M/S. South Konkan Distilleries & Anr vs Prabhakar Gajanan Naik & Ors

South Konkan Distilleries & Anr. ...Appellants

VERSUS

Prabhakar Gajanan Naik & Ors. ...Respondents

JUDGMENT

TARUN CHATTERJEE,J.

1. Leave granted.

2. This appeal is directed against the judgment and order

dated 20th of October, 2006 passed by the High Court of

Bombay at Goa in Writ Petition No.463 of 2003 whereby

the High Court had affirmed the order of the trial court

dated 5th of February, 2001 by which the trial court had

rejected the application for amendment of written

1 statement and the counter claim of the

defendants/appellants.

3. The facts leading to the filing of this appeal are stated in a

nutshell :-

Prabhakar Gajanan Naik has filed a suit for

dissolution of partnership firm wherein the appellant

No.1, being defendant No.1 in the suit, was the

partnership firm and the appellant No.2, who is

defendant No. 4, was a partner of the said firm. In

the said suit for dissolution of partnership, the

appellants by their written statement disputed the

existence of such partnership and had taken a plea

that by way of a family arrangement, the

defendants/appellants were allowed to carry on the

business of setting up South Konkan Distilleries. In

their written statement, the appellants also claimed

that in view of various letters addressed to various

Banks,the said distillery could not be commenced as

scheduled in May, 1986 and as a result thereof, the

appellants suffered heavy loss. Accordingly, in the

2 written statement, a counter claim of Rs.52 lakhs

was made against the original plaintiff/respondent.

The said written statement was, however, filed on

17th of June, 1987. The counter claim of the

appellants was based on a notice of the learned

counsel dated 23rd of October, 1986. In 2000, i.e.,

after thirteen and a half years, the appellants filed an

application for amendment of the written statement

and the counter claim seeking enhanced amount. In

the application for amendment, the appellants had

alleged that as they were suffering loss of Rs.

20,000/- per day from the month of June, 1987,

when the original written statement was filed, the

counter claim was made only upto to the date of

filing of the written statement and by seeking an

amendment of the same, they were only claiming a

sum of Rs.20,000/- per day from June, 1986 till

November, 2000 which would be less than Rs.25

lakhs. This application for amendment of the written

statement and the counter claim, filed by the

3 appellants, was opposed by the original

plaintiff/respondent on the ground that the prayer

for amendment of the written statement and the

counter claim was clearly barred by the law of

limitation. The trial court by its order dated 5th of

February, 2001 came to the conclusion that as the

cause of action arose in 1986, the prayer for

amendment of the written statement and the counter

claim for enhanced damages, as noted herein earlier,

was clearly ex facie barred by the law of limitation.

Accordingly, the trial court rejected the application

for amendment of the written statement and the

counter claim filed by the appellants and aggrieved

by the aforesaid order of rejection, a writ petition

being W.P.No.463/2003 was filed at the instance of

the appellants which was also rejected by the

impugned order of the learned Judge of the High

Court against which a special leave petition was filed

and on grant of leave, the same was heard in

presence of the learned counsel for the parties.

4

4. We have heard the learned counsel for the parties and

examined the application for amendment of the written

statement, the counter claim and also the original written

statement including the plaint filed by the respondents in

the present suit. At this stage, we may record that this

Court while issuing notice on 12.2.2007 passed the

following order:

"Issue notice limited to the question as to whether the amendment could have been allowed with some modification so as to grant relief to the petitioner only to the extent of amount not barred by limitation as on the date of the application."

5. The learned counsel for the parties appearing

before us, however, submitted that in the fittest of

things, this appeal may be decided whether the

amendment of the written statement and the counter

claim would at all be allowed as the law of limitation

would stand in the way. Such being the stand taken

by the learned counsel for the parties, we had taken

5 up the question at issue raised before us. The

question is whether an amendment of the written

statement and the counter claim could be allowed,

which was filed after thirteen and a half years of

filing of the written statement and the counter claim,

if the claim was already barred by the law of

limitation.

6. As noted herein earlier, the High Court as well

as the trial Court rejected the application for

amendment of the written statement and the counter

claim on the ground that as the cause of action had

arisen in 1986, the claim of the appellants sought to

be amended by filing the application for amendment

of the written statement and the counter claim was

clearly ex-facie barred by the law of limitation.

7. Having heard the learned counsel for the parties

and considering the nature of amendment and the

length of time after which the prayer for amendment

was made by the appellants in the written statement

and the counter claim, we are of the view that the

6 High Court as well as the trial court had exercised

their jurisdiction in a proper manner in rejecting the

application for amendment of the written statement

and the counter claim.

8. Before we deal with the orders of the courts

below, as to whether the application for amendment

of the written statement and the counter claim was

rightly rejected or not, let us consider the laws on the

question of allowing or rejecting a prayer for

amendment of the pleadings when the plea of

limitation was taken by one of the parties in the suit.

It is well settled that the court must be extremely

liberal in granting the prayer for amendment, if the

court is of the view that if such amendment is not

allowed, a party, who has prayed for such an

amendment, shall suffer irreparable loss and injury.

It is also equally well settled that there is no absolute

rule that in every case where a relief is barred

because of limitation, amendment should not be

allowed. It is always open to the court to allow an

7 amendment if it is of the view that allowing of an

amendment shall really sub-serve the ultimate cause

of justice and avoid further litigation. In L.J.Leach

& Co. Ltd. & Anr. Vs. M/s. Jardine Skinner & Co.

[AIR 1957 SC 357], this Court at paragraph 16 of the

said decision observed as follows :-

"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 interest of justice."

9. Again in T.N. Alloy Foundry Co. Ltd. Vs. T.N.

Electricity Board and Ors. [(2004) 3 SCC 392 this

Court observed as follows:

"The law as regards permitting amendment to the plaint, is well settled in L.J. Leach and Co. Ltd. v. Jardine Skinner and Co., it was held that the Court 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 this is a factor to be taken

8 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.

It is not disputed that the appellate court has a coextensive power to the trial court. We find that the discretion exercised by the High Court in rejecting the plaint was in conformity with law."

10. From the above, therefore, one of the

cardinal principles of law allowing or rejecting an

application for amendment of the pleading is that the

courts generally, as a rule, decline to allow

amendments, if a fresh suit on the amended claim

would be barred by limitation on the date of filing of

the application. But that would be a factor to be

taken into account in the exercise of the discretion as

to whether the amendment should be ordered, and

does not affect the power of the Court to order it, if

that is required in the interest of justice. In Ragu

Thilak D.John vs. S. Rayappan & Ors. [2001 (2)

SCC 472], this Court also observed that where the

amendment was barred by time or not, was a

9 disputed question of fact and, therefore, that prayer

for amendment could not be rejected and in that

circumstances the issue of limitation can be made an

issue in the suit itself. In a decision in

Vishwambhar & Ors. vs. Laxminarayan (Dead)

through Lrs. & Anr. [(2001) 6 SCC 163], this Court

held that the amendment though properly made

cannot relate back to the date of filing of the suit, but

to the date of filing of the application. Again in

Vineet Kumar vs. Mangal Sain Wadhera [AIR

1985 SC 817] this Court held that if a prayer for

amendment merely adds to facts already on record,

the amendment would be allowed even after

statutory period of limitation.

11. Keeping the principles laid down by various

decisions of this Court, as noted herein earlier, we

now proceed to take up the facts leading to the

refusal of the prayer for amendment by the courts

below.

10

12. A plain reading of the original written statement

would show that the case pleaded by the appellants

in their written statement was to the effect that the

appellant No. 2 had undertaken an expansion

project, which, due to certain alleged acts of the

answering respondents, ran into delays, however, at

the time of filing of the written statement, the

expansion project was in full swing and the

appellants were making continuous investments and

that, there was no interference by the respondents.

It would also be clear from the written statement that

the appellants had invested Rs. 20 lakhs in the

project when the alleged acts of omission and

commission were undertaken by the respondents

and in fact, paragraph 26 of the same gives an

impression that the said project was under

completion and that the appellants, till then, had

invested Rs. 40-45 lakhs. It was for the aforesaid

reasons, that the appellants claimed damages for a

sum of Rs. 52 lakhs by way of a counter claim and

11 made a conscious decision not to claim for any

damages arising in the future. It was, therefore,

stated in the written statement that the expansion

was in progress and the appellants had claimed

damages only for the alleged delay, which was

allegedly pleaded. From a reading of paragraph 55 of

the original written statement, it is also evident that

the appellants have limited their counter claim to Rs.

52 lakhs only towards damages and made conscious

choice to compute the sum only upto a particular

period and not beyond that. It is only after thirteen

and a half years of filing the original written

statement and the counter claim, for which no

explanation was given in the application for

amendment of the written statement and the counter

claim, the appellants have now by way of an

amendment of the written statement and the counter

claim, sought to increase the amount of damages

from Rs.52 lakhs, as originally claimed, to Rs.

8,53,50,000/- by claiming damages allegedly

12 incurred for the subsequent period from the year

1986.

13. Therefore, it is clear from the above that by way

of an amendment, the appellants are now completely

making out a new case by alleging that the

appellants were incurring damages on continuous

basis, which is contrary to the pleadings made in the

written statement and the counter claim which has

already been stated hereinabove.

14. An argument was advanced at the instance of

the learned counsel for the appellants that by way of

an amendment, the appellants only sought to

introduce certain subsequent events after filing of the

original written statement. This submission of the

learned counsel for the appellants cannot be

supported. The issue of alleged damages cannot be

said to be a subsequent event as the appellants are

now trying to plead. Even assuming for the sake of

arguments that certain losses were being caused but

such losses were within the knowledge of the

13 appellants all along even at the time of filing of the

original written statement i.e. since 1987. In any

case, in the original written statement and the

counter claim, there is no averment regarding the

continuous nature of losses on daily basis which has

been claimed after thirteen and a half years of filing

the written statement, when in the original written

statement, the appellants consciously claimed

damages only till a particular period.

15. It was next argued by the learned counsel for

the appellants that since it is well settled that the

Court should be extremely liberal in granting

amendment, provided the same was within the

period of limitation or there would be an arguable

issue with regard to the point of limitation, the courts

below ought to have allowed the amendment of the

written statement and the counter claim and thereby

raised an issue on the question whether the

amended claim of the appellants was barred by the

law of limitation. In support of this submission,

14 reliance was placed in the case of Pankaja and Anr.

Vs. Yellappa [Dead] By LRs and Ors. [ (2004) 6 SCC

415]. There is no quarrel about the proposition of

law that was submitted by the learned counsel for

the appellants. In any view of the matter in that

decision, namely, Pankaja and Anr., the question of

limitation was found to be arguable issue and on that

ground this Court allowed the amendment and the

trial court was directed to frame necessary issue on

the question of limitation and decide the same

keeping in view the law laid down in L.J. Leach's

case [supra]. But in the present case, we are in full

agreement with the courts below that there was no

dispute on the question of limitation. Therefore, it

cannot be said that the point of limitation was an

arguable one and the same should be decided by

raising an issue at the time of disposal of the suit.

16. In view of our discussions made hereinabove

that there was no dispute on the question of

15 limitation, it would not be fit and proper to hold that

the Courts below had acted illegally and with

material irregularity in the exercise of their

jurisdiction in rejecting the application for

amendment of the written statement and the counter

claim. The learned counsel for the appellants,

however, relied on a decision of this Court reported

in AIR 1967 SC 96 [A.K.Gupta & Sons Ltd. vs.

Damodar Valley Corporation] in order to satisfy us

that the prayer for amendment for a sum already

specified in the plaint or such other amount as was

to be determined after accounts, ought to be allowed

though the suit for recovery of money was barred

when the amendment was sought. In our view, that

decision of this Court stands on a different footing

altogether and will not be of any help to the

appellants. In that decision, it was made clear that

the amendment of pleadings introducing new case

cannot be allowed, if suit on such case is barred. In

that decision also, it was made clear that in the

16 matter of allowing amendment of pleadings, the

general rule is that a party is not allowed by

amendment to set up a new case or a new cause of

action, particularly when a suit on the new cause of

action is barred. However, an exception was given in

that decision saying where the amendment does not

constitute the addition of a new cause of action or

raise a different case, but amounts merely to a

different or additional approach to the same facts,

the amendment is to be allowed even after expiry of

the statutory period of limitation. We have already

observed that there is no quarrel on the proposition

enunciated by this Court in the aforesaid decision.

As held hereinabove, the date on which the

application for amendment of the written statement

and the counter claim was filed, the claim was

already barred by limitation. Therefore, if a fresh suit

was filed on the amended claim, there cannot be any

dispute that the same could also be barred by the

law of limitation. Under these circumstances and

17 applying also the principles laid down in the

aforesaid decision in the case of A.K.Gupta (supra),

in the facts of this case, we are of the view that since

even on the date of filing of the application for

amendment of the written statement and the counter

claim, the claim was barred and no fresh suit could

be filed on such amended claim and, therefore, the

two courts below had acted within their jurisdiction

in rejecting the prayer for amendment of the written

statement and the counter claim. It may not be out

of place to mention that following the principle laid

down in A.K.Gupta's case (supra), this Court again

in Vineet Kumar vs. Mangal Sain Wadhera [1984

(3) SCC 352] expressed the same view to which we

have already adhered to.

17. Considering the facts of the case and the nature

of amendment claimed and the principles laid down

by this Court in L.J.Leach's case (supra) and other

decisions of this Court, as referred to herein earlier,

18 we are of the view that if a suit was filed on the

amended claim, it was an admitted position that the

said claim was barred by limitation, the question of

allowing the amendment of the written statement

and the counter claim, in the facts and

circumstances of the case, could not arise at all.

Accordingly, the courts below were fully justified in

rejecting the application for amendment of the

written statement and the counter claim.

18. The learned counsel appearing on behalf of the

appellants again relied on a decision of this Court in

Gajanan Jaikishan Joshi vs. Prabhakar

Mohanlal Kalwar [1990 (1) SCC 166] and sought to

argue that the courts below were in error in rejecting

the application for amendment of the written

statement and the counter claim. In our view, that

decision of this Court is distinguishable on facts. In

that decision, no fresh cause of action was sought to

be introduced by the amendment applied for. All that

19 the appellant sought to do in that case was to

complete the cause of action for specific performance

for which relief he had already prayed for. It was only

that one averment required in law to be made in a

plaint in a suit for specific performance was not

made in that case as the provisions of sub-section (c)

of Section 16 of the Specific Relief Act was mandatory

in nature, probably on account of some oversight or

mistake of the lawyer who drafted the plaint and that

error was sought to be rectified by the amendment

applied for. This is not the position in the present

case. Admittedly the claim of 1986 was sought to be

made by way of the amendment of the written

statement and the counter claim in the year 2000,

when that claim had already become barred by the

law of limitation. Such being the position and in view

of the principle laid down, as noted herein above,

that if a suit was filed for the amended claim which

could have become barred by the law of limitation,

the application for amendment was rightly rejected. 20

19. Keeping the aforesaid findings made by us and

also the findings arrived at by the courts below in the

matter of exercise of discretion to reject the

application for amendment of the written statement

and the counter claim in mind, the delay and latches

on the part of the appellants to apply for amendment

of the written statement and the counter claim would

be the relevant factor for rejecting the application for

amendment of the pleadings. As noted herein earlier,

there has been thirteen and a half years delay in

filing the application for amendment of the pleadings.

Further more, in the application for amendment, the

appellants had not given any explanation whatsoever

for such delay. Under these circumstances, we do

not find any reason to interfere with the orders of the

courts below. In our view, in the facts and

circumstances of the case, the courts below were

perfectly justified in rejecting the prayer for

amendment of the written statement and the counter

claim.

21

20. In view of our findings made hereinabove, that

on the date of filing of the amendment petition, the

claim as made by the appellants in their amendment

petition was already barred, no purpose would be

achieved by allowing the amendment which has

already stood barred by the law of limitation.

21. For the reasons aforesaid, we are of the view

that the courts below had exercised their discretion

in a proper manner in the matter of rejecting the

amendment of the pleadings. We, therefore, do not

find any merit in this appeal Accordingly, the appeal

is dismissed. However, the trial court is directed to

dispose of the suit as early as possible preferably

within a year from the date of supply of a copy of this

order to it. There will be no order as to costs.

.........................J .

[Tarun Chatterjee]

22 New Delhi ....................... ....J. September 09, 2008. [Harjit Singh Bedi]

23