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Kisan Co-Operative Sugar Factory Ltd. v. Rajendra Paper Mills

Allahabad High Court
Oct 5, 1983
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Structured Summary of the Opinion (Revision against order dated 16-12-1980)

Factual and Procedural Background

The revision challenges an order dated 16-12-1980 of the Civil Judge, Pilibhit, in Original Suit No. 16 of 1974 rejecting the plaintiff's application for amendment (paper No. 43 kha). The plaintiff (revisionist) filed Original Suit No. 16 of 1974 on 15-2-1974 for recovery of Rs. 33,500 with costs and interest. The claim arose from agreements by respondents to purchase baggass (crushed sugar cane) at Rs. 20 per metric tonne: an initial acceptance on 4-1-1971 and a fresh proposal on 17-2-1971 for additional quantity. Between 5-2-1971 and 6-3-1971 the plaintiff supplied 234.806 metric tonnes; payments totalling some amounts were made (including Rs. 10,000 on 19-1-1971 and 5-4-1971) but a balance remained. Notices of demand were served and some payments (including a bank draft replacing a dishonoured cheque) were made; further demand for Rs. 18,162 was served on 10-12-1973. The suit was then filed on 15-2-1974.

Respondents filed a cross-suit (Suit No. 17, January 1974) in Ballabgarh. In that suit the plaintiff (in the Ballabgarh proceedings) pleaded that Rajendra Paper Mills (respondent 1) had ceased to exist because its assets and liabilities had been taken over by Raj Garhia Paper Mills Pvt. Ltd., incorporated on 14-6-1973; that amendment was allowed in Ballabgarh on 20-1-1976 and that suit was dismissed on 12-8-1977. Proceedings in Pilibhit (Suit No. 16 of 1974) had been stayed during the cross-suit and recommenced thereafter.

On 6-4-1978 the plaintiff filed application 43 Kha seeking leave to implead Raj Garhia Paper Mills Pvt. Ltd. (through its Director Sri Prag Dass) as respondent 3. Respondents opposed this, filing application 36-C (seeking dismissal on the ground that Rajendra Paper Mills did not exist on the date of institution) and objection papers (46-Kha / 46-C and 47-C) asserting mala fides and that the amendment was barred by limitation. The Civil Judge found that the claim as regards the period in question was barred by limitation against the proposed new party as more than three years had elapsed, and therefore refused the amendment and allowed respondent objections. Aggrieved, the plaintiff filed the present revision.

Legal Issues Presented

  1. Whether the proposed amendment (application 43 Kha filed 6-4-1978) to implead Raj Garhia Paper Mills Pvt. Ltd. as respondent 3 was barred by limitation on 6-4-1978.
  2. Whether the impugned order rejecting the amendment was revisable under Section 115, Civil P.C., given the authorities on the revisional jurisdiction in relation to orders under Order VI Rule 17, C.P.C., and the Small Cause Courts Act/Section 25.

Arguments of the Parties

Respondents' Arguments (as recorded)

  • Preliminary objection that the impugned order was not revisable under Section 115, Civil P.C.; reliance on Mst. Indrajit Kaur v. Mst. Ram Kumari and Sita Ram v. Suddhoo to show limited scope of Section 115 and restrict revision over findings of fact, particularly where Small Cause Courts Act/Section 25 is concerned (submitted by Sri R.R. Agarwal).
  • The proposed amendment was mala fide, taken after more than two years, and would deprive Raj Garhia Paper Mills Pvt. Ltd. of the benefit of the law of limitation; respondents sought dismissal of plaintiff's suit on the ground that Rajendra Paper Mills was not in existence on the date of institution and that suit against a non-existent firm was not maintainable (application 36-C and objection papers 46-Kha/46-C/47-C).

Revisionist / Plaintiff's Arguments (as recorded)

  • Contended that the impugned order was revisable and relied upon authorities holding that an order under Order VI Rule 17, C.P.C., allowing or refusing amendment is a "case decided" under Section 115 (referred to Rama Shanker Tiwari v. Mahadeo and related discussion).
  • Relied on precedents (Indian Cable Co. Ltd. v. Union of India; Siya Ram Das v. State of Bihar; Shambhu Nath Seth v. Madan Lal; A.K. Gupta and Sons Ltd. v. Damodar Valley Corporation) to argue amendments should not be refused merely for delay or negligence, and that amendments which do not alter the fundamental character of the suit or merely present a different approach to the same facts can be allowed even after the statutory period.
  • Asserted that plaintiff could implead the proposed respondent 3 as a necessary party under Order 1 Rule 10 read with Order VI Rule 17 irrespective of the efflux of time, and relied on the proviso to Section 21 of the Limitation Act that a suit as regards a new party may be deemed instituted earlier where omission to include the party was due to a mistake made in good faith (paper 44-Ga was invoked for this purpose).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mst. Indrajit Kaur v. Mst. Ram Kumari (1978 All CJ 41) Scope of Section 115, C.P.C. is limited; restricts revisional interference over questions of fact, especially under Small Cause Courts Act/Section 25. The court noted this authority but held it was not in point here because the impugned order was not recorded under Section 25, Small Cause Courts Act.
Sita Ram v. Suddhoo (1978 All CJ 310) Similar rule limiting revisional scope under Section 115 in relation to Small Cause Courts Act/Section 25. Referenced with the same observation as above; not applicable because Section 25 Small Cause Courts Act did not govern the impugned order.
Rama Shanker Tiwari v. Mahadeo (1968 All LJ 109, Full Bench) Held that an order under Order VI Rule 17, C.P.C. allowing or refusing amendment is a "case decided" within the meaning of Section 115. The court relied on this to observe that Section 115 can apply to Order VI Rule 17 orders and examined the proviso to Section 115; used the principle to address the preliminary objection and found revision maintainable because rejection might occasion irreparable injury.
Indian Cable Co. Ltd. v. Union of India (AIR 1976 Pat 76) Amendment that does not alter the fundamental character of the suit (foundation of claim remains intact) can be allowed; the amendment did not constitute a material change in the plaintiff's case. The revisionist relied on it; the court observed the case concerned changes in particulars but not the addition of a new party against whom limitation had already run, and therefore considered it not in point.
Siya Ram Das v. State of Bihar (AIR 1979 Pat 98) Amendment should not be refused merely on the ground of delay or negligence; amendments can be allowed at late stages in appropriate cases. Relied upon by revisionist; the court observed the authority but found it inapplicable to the present situation of adding a new party barred by limitation.
Shambhu Nath Seth v. Madan Lal (AIR 1976 All 220) Delay in making application to amend may not be mala fide where facts support the amendment (case concerned amendment of written statement supported by cross-examination admission). Referenced by revisionist; court noted the factual differences and held the principle was not applicable to adding a new party already time-barred.
A.K. Gupta & Sons Ltd. v. Damodar Valley Corporation (AIR 1967 SC 96) General rule: amendment cannot introduce a new cause of action, especially one barred by limitation; but if amendment is only a different approach to same facts (not a new cause), amendment may be allowed even after limitation period. Considered by the court but held not in point because none of the cited cases involved adding a new party against whom limitation had already run.
Dipchand Doulatram v. Firm of Parmanand Chimandas (AIR 1924 Sind 144) Amendment under Order VI Rule 17 which takes away defendant's legal right to plead bar of limitation should not be allowed unless special considerations exist. The court invoked this principle to support the conclusion that adding a new defendant against whom limitation had run was impermissible absent special circumstances.
Kanailal v. Jiban (AIR 1977 Cal 189) Set out principles on amendments: (i) amendments allowed to determine real controversy; (ii) substitution of one cause of action by another not permissible; (iii) inconsistent or contradictory allegations not permissible; (iv) amendments should not cause uncompensable prejudice; (v) amendment of a claim barred by limitation should not be allowed except in special circumstances. The court summarized these principles from Kanailal and applied them to conclude that the proposed amendment (adding a time-barred defendant) was barred and mala fide, justifying refusal.

Court's Reasoning and Analysis

The court proceeded in a stepwise analysis confined to the material in the record:

  1. Preliminary revisional jurisdiction: A contention by respondents that the impugned order was not revisable under Section 115, C.P.C., was considered in light of authorities limiting Section 115 in Small Cause Courts Act contexts. The court observed that the impugned order was not recorded under Section 25, Small Cause Courts Act, and further relied on Rama Shanker Tiwari (that Order VI Rule 17 orders are "case decided" under Section 115). The court noted the proviso to Section 115 which permits interference where (a) the order would have finally disposed of the suit, or (b) the order would occasion failure of justice or cause irreparable injury. Because rejection of the amendment could occasion irreparable injury to the revisionist (on the ground that assets/liabilities had been transferred to the proposed respondent 3), the preliminary objection was rejected and revision entertained.
  2. Central limitation question: The court focused on whether the proposed amendment (filed 6-4-1978) was barred by limitation as against Raj Garhia Paper Mills Pvt. Ltd. It identified the applicable legal yardstick as the proviso to Section 21 of the Limitation Act, which permits deeming the suit as instituted earlier for a newly added party only where omission to include that party was due to a mistake made in good faith.
  3. Burden to establish good faith: The court observed that the plaintiff (revisionist) sought benefit under Section 21 proviso (paper 44-Ga), but no affidavit accompanied that application to establish the requisite facts or a good-faith mistake. The record showed Raj Garhia Paper Mills Pvt. Ltd. came into existence on 14-6-1973 and that the plaintiff knew of these facts while filing the suit on 15-2-1974; indeed, the plaintiff himself had raised the existence/transfer point in the Ballabgarh proceedings. Thus, the omission to include the proposed respondent could not be characterized as a mistake in good faith.
  4. Applicability of precedents on amendment and delay: The court reviewed the authorities relied upon by the revisionist (Indian Cable, Siya Ram Das, Shambhu Nath Seth, A.K. Gupta) but distinguished them: none dealt with the specific problem of adding a new party against whom the cause of action was already barred by limitation. The court emphasized the distinction between amendments that change particulars of a claim or present a different approach to the same facts and amendments that introduce a new party thereby defeating the new party’s statutory right to plead limitation.
  5. Policy against depriving limitation defence: The court invoked Dipchand Doulatram (and the general principles as formulated in Kanailal) to underscore that amendments which would take away a defendant's right to plead limitation are not to be allowed except on special circumstances. The court found no such special circumstances here; on the contrary, the delay and prior knowledge of the plaintiff indicated mala fides.
  6. Conclusion on merits: Applying these principles, the court concluded that the proposed amendment was clearly barred by limitation and was mala fide, and therefore the learned Civil Judge correctly refused leave to amend.

Holding and Implications

Holding:

Revision dismissed.

Implications (direct consequences as stated in the opinion):

  • The order of the learned Civil Judge rejecting application(s) for amendment (including paper No. 43 Kha and related papers) is upheld.
  • The court concluded the proposed addition of Raj Garhia Paper Mills Pvt. Ltd. as respondent 3 was barred by limitation and was mala fide; accordingly the amendment was rightly refused.
  • The revision is dismissed but the court made no order as to costs.

The opinion does not purport to create a new legal precedent beyond applying existing authorities and established principles on amendment and limitation; the decision resolves the dispute between the parties by upholding the trial court's exercise of discretion.

Show all summary ...

1. This is plaintiff's revision against the order dated 16-12-1980 recorded by Shri P.C Joshi, Civil Judge, Pilibhit, in Original Suit No. 16 of 1974. Application for amendment paper No. 43 kha was rejected by the impugned order.

2. It appears that original Suit No. 16 of 1974 was filed by revisionist on 15-2-74 against the respondents for recovery of Rs. 33,500/- along with costs and interest pendente lite and future at the rate of Rs. 6% per annum. Respondent 1 is Rajendra Paper Mills, Faridabad, Gurgaon, Haryana.

3. Respondent 2, Sri Prag Dass is a partner in the aforesaid Mill.

4. According to the averments made in the plaint respondents proposed to purchase 1500 metric tonnes of Baggass (crush sugar cane) at Rs. 20/- per metric tonne which was to be paid in advance along with the amount of sales tax. This proposal was accepted on 4-1-1971 by plaintiff in district Pilibhit.

5. On 17-2-1971 a fresh proposal for supply of additional quantity of 1500 metric tonnes on the same terms and conditions was agreed upon. In between 5-2-1971 and 6-3-1971 plaintiff supplied 234.806 metric tones Baggass, respondents paid Rs. 10,000/- on 19-1-1971 and 5-4-1971 towards the value of Baggass. Asa sum of Rs. 62,537.67 was the balance price recoverable by plaintiff which remained unpaid, so plaintiff served a notice of demand of the said amount on respondents. Out of the said amount, a sum of Rs. 47,525.17 was sought to be paid by the respondents to revisionist through a cheque; however as the cheque was dishonoured, so the said amount was paid through a bank draft. This payment did not wipe out the entire liability of respondents, so the revisionist again served a notice of demand in the sum of Rs. 18,162/- on 10-12-1973. No payment was made so the present suit was filed by the revisionist on 15-2-1974.

6. Meanwhile respondents filed suit No. 17 in January, 1974 against the revisionist in the Court of Sub-Judge, 1st Class, Ballabgarh. That suit was contested by the revisionist who in written statement put forward the plea that Rajendra Paper Mills (respondent 1) was not in existence at the time of institution of the suit in Ballabgarh as its liabilities and assets had been taken over by Raj Garhia Paper Mills Pvt. Ltd. incorporated on 14-6-1973. This amendment was allowed by Sub Judge 1st Class, Ballabgarh, on 20-1-1976. The said suit in Ballabgarh was dismissed on 12-8-1977 vide copy of certified judgment filed per list 29-C dated 27-9-1977. The proceeding's of Suit No. 16 of 1974 which had been stayed on account of cross suit at Ballabgarh recommenced.

7. 43 Kha was filed on 6-4-1978 by the revisionist seeking leave to implead Raj Garhia Paper Mills Pvt. Ltd. through its Director Sri Prag Dass as respondent 3 in this suit. It was alleged that this amendment was necessitated on account of the allegations made by the respondents that the partnership business carried on by defendants 1 and 2 in the name of Rajendra Paper Mills had been changed to the style Raj Garhia Paper Mills through its Director Sri Prag Dass and so the leave should be allowed. This prayer was opposed by the respondents who had applied on 15-3-1978 vide application paper No. 36-C that the suit of plaintiff be dismissed with costs as Rajendra Paper Mills was not in existence on the date of institution and the suit against non-existent firm was not maintainable.

8. The proposed leave was opposed by the respondents vide objection paper No. 46-Kha alleging that the proposed amendment was mala fide it was moved after more than 2 years and tend to deprive Raj Garhia Paper Mills Pvt. Ltd. of the benefit of law of limitation.

9. Learned Civil Judge found that the suit for recovery of balance price due for the period from 7-3-1971 up to 17-7-1971 was clearly barred by time against Raj Garhia Paper Mills on 6-4-1978 as a period for more than three years had already expired since the date or purchase of the goods for which the price was being claimed and the proposed amendment was clearly barred by limitation. If the amendment is allowed it shall take away valuable right accrued to proposed defendant 3 who had not been impleaded as defendant within time. In the result application paper Nos. 36-C and 44-C and 43-Kha of respondents (revisionists) were rejected and objection papers Nos. 46-C and 47-C of respondent were allowed.

10. Aggrieved by this decision this revision has been preferred.

11. I have heard learned counsel for the parties and perused the record.

12. The simple point which falls for consideration is whether the proposed amendment was barred by limitation on 6-4-1978.

13. A preliminary objection has been raised before me by Sri R.R Agarwal, learned Advocate for respondents that the impugned order was not revisable as it did not amount to “case decided” within the meaning of Section 115, Civil P.C In this connection reliance was placed upon Mst. Indrajit Kaur v. Mst. Ram Kumari reported in 1978 All CJ 41 and Sita Ram v. Suddhoo reported in 1978 All CJ 310 where it was held that the scope of Section 115, C.P.C, was limited. It was not open to this Court to sit in revision over the decision of a question of fact in a case decided under Small Cause Courts Act as the revising powers of this Court under Section 25 of the Small Cause Courts Act, were limited. Obviously, the impugned order was not recorded by learned Civil Judge under Section 25 Small Cause Courts Act, and so these authorities are not in point.

14. In Rama Shanker Tiwari v. Mahadeo reported in 1968 All LJ 109 (Full Bench), it was decided that an order passed under Order VI, Rule 17, Civil P.C, allowing or refusing to allow amendment is “case decided” within the meaning of that expression in Sec. 115. It is correct that Section 115, Civil P.C, has appended a proviso by which High Court will not interfere except where—

“(a) The order, if it had been made in favour of the party applying for revision, would have finally disposed of the suit or other proceeding, or

(b) the order, if allowed to stand, would occasion a failure of justice or cause irreparable injury to the party against whom it was made.”

15. In the instant case, the rejection of the leave to amendment may occasion an irreparable injury to the revisionist as it is alleged that the assets and liabilities of Rajendra Paper Mills and another have been taken over by the proposed respondent 3 Raj Garhia Paper Mills Pvt. Ltd. incorporated on 14-6-1973. So this preliminary objection is brushed aside.

16. Sri U.S Awasthi, learned Advocate for revisionist, relied upon Indian Cable Co. Ltd. v. Union of India, reported in AIR 1976 Pat 76. In that case hearing was not commenced. Amendment of the plaint was sought to introduce a case that the first drum was simply offered to the plaintiff and it refused to take the delivery as it was in a state of highly damaged and injured condition and that other drums were not at all offered. The plaintiff claimed a sum of Rs. 27,417.17 on account of the price of 200 metres of cables consigned in the two drums. It was observed (at p. 78):—

“Held that the amendment did not alter the fundamental character of the suit and the foundation of the plaintiff's claim remained still intact. The basis of the claim being the same, namely, the loss suffered by it on account of misconduct or negligence of the defendant in carrying its consignment, the case with respect to one drum as originally made on the assumption that it had taken the delivery thereof to one of non-delivery did not make any material change in its case.”

17. Reliance was placed upon Siya Ram Das v. State of Bihar reported in AIR 1979 Pat 98 where it was observed that amendment was not to be refused merely on the ground of delay or negligence. It appears that in that case a suit for declaration was filed at the stage of hearing arguments, plaintiff sought amendment for an alternative relief for recovery of possession which was allowed.

18. The next authority relied upon has been reported in Shambhu Nath Seth v. Madan Lal, AIR 1976 All 220 (Lucknow Bench). In that case which related to a suit for ejectment, defendant moved an application for amendment of written statement with a view to take a plea that the house in dispute belonged jointly to the plaintiffs and their father and, therefore, the notice served upon the defendant was invalid because father had not joined in it. It appears that one of the plaintiffs who was examined as a witness, admitted in cross-examination that the house in dispute was purchased by the plaintiffs out of part of the money which belonged to a shop being jointly run by the plaintiffs and their father and partly from money received from their mother. Under such circumstances, it was held that the delay in making the application for leave to amend was not mala fide.

19. Reliance was next placed upon A.K Gupta and Sons Ltd. v. Damodar Valley Corporation reported in AIR 1967 SC 96 which posited (Paras 7 and 8):—

“In the matter of allowing amendment of pleading 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. Where, however, 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.”

20. I have carefully perused all these authorities none of which is in point. In none of these cases, the prayer was to add a new party against whom limitation had already run out.

21. Sri U.S Awasthi, learned Advocate for revisionist, further argued that it was open to the plaintiff to implead the proposed respondent 3 as a necessary party to the suit. Such right was available to the plaintiff under Order 1, Rule 10, Civil P.C, read with Order VI Rule 17 irrespective of efflux of time.

22. In the instant case, it is obvious from the perusal of paper 44-Ga that plaintiff sought the benefit of proviso of Section 21, Limitation Act. Section 21, Limitation Act, reads as below:—

“21(a) Where after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall, as regards him, be deemed to have been instituted when he was so made n party:

Provided that where the court is satisfied that the omission to include a new plaintiff or defendant was due to a mistake made in good faith it may direct that the suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date.”

23. Thus, it was incumbent on plaintiff-revisionist to establish that the omission to include the proposed respondent amongst the defendants in the plaint was due to a mistake made in good faith.

24. Surprisingly no affidavit was annexed with the application paper 44-Ga dated 6-4-1978. The facts detailed above go to disclose that Raj Garhia Paper Mills Pvt. Ltd. came in existence from 14-6-1973 and this objection was raised by respondent (revisionist) himself in Ballabhagarh which led to the dismissal of the suit filed by respondent on 12-8-1977. Thus, all these facts were well within the knowledge of plaintiff when he filed the suit on 15-2-1974. He waited up to 15-3-1978 and thus wanted to implead Raj Garhia Paper Mills Pvt. Ltd. as respondent 3 against whom the claim was already barred by limitation. Such amendment about addition of a new party is impermissible vide Dipchand Doulatram v. Firm of Parmanand Chimandas reported in AIR 1924 Sind 144 which posited:—

“Civil Procedure Code, Order 6, R. 17 Amendment taking away defendant's legal right to plead bar of limitation should not be allowed unless there are special considerations.”

25. The principles established by judicial decisions in respect of amendment of plaint are as follows vide Kanailal v. Jiban reported in AIR 1977 Cal 189 at page 191:—

(i) All amendments will be generally permissible when they ore necessary for determination of the real controversy in the suit.

(ii) All the same, substitution of one cause of action or the nature of the claim for another in the original plaint or change of the subject-matter of or controversy in the suit is not permissible.

(iii) Introduction by amendment of inconsistent or contradictory allegations in negation of the admitted position on facts, or mutually destructive allegations of facts are also impermissible though inconsistent pleas on the admitted position can be introduced by way of amendment.

(iv) In general, the amendments should not cause prejudice to the other side which cannot be compensated in costs.

(v) Amendment of a claim or relief which is barred by limitation when the amendment is sought to be made should not be allowed to defeat a legal right accrued except when such consideration is outweighed by the special circumstances of the case.”

26. Thus, the proposed amendment which was clearly barred by time was rightly refused by the learned Civil Judge as being mala fide.

27. In this view of the matter, the revision is dismissed. However, under the circumstances of the case, I make no order as to costs.

28. Revision dismissed.