Supreme Court Restores Injunction Over Family Estate, Warns Against Mini-Trials in Interim Orders

A Division Bench of the Supreme Court restores a Single Judge's injunction over a disputed family estate and bars appellate courts from conducting merits-laden mini-trials on interim applications.

The Supreme Court on 12 August 2026 set aside a Delhi High Court Division Bench order that had reversed an interim injunction protecting a disputed family estate, and restored the Single Judge's original order restraining further alienation of shareholding, LLP interests and immovable properties worth approximately Rs. 1,035 crores. The Court, comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe, held that the Division Bench had exceeded its limited appellate jurisdiction under Order XLIII Rule 1(r) of the Code of Civil Procedure, 1908 by conducting, in substance, a mini-trial on affidavits and documents instead of asking only whether the Single Judge's discretion had been exercised arbitrarily or perversely. The judgment contains a pointed direction to all courts to confine interim injunction orders — and appeals from them — to the three settled conditions of prima facie case, balance of convenience and irreparable injury, without venturing into the final merits.

How the Dispute Reached the Supreme Court

The testator, Shri Devinder Singh Chaudhary, died on 5 December 2009, leaving behind a network of companies, partnerships and trusts in which he and his wife, Mrs. Sita Chaudhary (the original plaintiff), held the principal capital and shareholding. His succession was contested on three fronts: one son, Mr. Deepinder Singh, propounded a Will dated 4 October 2008; another son, Mr. Virender Singh, claimed the testator died intestate; and the original plaintiff relied on an earlier Will dated 26 March 2004.

After the testator's death, the original plaintiff's granddaughter, Ms. Sunaina Singh (defendant No. 4), moved to Chandigarh and resided with her. Between 19 December 2018 and 6 June 2019, the original plaintiff executed a series of gift deeds and LLP transfer agreements transferring substantial shareholding and capital to defendant No. 4 and her husband, Mr. Ajay Kadyan (defendant No. 9). The transfers included 6,000 shares in Amba Promoters and Developers Pvt. Ltd., 18,012 shares in P.E. Manning Consultants Pvt. Ltd., a 62% LLP capital interest in Ruchi Towers LLP, a 47% LLP capital interest in Rama Packing and Wires Industries LLP, and 21,21,240 shares in Industrial Cables (India) Ltd. A farmhouse at Village Rajokri, New Delhi was also sold for Rs. 4.72 crores, and Rs. 50 crores were advanced by way of loans. With those funds, defendant Nos. 4 and 9 purchased flats at DLF Magnolias and Magnum Towers, Gurgaon, a factory at Laksar, Uttarakhand, and sports and luxury cars.

On 21 October 2021, the original plaintiff instituted CS (OS) No. 589 of 2021 before the Delhi High Court, pleading that defendant Nos. 4 and 9 had procured the transfers by exploiting her old age and infirm health, and seeking declarations that the transfers were null and void, permanent and mandatory injunctions, and restoration of shareholding. She simultaneously moved I.A. No. 14829 of 2021 under Order XXXIX Rules 1 and 2 of the Code for an interim injunction.

By order dated 29 July 2022, the Single Judge granted the injunction. The Division Bench, by the impugned judgment dated 20 March 2026, set it aside. The original plaintiff had by then died on 9 January 2025; her legal representatives — six of her seven grandchildren and three of her children — were substituted and pursued the appeals to the Supreme Court.

What the Single Judge Found and the Division Bench Did With It

The Single Judge made seven specific findings: that the original plaintiff's interest under the 2004 Will had not matured into an absolute interest under Section 14 of the Hindu Succession Act, 1956; that a genuine doubt existed about whether the 2004 Will was the testator's last will; that the original plaintiff could not lawfully have transferred the testator's estate; that the transfers were procured by undue influence; that the defendant companies and LLPs were the alter egos of defendant Nos. 4 and 9; that those defendants had drawn loans from family entities to acquire properties in their own names; and that further disposal of those properties was in progress. On those findings, the Single Judge concluded that a prima facie case, balance of convenience and irreparable injury all pointed towards preservation, and accordingly restrained alienation of properties owned by defendant Nos. 13 to 17 and of specific immovable properties held by defendant Nos. 4 and 9.

The Division Bench correctly stated the narrow standard of appellate review — that interference is warranted only where discretion has been exercised arbitrarily, capriciously, perversely, or contrary to settled principles — but then proceeded across twelve detailed findings to construe specific clauses of the 2004 Will, weigh the original plaintiff's admissions in a separate suit filed by Mr. Virender Singh, apply Section 89(8) of the Companies Act, 2013, and assess whether a “clear prima facie nexus” had been shown between specific property acquisitions and specific disputed proceeds. It held that the injunction had been granted without adequate prima facie entitlement and risked stalling ongoing development projects. It accordingly allowed the defendants' appeals and vacated the injunction.

The Supreme Court's Reasoning

Justice Aradhe, writing for the Court, identified the central error immediately. The Division Bench had correctly recited the Wander Ltd. & Anr. v. Antox India P. Ltd., 1990 Supp. SCC 727, standard but then applied a standard of its own devising. Each of the twelve findings it made — construing Will clauses, weighing conduct in separate litigation, applying Section 89 of the Companies Act, 2013 — was a matter of substance reserved for trial, not a permissible basis for appellate interference with a discretionary interlocutory order.

The Court reaffirmed that the threshold for a prima facie case is a modest one: not proof of title, but only that the claim is not frivolous or vexatious and that a serious question requiring investigation exists. Citing Dalpat Kumar v. Prahlad Singh, (1992) 1 SCC 719, the Court reiterated that a prima facie case is “a substantial question raised, bona fide which needs investigation and a decision on merits.” The plea that defendant Nos. 4 and 9, while residing with an elderly widow, procured transfer of virtually the entire family shareholding through undue influence, plainly met that threshold.

On balance of convenience, the Court found the scales were not equally poised. What was restrained was not any enterprise conducted by defendant Nos. 4 and 9 in their own right, but further alienation of assets whose very provenance was under challenge. Defendant Nos. 4 and 9 remained free to possess and enjoy those assets pending trial. The Single Judge had already carved out an exception permitting defendant No. 13 to continue selling developed plots in Madhuban Colony, Rajpura, which addressed in part the concern about third-party purchasers. The appellants, by contrast, stood to lose irrecoverably the subject-matter of the suit should control of family companies pass to strangers during the suit's pendency.

On irreparable injury, the Court held that loss of controlling shareholding in family companies, or the creation of third-party rights in properties acquired with the proceeds of disputed transfers, is injury that a subsequent decree cannot unwind. It is not mere financial loss capable of computation and recovery from a solvent party. The defendants' plea that certain properties were self-acquired did not alter this conclusion: the appellants' case, accepted on a prima facie view by the Single Judge, was that those properties were purchased with loans drawn from family entities and with proceeds of the impugned transfers, making them traceable to the very interests whose transfer was challenged.

The Court was equally pointed on what it called the vice of the mini-trial. It recorded disquiet at the increasing frequency with which courts — both at first instance and in appeal — write lengthy orders under Order XXXIX that close-analyse rival documents, weigh probable outcomes of title and fraud issues, and express views on which side is likely to succeed. The scope of inquiry on an interim injunction application, and equally on appeal from such an order, is confined to the limited threshold question of whether a serious dispute meriting investigation has been shown. It does not extend to an examination of the final effect or ultimate merits of the documents in the pleadings, which is the trial court's task after evidence.

Measured against that standard, the Court found both the Single Judge's order and the Division Bench's judgment bore the marks of a mini-trial. The Court chose to restore the Single Judge's order because, despite that defect, his ultimate conclusion was correctly anchored in the three conditions governing interim injunctions. The Division Bench's substitution of its own appreciation — of Will clauses, of the parties' conduct, and of statutory provisions bearing on the final merits — was not warranted on the standard it had itself correctly stated.

The Direction to Trial Courts and Appellate Courts

The Court expressly declined to approve the practice of writing merits-laden interim orders and directed courts to confine such orders to recording, with reasons, findings on the three settled conditions — prima facie case, balance of convenience and irreparable injury — without embarking on an examination of final merits or the probable outcome of trial issues. The direction applies equally to appellate courts reviewing such orders.

The Court also clarified that its own order proceeds solely upon a prima facie appraisal of a serious dispute. It directed that nothing in the judgment be read as any expression of opinion on the construction of the 2004 Will, the validity of the 2008 Will, the plea of intestacy, the applicability of Section 14 of the Hindu Succession Act, 1956, or Section 89 of the Companies Act, 2013, the plea of undue influence or fraud, or the plea of self-acquisition. All such issues remain entirely for the trial court, to be decided on evidence uninfluenced by anything in this judgment. The Division Bench's observations on those merits questions, recorded in the impugned judgment, were directed to be effaced and not to bind the trial court.

Order

The Supreme Court allowed the appeals and set aside the Division Bench's judgment dated 20 March 2026 in FAO (OS) No. 96 of 2022 and the connected appeals. The interim injunction granted by the Single Judge on 29 July 2022 was restored and directed to continue until further orders of the Single Judge in the suit. The appellants were directed to continue to be bound by, and to renew if required, the undertaking as to damages furnished before the Single Judge. The Single Judge was directed to take up and dispose of CS (OS) No. 589 of 2021 as expeditiously as possible, preferably within eight months. There was no order as to costs.