M.S. Basi vs State Bank Of India And Ors.

S.N.H. Zaidi, J

This appeal impugns the order dated 2.2.2012 passed by DRT-II, Delhi in O.A. No. 38/98, whereby the application (I.A. No. 923/2011) filed by defendant No. 4 (appellant herein) for amendment of his written statement has been dismissed. The facts giving rise to this appeal, in brief, are that the applicant/respondent bank had filed O.A. No. 38/98 before the DRT Delhi in February 1998 for the recovery of Rs. 89,21,25,119.08 together with pendent lite and future interest against defendants 1 to 4, who are respondent Nos. 2, 3, 3(b) and the appellant herein, on the ground that defendant No. 1 company had availed credit/bank guarantee facilities from the bank, but failed to repay/clear the outstanding in the account and defendants 2 to 4, the Directors of the company, stood guarantors in their personal capacity for the due repayment of the outstanding clues. Defendants 1 to 4 filed a joint written statement dated 19.5.1999 to that O.A. through duly constituted attorney. The DRT finally disposed of/allowed the O.A. vide order dated 26.5.1999 and issued an R.C. in pursuance thereof on the basis of which proceedings started before the RO. The defendants challenged the said order in Appeal No. 155/2000 on the ground that the final order made by the DRT was without recording the evidence. This Appellate Tribunal, while disposing of the appeal by order dated 29.9.2010, instead of remanding the matter to the DRT for recording the evidence, directed the parties to file their evidence before the Appellate Tribunal itself as a court of first instance. The order of this Tribunal was, however, assailed in WP(c) No. 7758/2010 before the Hon'ble Delhi High Court and the Hon'ble Court disposed of the said Writ Petition vide order dated 5.9.2011 as per the agreement of the parties and directed the parties to lead evidence before the DRT. The defendant No. 4 then filed an application (I.A. No. 923/2011) for amendment of the written statement on 13.12.2011 and the learned DRT dismissed that application by the impugned order. Feeling aggrieved, this appeal has been preferred by defendant No. 4.

Reply to the appeal has been filed by the respondent bank.

I have heard the counsel for the appellant and respondent No. 1 as the counsel for respondent No. 2, the borrower company, adopted the arguments of the appellant.

Mr. Dhrupad Das, the learned counsel appearing on behalf of the appellant, submitted that the learned Tribunal below, while dismissing the amendment application, has observed that the defendant/appellant wanted to raise a new plea that the guarantee was void and if the guarantee was void, that plea should have been taken at its earliest opportunity, i.e., in the written statement itself. Mr. Das pointed out that though the O.A. was filed in February 1998, its notices were served upon the defendants only in July and September then the defendants filed an application for the production of the documents, against which the applicant bank filed the reply in May 1999 and the written statement was also filed by the defendants on 19.5.1999. According to Mr. Das, as the written statement was filed within a short period, therefore, all the pleas could not be taken in it. He also pointed out that against the final order of the DRT dated 26.5.1999 the matter remained pending in appeal before this Tribunal and High Court from 1999 till 2011 and after the matter was returned from the High Court it came before the ORT for the first time on 29.9.2011 but was adjourned to 16.11.2011 on the joint request of the parties' counsel and thereafter it was adjourned to 13.12.2011, when the amendment application was filed and as such the pendency of the matter since 1998 or the delay in disposal of the matter cannot be attributed to the appellant. Mr. Das, placing reliance on the judgement of Hon'ble Supreme Court in North Eastern Railway Administration, Gorakhpur v. Bhagwan Das (0) by L.Rs., AIR 2008 SC 2139, submitted that only legal pleas qua the guarantee allegedly 'executed by defendant No. 4/appellant was sought to be introduced though the proposed amendment, which was necessary for determining the real question in controversy between the parties.

Mr. S.L. Gupta, learned counsel for the first respondent bank, on the other hand, submitted that the appeal against the final order was filed by the defendants only on the ground that the O.A. was disposed of without recording evidence, and at no point of time defendant/appellant either filed any application for amendment in the written statement or advanced any argument that he wanted to, amend the same during the pendency of the appeal. Mr. Gupta further submitted that in the Writ Petition before the High Court also the only grievance of the defendant/appellant was that the matter be sent to the DRT for recording evidence instead of recording the same by the DRAT. He also submitted that the bank had also agreed for the recording of the evidence before the DRT with the understanding that after recording/considering the evidence, the DRT would return the decision and as such the Hon'ble High Court had given opportunity to the parties to lead their evidence and the DRT was directed for the disposal of the matter within a period of six months. According to Mr. Gupta, amendment of the written statement, as prayed for by the defendant/appellant, would be against the order of the Hon'ble High Court.

I have considered the submissions of the parties' counsel and perused the record. The written statement was filed by the defendants on 19.5.1999 and the O.A. was finally disposed of by the DRT on 26.5.1999, i.e., on the 7th day of the filing of the written statement. Thereafter, the matter remained pending in appeal before this Tribunal as well as in Writ Petition before the Hon'ble High Court up to September 2011. During the pendency of the matter before the Appellate Tribunal there was no occasion for the amendment of the written statement as the main question raised in the appeal was the disposal of the O.A. without recording the evidence and it was not being pursued on any other ground.

A perusal of the amendment application reveals that besides taking the plea against the legality of the guarantee and claiming discharge from the said guarantee, the defendant/appellant has also stated the provisions of the Contract Act in support of his plea, which admittedly is not permissible in the pleadings. In my opinion, an application seeking amendment in the pleadings cannot be rejected on the ground that it contains the provisions of law and disallowing the amendment relating to law, the necessity of the remaining amendment can be considered. The learned DRT does not appear to have considered whether or not the proposed amendment was necessary for determining the controversy between the parties.

The Hon'ble Supreme Court in North Eastern Railway Administration, Gorakhpur v. Bhagwan Das (D) by L.Rs. (supra), in paragraph 15 of the judgement has held that:

Insofar as the principles which govern the question of granting or disallowing amendments under Order 6 Rule 17 C.P.C. (as it stood at the relevant time) are concerned, these are also well settled. Order 6 Rule 17 C.P.C. postulates amendment of pleadings at any stage of the proceedings. In Pirgonda Hongonda Patial v. Kalgonda Shidgonda Patil & Ors (AIR 1957 SC 363) which still holds the field, it was held that all amendments ought to be allowed which satisfy the two conditions: (a) of not working injustice to the other side, and (b) of being necessary for the purpose of determining the real questions in controversy between the parties. Amendments should be refused only where the other party cannot be placed in the same position as if the pleading had been originally correct, but the amendment would cause him an injury which could not be compensated in costs (Also see: Gajanan Jaikishan Joshi v. Prabhakar Mohanlal Kalwar [(1990) 1 see 166)])

In the light of the above observation, I am convinced that the learned DRT has committed error in disallowing the amendment application as the proposed amendment was satisfying the aforesaid tests because it was neither causing injustice to the respondent bank nor it could be said that it was not necessary for the determination of the questions in controversy. Consequently, the appeal is entitled to be allowed and the order impugned, is liable to be set aside.

The appeal is accordingly allowed and the impugned order is set aside. The amendment application (I.A. 923/2011) filed by the defendant appellant is allowed without such portion thereof which contains the provisions of law subject to payment of Rs. 5000/- as cost, which shall be deposited with Delhi Legal Services Authority. Amendment be carried out in the written statement after payment of cost within three weeks from today and a fresh amended copy of the written statement be also filed within the said period. Copy of this order be furnished to the parties as per law and be also sent to the concerned DRT forthwith.