event of the happening of a Termination Event, as aforesaid, notwithstanding anything to the contrary herein contained, the Bank shall be entitled in its absolute discretion, to inter –alia: (a) Call upon the Seller to pay forthwith the outstanding balance of all the monies due and payable by the Seller to the Bank pursuant to this Agreement, if any. (b) Terminate this Agreement with or without a period of notice prior to such termination taking effect; and (c) To take all necessary steps to enforce the Debts and/or the Associated Rights and exercise and other rights and remedy which may be available to Bank under applicable law. No remedy referred to hereinabove is intended to be exclusive but the same shall be in addition to any other remedy available to the Bank at law. Power of Attorney and Further Assurance The Client hereby irrevocably appoints the Bank and any person appointed by it to be the attorney for the Client and in the name and on behalf and as the act or deed of the Client or otherwise, without any reference to or consent from the Client, to sign and execute all cheques and other instruments and do all things as may be required for the full exercise of all or any of the powers hereby conferred on the Bank and its rights under this Agreement as it may consider expedient in connection with the exercise of such powers and rights and in order to perfect its title to any Debt and/or Associated Rights and to secure performance by the Client of its obligations hereunder or under any Contract of Sale. At the request of the Bank, the Client shall sign and execute such instruments and perform such acts as the Bank may consider expedient for any such purpose.” 40. I have excerpted the aforesaid conditions of the Factoring Agreement in order to appreciate the contentions put forward by the learned counsel for the parties. In the document Annexure-D.5 where the service are mentioned, it is to be noted that the Factoring service charges is one of the conditions of the facility provided and the said factoring service charges is 0.14% of the invoice value. In the document Annexure-D.5 where the service are mentioned, it is to be noted that the Factoring service charges is one of the conditions of the facility provided and the said factoring service charges is 0.14% of the invoice value. In the entire Factoring Agreement, except at clause 13 (u), nowhere else, can one find that the Bank was providing factoring services will have to take recourse to the insurance coverage and there is no mention of any premium that is to be paid either by the Bank or by the client i.e. plaintiff-Company. The only clause wherein there is a mention of insurance Policy is as already indicated at clause 13(u). 41. A careful reading of the said clause 13(u) would make it clear that it is only where credit protection insurance Police is taken out by the client then the question of the Bank acting on such an insurance Police would arise. In fact, in clause 13(u) various procedures are laid down as to how and in what manner the client has to obtain insurance police and submit the original copy to the Bank and the client also has to comply with the other terms and conditions of the insurance policy and should not do any of the things that are mentioned in clause 13(u)(V) (1 to 5). 42. In the instant case, there is no material placed by the plaintiff-Company to show that it had assigned to the Bank an insurance policy as referred to in condition No.4.10. It is nobody’s case that the insurance policy was produced before the Trial Court in conformity with the aforesaid conditions of the Factoring Agreement namely 13(u). The Trial Court also has not given any finding to the effect that the client namely the plaintiff-Company has in fact assigned to the Bank insurance policy which is in conformity with the clause 4.10 and 13(u) of the Factoring Agreement. In fact, the Trial Court has observed that there is a dispute as to the very insurance coverage itself. But, if the aforesaid conditions of the Factoring Agreement pertaining to the insurance policy had been noticed, the Trial Court would not have observed that the Bank has to proceed under the Insurance Policy, when no insurance policy was produced before the Trial Court nor was there any material placed in proof of premium paid. 43. But, if the aforesaid conditions of the Factoring Agreement pertaining to the insurance policy had been noticed, the Trial Court would not have observed that the Bank has to proceed under the Insurance Policy, when no insurance policy was produced before the Trial Court nor was there any material placed in proof of premium paid. 43. There is no compliance of entire conditions mentioned in Clause 4.10 read with 13 (u) of the Factoring Agreement. Therefore, in my view, the contention of the learned counsel appearing for the Respondents that there is an insurance coverage and therefore, the appellant-Bank has to seek remedy under the insurance coverage is unacceptable and is not based on any firm foundation, particularly having regard to the terms and conditions of the Factoring Agreement and fulfilling the requirements of clause 13(u) by the plaintiff-Company. Therefore, the submission of the learned Senior Counsel for the appellant that there is no question of any premium being collected and insurance coverage being taken by the Bank in respect of the invoice amount has to be accepted. 44. The learned Trial Judge totally lost sight of this important aspect of the Factoring Agreement and in fact in the course of entire order the learned Trial Judge has not even whispered anything about the various terms and conditions being part of the Factoring Agreement. As far as the contention put forward by the learned counsel appearing for Respondent No.1 namely Sri.B.C.Thiruvengadam that there is insurance coverage to the extent of o.14% of invoice value is concerned, there is enough force in the submission made by the learned Senior Counsel Sri.Nagananda appearing for the appellant/Bank that there appears to be tampering of the invoice agreement, particularly with regard to the services rendered relating to “domestic factoring with recourse” found in the original document produced by the appellant-Company as per Annexure-D.5. The word “recourse” is not to be found within the parenthesis whereas in the document referred to by the learned counsel for Respondent No.1 the word appears within the parenthesis. Apart from this, the document where insurance coverage is mentioned is not the final document, but it was only a proposed agreement. But the real agreement will all terms and conditions is the one that is produced at Annexure-D.5. In the said document except mentioning factoring service charges there is no other mentioned in insurance coverage. 45. Apart from this, the document where insurance coverage is mentioned is not the final document, but it was only a proposed agreement. But the real agreement will all terms and conditions is the one that is produced at Annexure-D.5. In the said document except mentioning factoring service charges there is no other mentioned in insurance coverage. 45. The learned Trial Judge did not take note of these important factors. Therefore the question of the appellant-Bank agreeing to get risk covered under a insurance policy does not arise. 46. As far as the letter addressed to the OMBUDSMAN, Reserve Bank of India referred to by the learned Senior Counsel for the Respondent-Company is concerned, the said letter is produced at page 202, Volume-I of the paper book. It has been stated that the Credit Protection taken by the HSBC will not absolve LAPL/Debtors from the respective liabilities and obligations or to repay the HSBC. The said letter further makes it clear that LAPL cannot seek protection under the argument that LAPL’s liability shall arise only on the balance, remaining, unpaid amount by the 3rd party insurance company. Though the said letter also mentions that premium paid in the insurance has been paid by the HSBC, no insurance policy as required under Clause 13(U) was placed before the Trial Court by the Respondent-Company. Though the learned counsel appearing for the respondents contended that the stand taken by the appellant-Bank in the written statement as regards the insurance coverage is one which is totally opposed to the contentions of the letter addressed to OMBUDSMAN by HSBC, what is relevant is as to whether the Respondent-Company had in fact assigned to the Bank any insurance policy as required under clause 13(u) of the terms and conditions of the Factoring Agreement. No such policy is forthcoming before the Trial Court. 47. The second point to be considered is as to whether the MOA was obtained by putting the plaintiff under economic duress. The MOA is dated 2-7-2009 and it is produced at page 242, Volume –I of paper book. No such policy is forthcoming before the Trial Court. 47. The second point to be considered is as to whether the MOA was obtained by putting the plaintiff under economic duress. The MOA is dated 2-7-2009 and it is produced at page 242, Volume –I of paper book. Since the argument of the learned counsel for the Respondents is that MOA itself is not a valid document and as the MOA according to the appellant/Bank indicates that the parties having acted upon the Factoring Agreement, it is also necessary to reproduce the terms and conditions agreed to between the parties in the said MOA dated 2-7-2009 and it reads as under: “MEMORANDUM OF AGREEMENT This Memorandum of Agreement arrived as on this 2 day of July 2009 at Bangalore. BY AND BETWEEN THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., a Banking Company incorporated in the Hongkong Special Administration Region as per the companies act of Hongkong SAR, and carrying on banking business in India as a scheduled bank with offices amongst other places at No.7, M.G.Road, Bangalore-560 001 and having its Indian Corporate office at 52/60, Mahatma Gandhi Road, Fort, Mumbai-400 001 acting through its duly appointed authorized representative Manoj Petitioner Paradkar in the factoring division of the bank duly authorized vide power of attorney dated:03.07.08 (hereinafter referred to as “THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD.” Which expression shall, unless repugnant to the context or meaning thereof, mean and including its successors-in-interest, executers, administrators and assigns) of the “FIRST PART”) AND M/s. Lisa Apparels Pvt Ltd., Registered Under the Company Act, 1956, having Registered Office at Bannerghatta Road, Bangalore, acting through its duly appointed authorised representative Mr.Subrahmanyam Iyer, authorised vide Board Resolution dated 2-July-09 SRI Subrahmanyam Iyer S/o Sri. V.Raghavan Iyer, (hereinafter referred to as Guarantor NO.1, which expression shall unless repugnant to the context or meaning thereof mean and include its successors, heirs, executors, administrators and assigns) of the “THIRD PART” AND Mrs.Desima Subrahmanyam Iyer, W/o Subrahmanyam Iyer, (hereinafter referred to as Guarantor No.2, which expression shall unless repugnant to the context or meaning thereof mean and include its successors, heirs, executors, administrators and assigns) of the “FOURTH PART”; RECITALS: WHEREAS Lisa Apparels Pvt Ltd., is one of the leading suppliers to top brands in the country like Van-Heusen, Arrow, Louis Philippe, Ruggers, Arrow, Basics, Scullers, Indigo nation, Turtle, Crocodile etc., Lisa Apparels Pvt Ltd., has approached THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., on 27.03.2008 for availing credit facility under “Domestic Factoring with Recourse” against receivables and was granted with the facility up to of Rs.5 Crore vide Sanction Letter FAL/FTG/SME/BGE/26 dated: 27.03.2008. The said facility was enhanced upto Rs.10.00 crores at the request of M/s.Lisa Apparels Pvt Ltd., vide sanction letter FAL/FTG/SME/BGE/91 dated: 26.09.2008. AND WHEREAS Lisa Apparels Pvt Ltd., executed a Demand Promissory Note dated 27.03.08 for a financial facility limit of amount upto Rs.5 Crore in favour of THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., and documents are executed on 27.09.08 for enhanced facility along with a Fresh Demand Promissory Note dated: 27.09.2008 for a sum of Rs.10 Crores where both the Demand Promissory Notes executed are to be read along with the factoring agreement within the definition of ‘recourse’ under the factoring agreement. AND WHEREAS Guarantor No.1 and 2, being Directors of Lisa Apparels Pvt Ltd., have jointly executed the personal Guarantee Agreements dated 27.03.2008 and 26.09.2008 respectively for securing the due repayment of the outstanding amount in case of default under the financial facility upto the tune of Rs.5 Crores and Rs.10 crores each sanctioned to M/s.Lisa Apparels Pvt Ltd., AND WHEREAS due to some market conditions the amounts due and payable by Lisa Apparels Pvt Ltd., has not been paid to The Hongkong and Shanghal Banking Corporation Ltd., as per the terms and conditions as envisaged under the said financial facility and a sum of Rs.80,208,272 (Rupees Eight Crore Two Lakhs Eight Thousand Two Hundred and Seventh Two only) inclusive of interest up to 30th June-09 is due and payable by Lisa Apparels Pvt Ltd., to THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., as on 30.06.2009 under the said financing agreement. AND WHEREAS now Lisa Apparels Pvt Ltd., has approached THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., with a one time settlement offer of a sum Rs.80,208,272 (Rupees Eight Crore Two Lakhs Eight Thousand Two Hundred and Seventy Two only) payable by installments against the outstanding dues as on date to THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., as per the schedule annexed herewith as Annexure-I, in full discharge of their liability under the said Credit facility. AND WHERE The The Hongkong And Shanghai Banking Corporation Ltd., has agreed to discharge Lisa Apparels Pvt Ltd., and Guarantor Nos.1 and 2 (Party no.3 and 4) as per the sanction Letter No.FAL/FTG/SME/BGE/26 dated: 27.03.2008 from the said Debt on receiving of a sum of Rs.80,208,272 (Rupess Eight Crore Two Lakhs Eight Thousand Two Hundred and Seventy Two only) plus interest accrued on this outstanding (at applicable Normal and/or penal rates under the Hongkong and Shanghai Banking Corporation Ltd’s Domestic Factoring with Recourse from time to time) till liquidation of the entire outstanding as per schedule annexed herewith as Annexure-I to The Hongkong and Shanghai Banking Corporation Ltd., but strictly as per the terms and conditions mentioned herein below. NOW, THEREFORE, THIS MEMORANDUM OF AGREEMENT Witness as follows: That Lisa Apparels Pvt Ltd hereby at the time of signing of this present MOA, agree accept and undertake to pay to HSBC a sum of (insure credit) of Rs.80,208,272 (Rupees Eighty Crores Two Lakhs Eight Thousand Two Hundred and Seventy Two only) as per Annexure attached starting from July 09 and ending as 15 September-09. Further in case payments are received from the debtors of Lisa Apparels Pvt Ltd., the repayment liability of Lisa Apparels Pvt Ltd., will be reduced to that extent for the corresponding period and the post dated cheques for the corresponding period will be returned to Lisa Apparels Pvt Ltd., That Lisa Apparels and parties to the Third and Fourth part to this MOA hereby agree, accept and undertake to make payment as per the agreed schedule as per clause No.1 hereinabove. That Lisa Apparels will offer properties with market value of approximate Rs.10 crore, situated at Survey No.40/2, measuring an extent of 1-00 (one acre) out of land, measuring 2-29 guntas, land situated at Arakere Village, Begur Hobli, Bangalore South Taluk, by way of creation of Equitable Mortagage, with a clear marketable title and free of encumbrances, as collateral security to The Hongkong and Shanghai banking Corporation Ltd., to secure the outstanding amount of Rs.80,208,272 (Rupees Eight Crore Two Lakhs Eight Thousand Two Hundred and Seventy Two only) with interest thereon payable by them as per Clause No.1 above Lisa Apparels Pvt Ltd shall execute such security documentation and obtain all necessary approvals to execute security documentation in favour of HSBC in the form and manner as HSBC may prescribe. The details of the properties are as under: That The Hongkong and Shanghai Banking Corporation Ltd., has agreed to freeze the outstanding at the current level as on date of execution of this present MOA in arriving at the final amount due as mentioned in clause I hereinabove. However HSBC shall charge interest at 10% p.a. on the outstanding and the same shall be recovered in the last instatement. That the parties to the second part, third part and fourth part to this present MOA hereby agree, accept and undertake that any breach or default of any terms and conditions and or not making payment of any one installments as per Clause No.1 subject to the entire outstanding being cleared by 15-Septeber 2009 hereinabove shall give rise to a separate and fresh cause of action including legal course of action against Lisa Apparels Pvt Ltd, and its debtors and liquidation of the security collateral offered on the balance amount due/outstanding along with interest. That THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD., hereby agrees accepts and undertakes that on and after the receipt and realisation of the entire outstanding mentioned hereinabove including interest if any, as per the terms and conditions mentioned here at, which shall discharge Lisa Apparels Pvt Ltd., and the guarantors No.1 and 2 in the main agreement, from their respective liabilities under the above mentioned “Domestic Factoring with Recourse”, assigned the debtors to Lisa Apparels Pvt Ltd., and issue a letter to effect cancellation of binding arising out of notice of assignment. That in the event of failure of Lisa Apparels to make the payments as per the clause 1 and 2 above of the present MOA with in the time stipulated hereinabove, then in such an eventuality the The Hongkong and Shanghai Banking Corporation Ltd., shall be entitled to terminate this MOA and in such an eventuality all the concession provided to the parties to the second part to this MOA shall be stand as withdrawn and entire amount with usual contractual rate of interest and other charges will be payable forthwith as and accepted as due and payable to the Bank by Borrowers, guarantees and mortgages and jointly and or severally. 48. On the termination as envisaged in clause 7 hereinabove the Hongkong and Shanghai Banking Corporation Ltd., shall be within its rights to initiate legal action for the recovery of its balance outstanding debt recovery tribunal along with pendent lite and future interest without any further notice to Lisa Apparels Pvt Ltd., and without prejudice to any other rights, claims or recourse it may have before any other forum, court, tribunal (any where in Indian) etc., as may be arising out of the said debt. 49. This MOA constitutes the entire agreement between the parties and no modification, amendment or waiver of any of the provisions of this MOA shall be effective unless made in writing specifically referring to this present MOA and duly signed by all the parties herein. IN THE WITNESS WHEREOF THE PARTIES hereto have said their respective hands on the day, month and here first in above written: For the Hongkong and Shaghai Banking Corpn Ltd., Authorised signatory For and on behalf of Lisa Apparels Pvt Ltc., For and on behalf The Hongkong and Shanghai Banking Corporation Ltd., For LISA APPARELS Petitioner (PVT) LTD., Director Signed, Sealed and Delivered By Borrowers. In presence of; By Guarantors: 1) Mr. Subrahmanyam Iyer, 202/203, Mantri Resideny, Bannerghatta Road, Opposite Menakshi Temple, Bangalore-560 076. 2) Mrs. Desima Subrahmanyam Iyer 202/203, Mantri Resideny, Bannerghatta Road, Opposite Menakshi Temple, Bangalore-560 076.” 50. The contents of MOA go to indicate that the parties acted upon the factoring agreement and the respondent-company also had accepted for one time settlement of a sum of Rs.8,02,08,272/-. Subrahmanyam Iyer, 202/203, Mantri Resideny, Bannerghatta Road, Opposite Menakshi Temple, Bangalore-560 076. 2) Mrs. Desima Subrahmanyam Iyer 202/203, Mantri Resideny, Bannerghatta Road, Opposite Menakshi Temple, Bangalore-560 076.” 50. The contents of MOA go to indicate that the parties acted upon the factoring agreement and the respondent-company also had accepted for one time settlement of a sum of Rs.8,02,08,272/-. Para-1 of the aforesaid MOA also makes it clear that, in case, the payments are received from the debtors of Lisa Apparels Pvt. Ltd. (LAPL), the repayment of liability of LAPL will be reduced to that extent for the corresponding period. Para-3 of the said agreement also indicates that LAPL will also offer properties by creating equitable mortgage as collateral security and will also execute such security documents. Another clause of the agreement to be taken note of is, para-5, where it is made clear that in case of default of payment of any one installment as per clause (1), the bank would take recourse to legal action against its debtors and liquidation of the security collateral offered. 51. The aforesaid MOA has been signed by both the parties and there is also a Board resolution of the plaintiff-company dated 27.9.2008, which document is produced at Annexure D-9, which is at page-63 of the paper book Volume-II, and its certified copy is at Annexure-D-10. The said resolution Annexure D-9 indicates that R.Subramanyam Iyer is authorised to execute the Memorandum of Agreement with HSBC. 52. As far as the contention put forward by the learned counsel for the respondents concerning validity of the MOA is concerned, the MOA only speaks of the plaintiff-company requiring to produce certain documents by way of collateral security and, therefore, the MOA itself cannot be construed as the document of collateral security by way of creating equitable mortgage. Therefore, the question of MOA being hit by Section 23 of the Contract Act does not arise and for that matter, the argument of the respondent’s counsel that there could be no estoppel against statute also cannot be accepted. The MOA only puts down on paper as to the nature of collateral security to be furnished by the plaintiff-company. 53. Therefore, the question of MOA being hit by Section 23 of the Contract Act does not arise and for that matter, the argument of the respondent’s counsel that there could be no estoppel against statute also cannot be accepted. The MOA only puts down on paper as to the nature of collateral security to be furnished by the plaintiff-company. 53. Apart from this, another inference which the trial court failed to draw from the MOA is that, the signing of the MOA by both the parties is an admitted fact and the said MOA has arisen out of and can be said to be a consequence of the first factoring agreement entered into between the parties. Therefore, when the parties do not dispute the existence of factoring agreement upon which the plaintiff-company acted and various transactions took place and amounts were paid by the plaintiff-company to the appellant-Bank as could be seen from various e-mail correspondence between the parties, the question of the parties not signing the factoring agreement and not acting upon that, therefore, cannot arise. The submission made in this regard by the learned counsel for the respondent as well as the view taken by the trial court that the factoring agreement itself is a doubtful document and cannot be sustained, in the light of the very conduct of the parties and the admissions made in the pleadings by both the parties. 54. Apart from the aforesaid observations, it is also pertinent to mention that the MOA is also accompanied by Annexure-1, wherein the details of the amounts due by the two buyers, Aravind Brands and Hasbro Clothing Pvt. Ltd., are mentioned and so also the various cheques issued, drawn on State Bank of India. This Annexure-A1 is also signed by both the parties. Under the said circumstances, the contention put forward by the learned counsel for the respondent that the MOA is not a valid document cannot be accepted as having any force behind it. 55. These factors do not give scope to infer that there was economic duress and the plaintiff Company was put under pressure. Though learned counsel Sri. Under the said circumstances, the contention put forward by the learned counsel for the respondent that the MOA is not a valid document cannot be accepted as having any force behind it. 55. These factors do not give scope to infer that there was economic duress and the plaintiff Company was put under pressure. Though learned counsel Sri. B.C. Thiruvengadam for the respondent-plaintiff contended very forcefully that the plaintiff company was put under economic duress in signing the Memorandum of Agreement and therefore the said factor also has to be taken into account while considering the challenge to the impugned order of the trial court. In this regard two judgments are referred by the learned counsel and they are the one reported in AIR 2008 S.C.2911 and another one reported in AIR 1992 Bombay 309. 56. I have carefully perused the judgments in the aforesaid cases. In the first of the two cases referred to by the learned counsel for the respondent company, the facts reveal that the company which had entrusted the work of construction of a compound wall and a bridge over a Nala, had demanded from the contractor No Due Certificate and repeated correspondence between the parties over a period of two years reveal that the company had put the contractor under duress. The facts of the said case are therefore inapplicable into the case on hand because the correspondence between the appellant bank and the plaintiff company, particularly E-mail with a precedent the Memorandum of Agreement and subsequent payment by the plaintiff company, does not give room to take the view that the plaintiff company was put in economic duress by the appellant bank. 57. As far as the second decision cited is concerned, that was a case where the defendant compelled the plaintiff by coercing the plaintiff and by representing that the bank guarantee would be enforced only if the customs duty was received by the plaintiff. The court found that the defendant had played fraud on the plaintiff and had resiled from the earlier representation made to the plaintiff. The facts of this case are quite different from the one with which we are concerned in these appeal. 58. The court found that the defendant had played fraud on the plaintiff and had resiled from the earlier representation made to the plaintiff. The facts of this case are quite different from the one with which we are concerned in these appeal. 58. In fact in the case on hand, the trial court has given a clean chit to the appellant bank by observing that no allegation of fraud and misrepresentation against the appellant bank has been made out by the plaintiff company. Under the above circumstances, the aforesaid decisions are inapplicable and in the case on hand, it cannot be said that the plaintiff company which is also a very well known manufacturer of garments of leading brands like Aravind & Hasbro etc., would be put under economic duress by the appellant bank. No such inference is warranted on going through the material placed and the stand taken by the respective parties. Therefore, the argument of the learned counsel for the respondent that the Memorandum of Agreement was executed under economic duress is without any firm foundation. 59. Coming to the third point, viz., issuance of cheques by the plaintiff-company to the appellant-Bank, the MOA referred to above and Annexure-1 leaves no doubt as to the cheques having been issued by the plaintiff-company to the appellant-Bank. The question is whether the said cheques are issued as security or not. It is strongly contended by the learned counsel for the respondent that the said cheques were issued only as security. A plain reading of the MOA does not give rise to such an inference. In fact, in para-5 of the MOA, it has been clearly mentioned that in the event of failure on the part of the plaintiff-company in making payment of any one installment, the Bank would be at liberty to take legal course of action against LAPL and its debtors and liguidation of security collateral offered on the balance amount. 60. A careful reading of clauses-3 and 5 of the MOA will go to show that the security sought in respect of outstanding amount of Rs.8,02,08,272/-is creation of equitable mortgage and other security documents. Clause (5) of the MOA further makes it clear that in the event of failure to pay the outstanding amount, the Bank would proceed to liquidate the security offered. Clause (5) of the MOA further makes it clear that in the event of failure to pay the outstanding amount, the Bank would proceed to liquidate the security offered. Under these circumstances, the argument that the cheques alone were received as security also cannot be accepted, particularly having regard to the terms and conditions of the MOA. When the Bank has given liberty to proceed to liquidate the security collateral offered, it goes without saying that the Bank also could invoke the cheques issued to it which are mentioned in Annexure-I to MOA. 61. The argument of the learned counsel for R-1 that same of the cheques were returned also goes to reinforce the above said view taken, in the sense, it is only where the appellant-Bank is able to receive the amount due under various invoices that the cheques issued in respect of the said invoices are returned and that does not mean that even in respect of the invoices in regard to which no amount has been received by the Bank that the Bank would still return all the cheques to the plaintiff-company. Therefore, the cheques in question being issued only as security and nothing more goes against the very spirit of security that is sought in clasue-(3) of the MOA. As such, the contention urged in this regard by the learned counsel for the respondent also cannot be considered as having enough substance behind it. 62. The last of the point or aspect to be considered in the light of the contentions urged by the learned counsel for the respondent is as regards the activity of the appellant bank being in contravention of Section 6 of the Banking Regulation Act, 1949. Learned counsel Sri. Thiruvengadam for the plaintiff company relied on a decision of the Gujarat High Court reported in (2009) 2 GLR 1158 . No doubt, a plain reading of Section 6 of the aforesaid Banking Regulation Act mentions at 6(1)(o) that, other than the forms of business mentioned in 6(1)(a) to (m), a banking company can also engage in any other form of business which the Central Government may, by Notification in the Official Gazette, specify as a form of business in which it is lawful for a banking company to engage. Reliance was also placed by the learned counsel plaintiff company on clause (2) of Section 6 to contend that no banking company shall engage in any form of business other than those referred to in sub-section(1). Reference was also made to other sections of the Act particularly Section 19. 63. In the light of the contention put forward in this regard, in so far as the decision referred to by the learned counsel for the respondent plaintiff is concerned, that was a case where by a deed of assignment by the ICICI bank to Kotak Mahindra Bank, a basket of debts of the Assignor Bank along with underlying security interest were assigned to or transferred on ‘as is where is’ basis to the Assignee Bank at the defined purchase price. Application by the Assignee Bank before the Company Court for substitution was made and the court dismissed the said application by observing that the rights are not acquired through the process known to law and the applicant bank cannot be permitted to be substituted in place of secured creditors of the company in liquidation. It was in the context of the above facts the court went on to hold that the concept of ‘banking policy’ as defined in Section 5(a) of the B.R.Act does not permit trading in debts between the banks and such a policy cannot be framed by the RBI. 64. It is therefore clear from the aforesaid facts of the case in consideration that the banks policy prohibits trading in debts between the banks. We are not dealing in these appeals, a case of trading in debts between two banks, on the other hand, the transaction is between HSBC Bank on the one side and Lisa Apparels Private limited the plaintiff company on the other. As such, the above decision is also inapplicable. 65. Apart from the aforesaid reason, learned senior counsel for the appellant bank has also placed before this court a Notification issued by the Central Government dated 2.7.1990 and the said Notification reads as under: “Banking Regulation Act, 1949: Notification under section 6(1)(o); “Factoring” specified as a form of business in which it is lawful for a banking company to engage Notification No.S.O.1874, dated 2nd July, 1990. In exercise of the powers conferred by clause (o) of sub-section (1) of section 6 of the Banking Regulation Act, 1949 (10 of 1949), the Central Government hereby specify “factoring” as a form of business in which is lawful for a banking company to engage.” 66. In addition to the aforesaid Notification, attention is also drawn to the R.B.I Circulars which have been produced at pages.55 and 56 of paper book Vol.2. One Circular which is dated 1.7.2008 issued by the R.B.I to all commercial banks reads as under: “All Scheduled Commercial Banks (excluding RRBs) Dear Sir, Master Circular – Para-banking Activities Please refer to the Master Circular No.DBOD.FSD.BC.18/24.01.001/2007-08 dated July 2,2007 consolidating instructions/guidelines issued to banks till June 30, 2007 on para-banking activites. The Master Circular has been suitably updated by incorporating instructions issued upto June 30, 2008. The Master Circular has also been placed on the RBI. A copy of the Master Circular is enclosed. A separate Master Circular has been issued on the Credit Card Operation of banks. Yours faithfully, (P. Vijaya Bhaskar) Chief General Manager.” Para.5 of the Circular that is enclosed to the aforesaid letter reads as under: “5. Equipment leasing, Hire purchase and Factoring services as departmental activities. Banks can also undertake equipment leasing, hire purchase and factoring services departmentally. Prior approval of the RBI is not necessary for undertaking these activities departmentally. The banks should, however, report to the RBI about the nature of these activities together with the names of the branches from where these activities are taken up. The banks should comply with the following prudential guidelines when they undertake these activities departmentally.” It is therefore clear from the aforesaid Notification and circular issued that a banking company can also engage in factoring services departmentally. 67. What is the effect of circulars and guidelines issued by the R.B.I. Whether they have statutory force or not was considered by the Apex Court in two decisions referred to by the learned senior counsel Sri. S.S. Naganand for the appellant bank. One of them is the case reported in AIR 2007 Delhi 65 in the case of Haryana Steel & Alloys Limited Vs IFCI Limited. The Apex Court has held that RBI circular and guidelines have statutory force and the relevant observations which are at paras 14 and 15 are as under: “14. S.S. Naganand for the appellant bank. One of them is the case reported in AIR 2007 Delhi 65 in the case of Haryana Steel & Alloys Limited Vs IFCI Limited. The Apex Court has held that RBI circular and guidelines have statutory force and the relevant observations which are at paras 14 and 15 are as under: “14. In the case of Central Bank of India (supra), the Supreme Court observed that the RBI is a prime banking institution of the country entrusted with a supervisory role over banking and conferred with the authority of issuing binding directions, having statutory force, in the interest of public in general and preventing banking affairs from deterioration and prejudice as also to secure the proper management of any banking company generally. It was further observed as below. RBI has been issuing directions/circulars form time to time which, inter alia, deal with rate of interest which can be charged and the periods at the end of which rests can be struck down, interest calculated thereon and charged and capitalised. It should continue to issue such directives. Its circulars shall bind those who fall within the net of such directives. For such transaction which are not squarely governed by such circulars, the RBI directives may be treated as standards for the purpose of deciding whether the interest charged is excessive, usurious or opposed to public policy. 15. The conclusion, therefore, is inevitable that the RBI Guidelines in question have a binding force on the respondent No. 1 who is under an obligation to comply with the same. 68. From the aforesaid law laid down by the Apex Court the position that emerges is that the circulars issued by the RBI under its guidelines have a binding force and as such, in the light of the aforesaid Notification dated 2.7.90, when the banking companies are permitted to engage in factoring services departmentally and further when section 6 (1)(o) has been taken into account by issuing a Notification by the Central Government authorising a banking company to engage, contention that the appellant bank cannot engage in factoring services therefore has to fall to the ground like nine pins. 69. 69. Therefore, the argument by the learned counsel for the respondent that the very activity of factoring services engaged by the appellant bank is unlawful, invalid and it is only a subsidiary of the bank that alone can engage in factoring services has also to be rejected in the light of the aforesaid authoritative law laid down by the Apex Court in the case of Haryana Steel & Alloys Limited’s case. 70. Having thus answered all the points under consideration, it has to be seen as to whether the trial court was justified in granting temporary injunction by allowing all the I.As 1 to 4 and whether the discretion exercised by the trial court can be said to be a proper one having regard to the facts and circumstances of the case. 71. It is a well settled law that for grant of injunction, a party will have to make out a prima facie case and even after establishing a prima facie case, the court also will have to take into account other factors which have been recognised by the court in various decisions right from the famous case of American Express Bank Limited Vs Calcutta Steel Co. & others, Gujarat Bottling Co. Limited Vs Coca Cola company etc., Both sides have relied on several decisions in regard to the factors to be considered by the court while granting temporary injunction at interlocutory stage. 72. In the present case, the trial court has granted injunction and the effect of it is that the appellant bank has been prevented from proceeding judicially in other forums/courts in respect of the cheques issued by the plaintiff company and also other securities like promissory notes etc., By granting injunction against the appellant in respect of the aforesaid cheques and promissory notes, can it be said that the trial court has exercised its discretion properly. The following decisions throw light on this aspect. 73. In the case reported in 1997(6) SCC 450 (Dwarikesh Sugar Industries Limited Vs Prem Heavy Engineering Works (P) limited & another), the Apex Court has held that injunction ought not to be an instrument to be used in nullifying the terms of a contract, agreement or undertaking which is lawfully enforceable. The following decisions throw light on this aspect. 73. In the case reported in 1997(6) SCC 450 (Dwarikesh Sugar Industries Limited Vs Prem Heavy Engineering Works (P) limited & another), the Apex Court has held that injunction ought not to be an instrument to be used in nullifying the terms of a contract, agreement or undertaking which is lawfully enforceable. The relevant observation for our purpose has to be found at para.24 wherein the Apex Court has observed that the court ought not to have issued an injunction which has the effect of restraining the bank from fulfilling its contractual obligation in terms of the bank guarantee. 74. In another decision reported in AIR 2003 S.C.1177 in the case of Modi Entertainment Network & another Vs W.S.G. Cricket Pvt. Limited, the Apex Court has held that injunction which is in the nature of anti-suit injunction will have the effect of interfering with the jurisdiction of another court and in this context, the Apex Court has observed thus at para.9. “The Courts in India like the Courts in England are Courts of both law and equity. The principles governing grant of injunction an equitable relief by a Court will also govern grant of anti-suit injunction which is but a species of injunction. When a Court restrains a party to a suit/proceeding before it from instituting or prosecuting a case in another Court including a foreign Court, it is called anti-suit injunction. It is a common ground that the Courts in India have power to issue anti-suit injunction to a party over whom it has personal jurisdiction, in an appropriate case. This is because Courts of equity exercise jurisdiction in personam. However, having regard to the rule of comity, this power will be exercised sparingly because such an injunction though directed against a person, in effect causes interference in the exercise of jurisdiction by another Court. In the very same decision, the Apex Court also has laid down the guidelines for the courts while exercising discretion to grant anti-suit injunction and the said guidelines are as under: “(D) Civil P.C. (5 OF 1908), O.39, R.1-Anti-suit injunction–Grant–Aspects to be considered. In the very same decision, the Apex Court also has laid down the guidelines for the courts while exercising discretion to grant anti-suit injunction and the said guidelines are as under: “(D) Civil P.C. (5 OF 1908), O.39, R.1-Anti-suit injunction–Grant–Aspects to be considered. In exercising discretion to grant an anti-suit injunction the Court must be satisfied of the following aspects:-the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the Court; if the injunction is declined the ends of justice will be defeated and injustice will be perpetuated; and the principle of comity – respect of the Court in which the commencement or continuance of action/proceeding is sought to be restrained – must be borne in mind; in a case where more forums than one are available, the Court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens; where jurisdiction of a Court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non-exclusive jurisdiction of the Court of choice of the parties are not determinative but are relevant factors and when question arises as to the nature of jurisdiction agreed to between the parties the Court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case; a Court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a Court including a foreign Court, a forum of their choice in regard to the commencement or continuance of proceedings in the Court of choice, save in a exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances of subsequent events have made it impossible for the party seeking injunction to prosecute the case in the Court of choice because the essence of the jurisdiction of the Court does not exist or because of the Court does not exist or because of a vis major or force majeure and the like; 75. Apart from the aforesaid principles, it must also be mentioned that the present case is one pertaining to commercial transaction between the appellant bank on the one side and the respondent plaintiff company on the other and while dealing with cases of such nature, what should be the parameters which the court will have to keep in view while exercising its discretion, was considered by the Apex Court in the case of American Express Bank Limited Vs Calcutta Steel Company & others and the Apex Court held that in respect of injunction in the matters relating to commercial transactions is concerned, the discretionary power has to be exercised with the circumspection ex debito justitiae having regard to pros and cons in the facts and circumstances of each case. The observation which is very relevant for our purpose is to be found at para.22 of the said judgment and it reads thus: “While exercising its discretionary power, the court must keep in its mind the well-settled principles of justice and fair play and the discretion would be exercised keeping in view the ends of justice since justice is the hallmark and it cannot be administrated in vacuum. Grant of declaration and injunction relating to commercial transactions tend to aid dishonesty and perfidy. Conversely, refusal to grant relief generally encourages condour in business behaviour, facilities free flow of capital, prompt compliance with convenants, sustained growth of commerce and above all inculcates respect for the efficacy of judicial adjudication. Before granting of refusing to grant relief of declaration or injunction or both the court must weigh pros and cons in each case, consider the facts and circumstances in their proper perspective and exercise discretion with circumspection to further the ends of justice. From the backdrop fact-situation we have no hesitation to hold that the relief of declaration granted is unjust and illegal. It tended to impede free flow of capital, thwarted the growth of mercantile business and deflected the course of justice.” (emphasis by me) 76. Yet another decision of the Apex Court which will have to be referred to in the present context is, the Apex Court’s decision in Cotton Corporation of India Limited Vs United Industrial Bank Limited & others. It tended to impede free flow of capital, thwarted the growth of mercantile business and deflected the course of justice.” (emphasis by me) 76. Yet another decision of the Apex Court which will have to be referred to in the present context is, the Apex Court’s decision in Cotton Corporation of India Limited Vs United Industrial Bank Limited & others. The Apex Court held in the said case that the court cannot grant injunction restraining a person from initiating proceedings in a court of co-ordinate superior jurisdiction and the view of the Supreme Court is expressed at para.7 in the following words: “Ordinarily a preventive relief by way of prohibitory injunction cannot be granted by a court with a view to restraining any person from instituting or prosecuting any proceeding and this is subject to one exception enacted in larger public interest, namely, a superior court can injunct a person from instituting or prosecuting an action in a subordinate court with a view to regulating the proceeding before the subordinate courts. At any rate the court is precluded by a statutory provision i.e., Section 41(b) from injunction restraining a person from instituting or prosecuting a proceeding in a court of co-ordinate jurisdiction or superior jurisdiction.” (emphasis by me) 77. In the light of the aforesaid decisions of the Apex Court, in the case on hand, the trial court did not take into account the nature of the transaction between the parties and did not consider the pros and cons of granting an order of injunction and considering the fact that the appellant bank is according to it a leading bank and huge deposits are made by the corporate as well as private individuals, the trial court did not take into account the impact of the order of injunction on the banking activities in which the appellant bank is engaged. 78. As the Apex Court has observed in American Express Bank’s case, while the grant of injunction can come to aid dishonesty and perfidy, refusal to grant the relief, facilitates free flow of capital, sustains growth of commerce and above all inculcates respect for the efficacy of judicial adjudication. 79. 78. As the Apex Court has observed in American Express Bank’s case, while the grant of injunction can come to aid dishonesty and perfidy, refusal to grant the relief, facilitates free flow of capital, sustains growth of commerce and above all inculcates respect for the efficacy of judicial adjudication. 79. Learned trial judge lost sight of all these principles laid down by the Apex Court and totally oblivious the impact of grant of injunction, the trial court in this case erred in exercising its discretion in proper manner more so when the matter pertains to commercial transaction between the appellant and the plaintiff Company both of whom claim to giants in the respective fields viz., one in the banking sector and the other in the manufacture of garments. 80. As far as the other decisions referred to by the learned counsel for the respondents are concerned, I have carefully gone through them and find that the facts and circumstances involved in most of the cases are entirely different from the one with which we are seized of in these appeals. 81. Apart from the above, the conduct of the respondent plaintiff company is not the one which can entitle it to the discretionary order of injunction at the hands of the court. The plaintiff company entered into factoring agreement with the appellant bank and signs the factoring agreement which is produced at document Nos.5 and 6 and thereafter the plaintiff company also signs the M.O.A admitting its liability and in between these two events, E-mail was exchanged between the parties and nowhere the plaintiff company took the stand that the factoring agreement is void. Having elected to go in accordance with the letter of spirit of the factoring agreement and the M.O.A, the plaintiff company cannot be permitted to turn around and say that the factoring agreement is void and so also the M.O.A. 82. The Apex Court in a case reported in AIR 2006 S.C.2432 has held that once a person elects and obtains an entry on that basis, he cannot be allowed to turn around and contend that the conditions are illegal. In another decision reported in AIR 1993 S.C.352 the Apex Court has observed that it is not open to a person to both approbate and reprobate. 83. In the case on hand, the conduct of the plaintiff company is nothing but one of approbation and reprobation. In another decision reported in AIR 1993 S.C.352 the Apex Court has observed that it is not open to a person to both approbate and reprobate. 83. In the case on hand, the conduct of the plaintiff company is nothing but one of approbation and reprobation. Although it was contended by the learned counsel for the respondent plaintiff company that before signing the M.O.A, the plaintiff company had reprobated the factoring agreement, in the reply notice dated 29.4.09, the said act on the part of the plaintiff company itself is indicative of the plaintiff company turning around after having entered into factoring agreement and reaped the benefits under the factoring agreement and only when the appellant bank sought for the amount due, that the respondent plaintiff company came up with its act of retaliation. 84. Apart from the aforesaid conduct of the respondent plaintiff company, it is also not out of place to mention that despite this court passing an order on 23.4.2010 directing the plaintiff company to deposit before this court within 15.5.2010, a sum of rupees two crores, the respondent plaintiff company has failed to comply with the said direction and though learned counsel for the respondent plaintiff company made a submission that an S.L.P has been filed before the Apex Court challenging the order passed on the aforesaid date i.e. 23.4.2010, even at this point of time, the respondent plaintiff has failed to comply with the direction given by this court which only leads to the inference that the respondent plaintiff company has no respect for the court orders. 85. In the light of the aforesaid reasoning, I am of the view that the plaintiff has not made out a prima facie case for grants of injunction. The contention that the factoring agreement itself is not subsisting, may also give rise to the question of maintainability of the suit of the plaintiff. 86. 85. In the light of the aforesaid reasoning, I am of the view that the plaintiff has not made out a prima facie case for grants of injunction. The contention that the factoring agreement itself is not subsisting, may also give rise to the question of maintainability of the suit of the plaintiff. 86. To some up, not only there is no prima facie case made out by the plaintiff company, but even the other factors like balance of convenience, harm to the appellant bank and to the public and preventing the appellant bank from taking recourse to other judicial forums in respect of the cheques and promissory notes, all these therefore lead to the one and only conclusion that the impugned order of the trial court cannot be sustained not only on facts but also in law particularly in the light of the various rulings of the Apex Court referred to by me in the preceding paragraphs. 87. One last word that is to be said is that all the aforesaid observations are only from prima facie angle and therefore shall not have any bearing on the suit filed by the plaintiffs. In the result, I pass the following order. 1. All the appeals are allowed. The impugned order of the trial court on I.As 1 to 4 stand set aside. 2. The appellant-bank is at liberty to take necessary action as is open to it in law against the plaintiff company in respect of the plaintiff company not complying with the directions issued by this court on 23.4.2010. 88. At this stage, learned counsel for the respondents made a prayer for keeping the aforesaid judgment in abeyance for two months to enable the respondent plaintiff to approach the Apex Court. 89. This prayer is strongly resisted by the learned counsel for the appellant Bank by contending that the very conduct of the plaintiff company in not depositing even a paise before this court despite direction given on 23.4.10 itself does not give room to exercise discretion in favour of the request made by the learned counsel for the respondents. 90. 89. This prayer is strongly resisted by the learned counsel for the appellant Bank by contending that the very conduct of the plaintiff company in not depositing even a paise before this court despite direction given on 23.4.10 itself does not give room to exercise discretion in favour of the request made by the learned counsel for the respondents. 90. Having thus heard both sides, I am of the view that, when this court has held that the plaintiffs have not even made out a prima facie case, it is not a case where the request made by the learned counsel for the respondent plaintiffs can be considered in his favour. Hence, the said prayer is rejected.