Saraswat Co Operative Bank Limited vs M/s Royale Builders And Developers

The petitioner-Bank initially did not appear before the Commercial Court despite service of the suit summons and was accordingly placed ex parte. The order placing the petitioner ex parte was subsequently recalled, and the petitioner was permitted to file its written statement. Thereafter, the petitioner filed an application seeking amendment of the written statement, which came to be allowed by the Commercial Court. An application was filed under Order VII Rules 11(a) and (d) of the CPC, seeking rejection of the plaint. Thereafter, the petitioner proposed a settlement, which, however, was not reported to the Commercial Court. The application filed under Order VII Rules 11(a) and (d) of the CPC came to be rejected. The plaintiff-respondent proceeded to record its evidence, and documents were marked in evidence. Subsequently, certain applications were filed, to which the petitioner-Bank filed its objections. At this stage, the impugned application seeking amendment of the written statement was filed, raising a plea that the suit was barred for non-compliance with Section 115 of the Multi-State Co-operative Societies Act, 2002 (for short, ‘the Act’). The Commercial Court, by the impugned order, rejected the said application.

It is submitted that the provisions of Order VI Rule 17 of the CPC, insofar as they relate to amendment of the written statement, are required to be considered liberally, even where the proposed amendment seeks to introduce new pleadings or pleadings inconsistent with the earlier pleadings in the written statement. In support of the said submission, reliance is placed on the judgment of the Hon’ble Supreme Court in Usha Balashaheb Swami and Others v. Kiran Appaso Swami and Others^{11.(2007) 5 SCC 602}.

Learned Senior Counsel submits that Section 115 of the Act is not applicable to every suit instituted against a Multi-State Co-operative Society unless the parameters stipulated therein are shown to be prima facie applicable. It is submitted that an amendment to the written statement, after commencement of the trial, cannot be permitted unless the requirement of due diligence at the time of filing the written statement is established. It is further submitted that amendment of the written statement cannot be claimed as a matter of right. Learned Senior Counsel also submits that the amendment now sought would seriously prejudice the rights accrued to the respondent and would have a bearing on the question of limitation. In support of the above submissions, learned Senior Counsel places reliance on the judgment of the Hon’ble Supreme Court in Basavaraj v. Indira and Others^{22.(2024) 3 SCC 705}.

It is also submitted that the notice contemplated under Section 115 of the Act is not mandatory, but is merely procedural in nature. It is submitted that, by not raising the issue of compliance with Section 115 of the Act at the threshold, the petitioner is deemed to have waived such requirement. In support of the said submission, reliance is placed on the judgment of the Hon’ble Supreme Court in State of A.P. and Others v. Pioneer Builders^{33.(2006) 12 SCC 119}.

Whether, in the facts and circumstances of the present case, amendment of the written statement is permissible?

Whether a prima facie case is made out for invoking Section 115 of the Multi-State Co-operative Societies Act, 2002?

The petitioner is a statutory body, governed by and regulated under an enactment. It cannot be said that the petitioner was unaware of the statutory protection available to it under the enactment in the event of a suit being instituted against it. If a suit is instituted in breach of such statutory protection, ordinarily, the first line of defence would be to question the maintainability of the suit on the ground of such protection or non-compliance with the statutory requirement.

In the present case, the petitioner has filed a written statement running into 18 pages and containing 52 paragraphs. In paragraph 3 of the written statement dated 10.12.2024, the maintainability of the suit has been questioned, though not with reference to Section 115 of the Act. Till the filing of the impugned application, it was not even pleaded that the petitioner is governed by the Multi-State Co-operative Societies Act. Unless such foundational averment is made, it would not be open to the petitioner to subsequently plead non-compliance with Section 115 of the Act. No doubt, on a plain reading of Section 115 of the Act, the requirement contemplated therein is mandatory. However, no reasons are forthcoming as to why such a plea was not raised at the earliest stage. The affidavit accompanying the application also does not state that, despite due diligence, the requirement under Section 115 of the Act could not be pleaded earlier.

The petitioner was placed ex parte on 14.10.2024. On 05.11.2024, an application was filed seeking permission to file vakalat and to recall the order placing the petitioner ex parte. By order dated 03.12.2024, the application filed under Order IX Rule 7 of the CPC came to be allowed, the order placing the petitioner ex parte was set aside, and the petitioner was permitted to file its written statement. The written statement came to be filed on 10.12.2024. Thereafter, certain applications were filed and adjudicated upon. Both sides filed statements of admission and denial of documents. Issues were framed.

On 12.02.2025, the plaintiff filed its list of witnesses. On the said date, there was no representation on behalf of the petitioner, nor had the petitioner furnished its list of witnesses. Thereafter, the petitioner filed an application under Order XIV Rule 5 of the CPC, pursuant to which an additional issue came to be framed. Subsequently, a few more applications were filed and came to be disposed of.

On 18.03.2025, the petitioner filed an application under Order VII Rule 11(a) and (d) of the CPC. In the meantime, the petitioner proposed settlement, resulting in deferment of consideration of the said application, which ultimately came to be rejected on 21.11.2025. On 30.01.2026, the plaintiff filed an application under Order XI Rule 4 of the CPC seeking production of documents. Thereafter, on 15.04.2026, the defendant filed an application under Order VI Rule 17 of the CPC seeking amendment of the written statement, which came to be rejected by the impugned order.

The above dates are relevant for examining the bona fides of the petitioner in conducting the proceedings. The sequence of events referred to above would weigh against the petitioner, particularly when the petitioner appears to have made repeated attempts resulting in delay in the progress of the suit. As held by the Hon’ble Supreme Court in Basavaraj (supra), it is not only the necessity for the amendment but also the due diligence exercised in seeking to raise the pleadings proposed to be introduced by way of amendment that is required to be established. In the present case, there is neither any pleading nor any averment by the petitioner explaining the due diligence exercised in seeking the proposed amendment.

Amendment of the written statement cannot be claimed as a matter of right and cannot be permitted where the proposed amendment would cause prejudice to the other side which cannot be adequately compensated in terms of money. In the present case, permitting the proposed amendment with reference to Section 115 of the Act would undoubtedly cause prejudice to the respondent. Hypothetically, if the plea regarding the maintainability of the suit on the ground of non-compliance with Section 115 of the Act had been raised in the written statement and the same had been adjudicated upon, depending upon the finding regarding the applicability of the said provision, the suit could have been re-presented after complying with the statutory requirement. At this stage, if such a plea is permitted to be raised and it is ultimately held that Section 115 of the Act is applicable, the question of limitation for re-presentation of the suit after compliance with Section 115 of the Act would arise.

The prolonged adjournments and the manner in which the proceedings have progressed, particularly at the instance of the petitioner, coupled with the failure to raise the plea at the earliest opportunity, do not demonstrate bona fides in seeking the proposed amendment. The attempt to raise the plea of a statutory bar at this belated stage, instead of raising it at the threshold, has the effect of further delaying the proceedings and would cause prejudice to the respondent, which cannot be adequately compensated in terms of money.

Even assuming that the applicability of Section 115 of the Act is to be examined prima facie, the affidavit accompanying the application for amendment does not even remotely plead as to how the said provision is attracted to the present suit. The amendment has been sought on the premise that every suit instituted against the petitioner would attract Section 115 of the Act. Such an understanding of the provision is impermissible.

As per a plain reading of Section 115 of the Act, the bar against institution of a suit without issuance of notice is attracted where the issues relate to the constitution, management or business of the Society. If the transaction in question is examined in brief, the petitioner had notified certain properties for public auction for recovery of its loan. The respondent participated in the public auction and made certain deposits. As the auction proceedings did not fructify, the deposit was not refunded, resulting in institution of the suit.

The transaction relating to refund of the amount deposited pursuant to the auction proceedings cannot, prima facie, be said to relate to the constitution, management or business of the Society. In the absence of a prima facie case establishing the applicability of Section 115 of the Act, the proposed amendment seeking to introduce a plea with reference to the said provision need not be entertained, particularly when the circumstances do not disclose bona fides in seeking such amendment. Perhaps for this reason, the applicability of Section 115 of the Act was not pleaded in the first instance, when the maintainability of the suit was questioned on other grounds.

No doubt, the applicability of Section 115 of the Act is ultimately a matter for consideration by the Commercial Court. However, when such an amendment is sought without demonstrating bona fides and when the circumstances indicate that it is intended to delay adjudication of the suit and would cause serious prejudice to the rights of the other party, the Commercial Court was justified in rejecting the application for amendment.

The reliance placed by the learned counsel for the petitioner on the judgment in Usha Balashaheb Swami (supra), to contend that a liberal approach is required to be adopted while considering an application for amendment of the written statement, is not applicable to the facts and circumstances of the present case. In the said judgment, the Hon’ble Supreme Court has held that, in cases involving amendment of a written statement, the Courts may adopt a more liberal approach, even where the amendment has the effect of introducing a new ground of defence, substituting or altering a defence, or taking inconsistent pleas. However, such an amendment remains subject to the other requirements governing amendment of pleadings, including the requirement of due diligence and absence of prejudice to the other side.

Considering the question of prejudice likely to be caused to the other party, learned Senior Counsel appearing for the respondent has placed reliance on the judgment of the Hon’ble Supreme Court in Pioneer Builders (supra), to contend that the requirement of notice under Section 115 of the Act can be waived. The said judgment was rendered in the context of Section 80 of the CPC. However, the language of Section 80 of the CPC and Section 115 of the Act is not identical so as to extend the same interpretation to the latter provision. In the absence of any express provision permitting waiver in the circumstances contemplated under Section 115 of the Act, such an inference cannot be drawn, as it would amount to rewriting the statutory provision, which is impermissible.

As held by the Bombay High Court in Saraswat Co-operative Bank Ltd. & Anr. v. Mulani Associates^{44.2026 SCC OnLine Bom 7462}, the transaction in question cannot be held to be one covered under Section 115 of the Act. The Bombay High Court, in the said judgment, has held that every activity or incident, whether implied or incidental to the core business of the Society, cannot be held to attract Section 115 of the Act. For Section 115 to be attracted, the issue involved in the suit must necessarily relate directly to the constitution, management or business of the Society. In the present case, it is not even pleaded that the sale of properties by public auction constitutes the business of the petitioner-Society.

The Commercial Court, under the impugned order, proceeded to hold that non-compliance with Section 115 of the Act is a pure question of law and, therefore, need not necessarily be pleaded. The Commercial Court rightly held that, when the petitioner is a Multi-State Co-operative Bank to which the provisions of Section 115 of the Act are applicable, the bar against institution of a suit was well within the knowledge of the petitioner and the omission to raise such a plea cannot be attributed to mere oversight. Such omission or oversight cannot be accepted, particularly when the proposed amendment would prejudice the rights of the other party and is sought at a belated stage without demonstrating bona fides.