Whether court should allow amendment of plaint if plaintiff comes to know about new documents from written statement of defendant?

IN THE HIGH COURT OF BOMBAY

Chamber Summons No. 551 of 2014 in Suit No. 2726 of 1994

Decided On: 02.09.2014

Sumer Builders Pvt. Ltd.
Vs.
Sadhana Textiles Mills Pvt. Ltd.

Hon’ble Judges/Coram: S.C. Gupte, J.
Citation: 2015(1) ALLMR 795

1. This Chamber Summons is taken out by the Plaintiff/Applicant for amendment of the plaint. The Schedule of the amendment annexed to the Chamber Summons seeks to add averments in respect of a purported declaration and deed of apartment, both dated 17 October 2002, executed between Defendant Nos. 1 and 5. The amendment further seeks to add prayers seeking inter alia a declaration of nullity of the purported declaration and deed of apartment. The facts of the case, leading to the present application, may be briefly stated as follows :-

2. The Plaintiff has filed the present suit for specific performance of an agreement for sale of land executed between Defendant No. 1 and the Plaintiff. During the pendency of the suit, the Plaintiff claimed to have learnt about a transaction between Defendant No. 1 and Defendant No. 5 contained in a letter of allotment dated 16 August 1996, by which Defendant No. 1 purported to create rights in favour of Defendant No. 5 in respect of the suit property. The Plaintiff, accordingly, sought to amend the plaint inter alia by seeking cancellation of the purported letter of allotment dated 16 August 1996. This Court, by its order dated 26 February 2014, allowed the Chamber Summons in terms of prayer clause (a) thereof, leaving all contentions of the parties, including the issue of limitation, open. This order has been accepted by Defendant No. 1 and not carried in appeal. The Plaintiff has, accordingly, amended the plaint impleading the Defendants as party Defendants to the present suit and seeking cancellation of the letter of allotment executed by Defendant No. 1 in favour of Defendant No. 5.

3. After his joinder to the suit, Defendant No. 5 filed a written statement, disclosing inter alia that there was a conveyance executed on 17 October 2002 by way of a declaration and deed of apartment in respect of the suit property. By the present Chamber Summons, the Plaintiff seeks to add the requisite averments challenging the purported declaration and deed of apartment, and seeks a declaration of nullity and cancellation thereof.

4. The Chamber Summons is opposed by Defendant No. 5 on the ground, firstly, that the declaration and deed of apartment are executed on 17 October 2002. The declaration and deed of apartment having being registered, the Plaintiff has had deemed notice of the execution and registration thereof. In the premises, it is submitted that any challenge to the declaration and deed of apartment on the date of the application of amendment, is clearly barred by the law of limitation. It is submitted that under Section 3 of the Transfer of Property Act, a person has a deemed notice of the instrument as from the date of registration thereof. It is submitted that under Article 59 of the Schedule to the Limitation Act, 1963, a suit for cancellation or setting aside of an instrument must be filed within three years of the Plaintiff coming to know of the facts entitling the Plaintiff to have the instrument cancelled or set aside. It is submitted that the Plaintiff is accordingly deemed to be in the knowledge of the instrument, which is claimed to be in breach of the Plaintiff’s right of specific performance in the suit herein, as on the date of the registration of the instrument. It is submitted that reckoning this date to be date for starting of the period of limitation, any application seeking cancellation of the instrument filed more than three years after such knowledge, is barred under Article 59. Learned Counsel for Defendant No. 5 relies on the judgments of the Supreme Court in the cases of Radhika Devi Versus Bajrangi Singh MANU/SC/0594/1996 : (1996) 7 Supreme Court Cases 486, Shivgopal Sah Alias Shiv Gopal Sahu Versus Sita Ram Saraugi MANU/SC/1672/2007 : (2007) 14 Supreme Court Cases 120 and Ashutosh Chaturvedi Versus Prano Devi Alias Parani Devi MANU/SC/7510/2008 : (2008) 15 Supreme Court Cases 610 in support of his submissions. These judgments are countered by the learned Counsel for the Plaintiff by citing the judgment of the Supreme Court in the case of Pankaja Versus Yallappa MANU/SC/0590/2004 : (2004) 6 Supreme Court Cases 415. It is submitted by the learned Counsel for the Plaintiff that granting of amendment is a matter of discretion for the Court and such discretion should be exercised having regard to the facts and circumstances of each case.

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5. Insofar as the Court’s jurisdiction to allow an amendment of the pleadings is concerned, our Courts have consistently held that the jurisdiction is wide enough to permit amendments even in cases where there has been substantial delay in filing amendment applications. The Courts have held that the dominant purpose of allowing the amendment is to minimize the litigation and therefore, in the facts and circumstances of the case, it is always open to the Court to disregard the delay and allow an amendment. The Supreme Court has considered the content and extent of this discretion in the case of Pankaja v/s Yallappa (supra). The Court in that case held as follows :-

” 12. So far as the court’s jurisdiction to allow an amendment of pleadings is concerned, there can be no two opinions that the same is wide enough to permit amendments even in cases where there has been substantial delay in filing such amendment applications. This Court in numerous cases has held that the dominant purpose of allowing the amendment is to minimise the litigation, therefore, if the facts of the case so permit, it is always open to the court to allow applications in spite of the delay and laches in moving such amendment application.

13. But the question for our consideration is whether in cases where the delay has extinguished the right of the party by virtue of expiry of the period of limitation prescribed in law, can the court in the exercise of its discretion take away the right accrued to another party by allowing such belated amendments.

14. The law in this regard is also quite clear and consistent that there is no absolute rule that in every case where a relief is barred because of limitation an amendment should not be allowed. Discretion in such cases depends on the facts and circumstances of the case. The jurisdiction to allow or not allow an amendment being discretionary, the same will have to be exercised on a judicious evaluation of the facts and circumstances in which the amendment is sought. If the granting of an amendment really subserves the ultimate cause of justice and avoids further litigation the same should be allowed. There can be no straitjacket formula for allowing or disallowing an amendment of pleadings. Each case depends on the factual background of that case.

15. This Court in the case of L.J. Leach and Co. Ltd. v. Jardine Skinner and Co. has held :(AIR p. 362, para 16)

“16. It is no doubt true that courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application. But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice.”

16. This view of this Court has, since, been followed by a three-Judge Bench of this Court in the case of T.N. Alloy Foundry Co. Ltd. v. T.N. Electricity Board. Therefore, an application for amendment of the pleading should not be disallowed merely because it is opposed on the ground that the same is barred by limitation, on the contrary, application will have to be considered bearing in mind the discretion that is vested with the court in allowing or disallowing such amendment in the interest of justice.

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17. Factually in this case, in regard to the stand of the defendants that the declaration sought by the appellants is barred by limitation, there is dispute and it is not an admitted fact. While the learned counsel for the defendant-respondents pleaded that under Entry 58 of the Schedule to the Limitation Act, the declaration sought for by the appellants in this case ought to have been done within 3 years when the right to sue first accrued, the appellant-plaintiff contends that the same does not fall under the said entry but falls under Entry 64 or 65 of the said Schedule of the Limitation Act which provides for a limitation of 12 years, therefore, according to them the prayer for declaration of title is not barred by limitation, therefore, both the courts below have seriously erred in not considering this question before rejecting the prayer for amendment. In such a situation where there is a dispute as to the bar of limitation this Court in the case of Ragu Thilak D. John v. S. Rayappan has held: (SCC p. 472)

“The amendment sought could not be declined. The dominant purpose of allowing the amendment is to minimize the litigation. The plea that the relief sought by way of amendment was barred by time is arguable in the circumstances of the case. The plea of limitation being disputed could be made a subject-matter of the issue after allowing the amendment prayed for.”

18. We think that the course adopted by this Court in Ragu Thilak D. John case applies appropriately to the facts of this case. The courts below have proceeded on an assumption that the amendment sought for by the appellants is ipso facto barred by the law of limitation and amounts to introduction of different relief than what the plaintiff had asked for in the original plaint. We do not agree with the courts below that the amendment sought for by the plaintiff introduces a different relief so as to bar the grant of prayer for amendment, necessary factual basis has already been laid down in the plaint in regard to the title which, of course, was denied by the respondent in his written statement which will be an issue to be decided in a trial. Therefore, in the facts of this case, it will be incorrect to come to the conclusion that by the amendment the plaintiff will be introducing a different relief. ”

6. Having regard to this wide discretion of the Court in the matter of allowing of amendments, it is necessary to be seen whether in the present case such discretion ought to be exercised in favour of the Plaintiff and the amendment proposed should be allowed.

7. This Court by its order dated 26 February 2014, in the first place, allowed the amendment of the plaint by (i) impleadment of Defendant No. 5 as a party Defendant to the present suit and (ii) inclusion of challenge to the transaction between Defendant No. 1 and Defendant No. 5 in respect of the suit property. The Plaintiff at that stage claimed to be aware of only the letter of allotment issued by Defendant No. 1 in favour of Defendant No. 5 purporting to create rights in respect of the suit property. The impleadment of Defendant No. 5 and incorporation of challenge to the transaction between Defendant Nos. 1 and 5 was allowed, by keeping the contentions of parties concerning the bar of limitation in respect of such impleadment and challenge, open. Thus, the Court has already been seized of a challenge to the creation of third party rights by Defendant No. 1 in favour of Defendant No. 5. In the backdrop of these facts, it may now be seen that the Plaintiff, by way of the present Chamber Summons, seeks to incorporate a further challenge to the creation of rights by Defendant No. 1 in favour of Defendant No. 5 by a purported declaration and deed of apartment. After the Chamber Summons was allowed and the plaint was amended, the Plaintiff claims to have learnt about these documents from the Written Statement of Defendant No. 5. With a view to claim effective relief in respect of the transaction between Defendant No. 1 and Defendant No. 5, which is claimed to be in breach of the Plaintiff’s right to specific performance of the suit agreement for sale, the Plaintiff has taken out the present Chamber Summons. Having regard to the fact that creation of rights by Defendant No. 1 in favour of Defendant No. 5 has already been impugned in the present suit, with a view to effectively grant relief to the Plaintiff, it is necessary that the present amendment proposed by the Plaintiff ought to be allowed. In the peculiar facts and circumstances of the present case, it is in the fitness of things that this Court exercises its discretion to allow the amendment in favour of the Plaintiff. If such amendment is not allowed, even if the Plaintiff were to succeed in its challenge to creation of rights by Defendant No. 1 in favour of Defendant No. 5, in the absence of the present amendment, no effective relief can be granted to the Plaintiff. Accordingly, the present Chamber Summons deserves to be allowed.

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8. The reliance placed by the learned Counsel for Defendant No. 5 on the judgments of the Supreme Court in the cases of Radhika Devi, Shivgopal Sah and Ashutosh Chaturvedi(supra), is besides the point. These cases affirm the proposition that the amendment of the plaint is not granted normally when accrued rights are taken away by amendment of the pleadings, though in an exceptional case, even according to these judgments, there is a discretion in the Court to allow the amendment. Secondly, what these cases affirm is that by allowing the amendment, the rights created in favour of the Defendant by lapse of time would stand defeated and that such a course is not permissible. As held by me above, having regard to the peculiar facts and circumstances of the case, the exercise of discretion to allow the amendment ought to be exercised in this case in favour of the Plaintiff. As long as the issue of limitation is kept open, as is done in the order of this Court whilst allowing the first amendment on 24 February 2014, it cannot be said that an accrued right in favour of the Defendant, as a result of an intervening period of limitation, is taken away. This right is certainly available to the Defendant, if his contentions regarding the bar of limitation are expressly kept open.

9. In this view of the matter, the Chamber Summons deserves to be allowed. Accordingly, the Chamber Summons is made absolute in terms of prayer clauses (a) and (b), subject to the plea of limitation being kept open.

10. Amendment to be carried out within a period of two weeks from today.

11. The amended copy of the plaint to be served on the Defendants.

12. Defendants will have liberty to file a further written statement, if any.

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