BPL Ltd. vs Indian Overseas Bank And Ors.

Aggrieved against the order passed by the Tribunal below permitting amendment of the O. A. filed by the bank, the appellant has filed the present appeal.

The bank in this case has filed the O.A. for the recovery of a sum of Rs. 1,59,01,213.55 with interest and cost. In the O.A., Appellant (defendant No. 6) was shown as guarantor to the extent of Rs. 9.75 crores. It is stated that the appellant, in fact, is not a guarantor as liability is established under Sec. 37 of the Negotiable Instruments Act, being the acceptor of the discounted bills. By mistake, the appellant was mentioned as guarantor and the application to amend the O.A. to rectify this mistake by amending paras 5.32(i) and 6(a) was accordingly filed.

The appellant filed Written Statement opposing the prayer. It is pointed out that the appellant had filed an application for dismissing the O.A. against it and in response thereto the Bank has come up with the plea to amend the O.A. which, as per the appellant, was a plea barred by limitation.

The Tribunal below has allowed the prayer of the Bank by observing that Bank is not claiming this amount from the appellant for the first time. The claim against the appellant is already contained in the O.A., but inadvertently it was stated that appellant was liable as guarantor. The bank is now wishing to rectify this mistake by pleading that appellant is liable as an acceptor of bill of exchange and thus this is not a new claim being raised against it.

The Tribunal has also noticed that the bank had produced the document to prove the bill of exchange which was duly accepted by the appellant. Thus, the Tribunal has observed that this amendment is not strange to the previous plea of the bank. The Tribunal below has thus allowed the amendment. The appellant has therefore filed this appeal.

In this appeal, the appellant had impleaded as many as six respondents. Notice in this appeal was issued on the submission made by the counsel for the appellant that this amendment has been allowed even when the evidence has been led in the O.A.

It is noticed that respondent No. 4 had died on 7th February, 2007, whereas, respondent No. 6 had died on 6th June, 2004. The appellant was, therefore, required to implead the LRs of the said respondents. Instead of moving an application for impleading the LRs of the said deceased respondents, the appellant moved an application for deleting the name of these respondents from the array of parties. The names of the said respondents were deleted from the array of parties at the risk and responsibility of the appellant.

In support of this plea, the counsel for the appellant has relied upon number of precedents. He would refer to the case of Akhilesh Kumar Verma v. Maruti Udyog Ltd. & Ors., I.A. No. 10706/2007 in CS (OS) 1917/1995, decided on 21st July, 2008 and reported as. In this case, application for amendment was moved by plaintiff seeking to incorporate facts regarding salary structure of employees at different levels working with defendant No. 1 to show his promotional prospects during the year 1992 to 2004. The plaintiff had also sought to incorporate facts regarding his estimated annual package on promotion. The defendant objected to the said amendment urging that no amendment could be allowed after commencement of trial. The plaintiff failed to show whether he had the knowledge of such facts or not at the initial stage of the case. He could neither give any reason why the facts sought to be introduced by amendment not pleaded earlier nor shown that plaintiff could not have known such facts despite due diligence. In this background the amendment prayed for the plaintiff was not allowed. The ratio of law which would emerge from this case is that an amendment can be allowed after the trial has commenced, if the Court comes to the conclusion that despite due diligence, the parties could not have raised the matter before the commencement of the trial.

Reference is then made to the case of J. Samuel & Ors. v. Gattu Mahesh & Ors., (2012) 2 S.C.C. 300. The Supreme Court in this case has reiterated the principle of due diligence for a party to seek amendment. Explaining the meaning and significance of due diligence, it is observed that this provides test to determine whether Court discretion to allow amendment should be exercised or not. Omission of specific plea mandatorily required by statute to be stated in plaint was held amounted to negligence and lack of due diligence.

Amendment sought to incorporate such a plea on the ground that it was missed due to typographical mistake was not accepted. The Court in this case has also held that on a proper interpretation of Rule 17 Order 6 the party has to satisfy the Court that it could not have discovered that ground which was pleaded by amendment, in spite of due diligence. It is held that no doubt Rule 17 confers power on the Court to amend the pleading at any stage of the proceedings, but the proviso restricts the power once trial has commenced. Unless the Court satisfies itself that there is a reasonable cause for allowing the amendment, normally the Court has to reject such a request.

In S. Manoharan v. Karunamurthy, (2013) 7 M.L.J. 328 : 2013 (6) C.T.C. 801, the Hon'ble Madras High Court has considered the aspect of amendment of plaint seeking to introduce a new alternative relief. It is observed that Court in such case has to see as to whether such new or alternative relief sought to be introduced by amendment is barred by limitation or not. Reference is then made to the cases of Janet Anne Woolqar James v. Jaypee Hotel Ltd., 83 (2000) D.L.T. 277 andSatya Prakash Gutpa v. Vikas Gupta, R.F.A. (O.S.) No. 23/2010 decided on 24lh January, 2011. In Janet Anne Woolquar James case amendment in the plaint seeking enhancement of amount claimed in the suit was held likely to change the quantity of relief by entitling the plaintiff to get the double of amount and hence the amendment was not allowed. The judgment in the case of Satya Prakash Gupta (supra) seems to have dealt with the aspect of limitation and thus may not be relevant.

On the other hand, the counsel for the respondent bank has placed before me as many as 11 judgments. All of these judgments deal with the case where the Court has considered and held that it will not be proper that an innocent litigant, after doing everything in his power to effectively participate in his proceedings by entrusting his case to the Advocate should be made to suffer for the inaction, deliberate omission or misdemeanour of his agent. In majority of these cases the absence of the counsel had led to the orders being passed which were challenged where observations to this effect have been so recorded. In this regard, I have considered a few of these judgments which may appear relevant to decide the issue. Accordingly, I may not be referring to all these judgments, but would take note of the ratio of law in the cases of Rafiq v. Munshilal, A.I.R. 1981 S.C. 1400; Lachi Tewari v. Director of Land Records, A.I.R. 1984 S.C. 41 and Tahil Ram Issardas Sadrangani v. Ramchand Issardas Sadrangani, A.I.R. 1993 S.C. 1182.

The plea by the counsel for the bank is that it may be a fault of the bank that it did not take notice of this mistake all this while but mistake could be noticed only on the death of the earlier counsel by a new counsel engaged and then it was realised that appropriate pleading have not been made insofar as the liability of the appellant was concerned. The counsel accordingly moved this application seeking amendment of the O.A. which the been allowed having regard to these peculiar facts.

I have considered the submissions made before me. Before embarking upon the discussion on the basis of respective pleas raised before me, it may need a notice at the outset that the Tribunals constituted under the RDDBFI Act are not bound by the procedure laid in the Code of Civil Procedure. The Tribunals are guided by the principles of natural justice subject to other provisions of the Act and the rules. The Tribunals and Appellate Tribunals even have powers to regulate their own procedure. That being the position, the provisions of Order 6, Rule 17 which have been pressed into service by the appellant in support of its plea may not be the regulatory guide to consider and decide the pleas raised by the counsel for the appellant.

The perusal of the application filed by the bank seeking amendment would also show that the same was filed with the support of Section 19(25) of the RDDBFI Act for amendment in the prayer clause of the O.A. Even if one was to see Order 6, Rule 17 regulating the amendment of pleading, it would be seen that the Court at any stage of the proceeding can allow either party to alter or amend its pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may I necessary for the purpose of determining the real questions in controversy between the parties. The proviso thus say that no application for amendment shall be allowed after the trial has commenced, unless the Court comes to the conclusion that despite due diligence, the party could not have raised the matter before the commencement of trial.

If the liability of the defendant is on account of having accepted the bill of exchange and it was wrongly pleaded by the appellant that he was a guarantor, then it can be said that amendment to bring the liability of the appellant may be necessary for the purpose of deciding the real issues in controversy between the bank and the appellant. It can thus be taken that if this amendment had been sought at the initial stage of the pleadings, the same could have easily been allowed being within the purview of Order 6, Rule 17 . The objection primarily is that this amendment is now sought after delay when the trial has commenced and so the proviso under Order 6, Rule 17 would come into play. That would be situation if the provisions of CPC are to apply to the proceeding under the RDDBFI Act. Even if that be so, what is to be seen is if the bank could or could not have raised the matter before the commencement of trial in spite of due diligence Otherwise, it cannot be disputed that all amendment be allowed which are necessary for determining the issues in controversy in the suit.

This is not a case where amendment is going to alter or substitute the cause of action on the basis of which the original lis was raised. The Hon'ble Supreme Court in the case of Revajeetu Builders & Developers v. Narayanaswamy & Sons, (2009) 10 S.C.C. 84, has observed that governing principle in exercise of discretionary power by a Court in relation to allowing amendment is that it must be exercised judiciously and with great care. It is further observed that the Court must not refuse bona fide, legitimate, honest and necessary amendment whereas it should never permit mala fide, worthless and/or dishonest amendments. Basic test, as per the Court, which must govern grant or refusal of amendment is whether such an amendment is necessary for determination of real question in controversy or for proper and effective adjudication of the case. No doubt, the Court has to consider potentiality of prejudice or injustice which is likely to be caused to the other side by amendment and amendment should not cause such prejudice to the other side which cannot be compensated adequately in terms of money. Some other factors/principles to be kept in mind while granting or refusing the amendment as have been reiterated in this judgment are as under:

"(1) whether the amendment sought is imperative for proper and effective adjudication of the case;

(2) whether the application for amendment is bona fide or mala fide;

(3) the amendment should not cause such prejudice to the other side which cannot be compensated adequately in terms of money;

(4) refusing amendment would in fact lead to injustice or lead to multiple litigation;

(5) whether the proposed amendment constitutionality or fundamentally changes the nature and character of the case; and

(6) as a general rule, the Court should decline amendments if a fresh suit on the amended claims would be barred by limitation on the date of application."

Even otherwise, based on a difference judgment, the following principle can be noted which should be kept in view while dealing with the application.

(i) All amendments should be allowed which are necessary for determination of-the real controversies in the suit;

(ii) The proposed amendment should not alter and be a substitute of the cause of action on the basis of which the original lis was raised.

(iii) Inconsistent and contradictory allegations in negation to the admitted position of fact or mutually destructive allegations of facts would not be allowed to be incorporated by means of amendment;

(iv) Proposed amendment should not cause prejudice to the other side which cannot be compensated by means of costs;

(v) Amendment of a claim or relief barred by time should not be allowed;

(vi) No amendment should be allowed which amounts to or results in defeating a legal right to the opposite party on account of lapse of time;

(vii) No party should suffer on account of the technicalities of law and the amendment should be allowed to minimise the litigation between the parties.

(viii) The delay in filing the petitions for amendment of the pleadings should be properly compensated by costs;

(ix) Error or mistake, which if not fraudulent, should not be made the ground for rejecting the application for amendments of pleadings.

Broadly stating, the principles that can be culled from various judgments is that bona fide amendments, vital for adjudication of the real question in controversy between the parties, should be allowed however negligent the first omission and howsoever delayed the proposed amendment is, if the opposite party can be compensated with costs and other terms to be imposed in the order. When the amendment sought is not necessary for proper adjudication of the case, it ought to be refused. Amendment should not be refused on technical grounds as it is the discretion of the Court before which the application for amendment comes up. One must keep note of the legal position that the rules of procedure are intended for administration of justice and a party should not be refused just relief, merely because of some mistake, negligence, inadvertence or even infraction of the rules of procedure. It has also been held that there is no rule limiting amendment to accidental errors and it is immaterial whether the error sought to be amended was accidental or not. A mistake by an advocate in failing to appreciated written acknowledgement of adoption was one such mistake allowed to be remedied by amendment. There is no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to be corrected if it can be done without injustice to the other party. A delay in making an application for amendment may be ground for doubting the genuineness of the acknowledgement, but not good ground for refusing the application.

Having considered the prayer in the case in the light of the legal principles noticed above, it is seen that the amendment sought is for proper and effective adjudication of the case against the appellant. This amendment is bona fide and is not actuated with mala fide. The amendment is not such which will prejudice the other side or the appellant as it is based on a document and such plea could not be brought in because of the mistake by the advocate for which the bank cannot be made to suffer. It will otherwise lead to loss of public money. Refusing amendment in the facts noticed may lead to injustice. If delay is being pleaded as ground to oppose the amendment, which indeed is the ground pressed by the appellant, then alternative could have been compensation which is not prayed.

In view of the detailed discussion above, I find that the Tribunal below has rightly exercised its discretion in permitting the amendment of this O.A. No case is made out for calling for interference in exercise of its discretion by the Tribunal below. Finding no merit in the appeal, the present appeal is dismissed.