Status Quo Ante Means Restoration, Can't Be Ordered Lightly: Andhra Pradesh High Court

The Andhra Pradesh High Court has recently set aside an ad interim order passed during arbitration proceedings that directed restoration of possession of leased premises, holding that such relief amounts to a mandatory injunction and cannot be granted lightly.

A Division Bench of Justice Ravi Nath Tilhari and Justice Maheswara Rao Kuncheam said courts must record clear and justifiable reasons before directing restoration of an earlier state of affairs.

"Such orders of „status quo ante‟ are not to be passed lightly and certainly not for no reasons assigned in the order. The order must contain justifiable reasons for an ad-interim order in the nature of mandatory injunction", it said.

The dispute involves the Visakhapatnam Port Authority and two private companies, Vishwanadh Avenues (India) Private Limited and Vishwanadh Sports and Convention Private Limited. The Port Authority had granted them a ten-year lease to operate the Kalvani A/c Auditorium at the Nehru Sports and Cultural Complex in Visakhapatnam.

Alleging violations of lease conditions, the Port Authority issued show cause notices, invoked the bank guarantees, terminated the lease and took back possession of the premises.

The two companies then approached the Commercial Court at Visakhapatnam under Section 9 of the Arbitration and Conciliation Act, seeking interim protection. While the petitions were pending, the Commercial Court directed the parties to maintain status quo ante as on the date of filing of the petitions. The order was extended from time to time, prompting the Port Authority to move the High Court.

The High Court noted that on the date the impugned order was passed, the Port Authority was already in possession. A direction to maintain status quo ante in such circumstances, the Bench said, would disturb the existing position and effectively compel restoration, making it an ad-interim mandatory injunction.

“Status quo ante‟ would certainly mean the state of things before the things existing at a given point of time. To maintain "status quo ante‟ is to disturb the existing state of things and to restore the previous state of things,” the court observed.

The bench found that the Commercial Court had recorded no reasons for granting such coercive interim relief. There was also no prima facie finding explaining why restoration was warranted.

The High Court stressed that reasons are not a formality, particularly when an order alters possession.

"The reasons enable the aggrieved party approaching the higher court to demonstrate that such reason was either no reason in the eye of law or was not justified reason for reaching the conclusion. The superior court may also know the actual reason for passing of the order and to reach its conclusion, whether a case for interference is made out or not. A nonspeaking order or an order without justifiable reasons cannot be sustained, may it be a judicial, quasi judicial or even an administrative order", the court said.

The court rejected attempts to defend the order in question by supplying reasons during the appeal, including arguments relating to the legality of taking possession. An order, it said, must stand or fall on the reasons recorded in it and cannot be supplemented later.

The bench said it would not get into disputed questions of fact, including whether the lease terms were breached or whether possession was taken lawfully, as those issues require factual examination and are already pending before the Commercial Court.

Since the impugned order recorded no reasons and did not even contain a prima facie finding to justify restoration, the High Court set aside the ad interim order.