Rajendra Nath Shaha v. Sree Saraswati Press, Ltd.

P.B Mukharji, J.:— This is an application for amendment of the plaint. It raises the important question whether a plaint for specific performance of a contract can be converted by amendment into a plaint for damages for breach of contract.

The suit was instituted on or about December 17, 1946. The plaint claims specific performance of an Agreement dated July 3, 1946, under which the plaintiff agreed to sell to the defendant premises Nos. 3A, 3B and 3/1, Mabarani Swarnamoyee Road, for a sum of Rs. 2,30,000. There is no pleading in the plaint for damages for breach of contract, but there is a claim for compensation in addition to, or in substitution of, the claim for specific performance.

The amendment that the plaintiff now seeks in his application made on the petition affirmed on June 19, 1950, is to delete the averment of readiness and willingness and to delete the claim for specific performance and to substitute a claim for damages simpliciter for breach of the Agreement. The reason put forward for this amendment is that the property in suit has been requisitioned by the Government pending suit with the result that the plaintiff himself can no longer specifically perform the Agreement to convey the property.

Mr. H.N Sanyal, learned counsel appearing for the defendant, has opposed this application on two grounds. The first ground is that a suit for specific performance cannot be converted into a suit for damages. The second ground is that the claim for damage is now barred by limitation and, therefore, in any event such amendment should not be allowed.

The first ground of objection raises a question of considerable importance. Except by way of obiter, the point does not appear to me to be concluded by any decision exactly on the point. It, therefore, becomes necessary to deal with the question from the first principle.

A good deal of the confusion on the subject arises from the fact that in English law, the only legal right which arose under the common law when there was non-performance of a contract, was a claim for damages by the party injured by such breach. Common Law provided no relief for specific performance in England. Equity, therefore, had to step in aid of that court and provided the more complete remedy of specific performance where damage was obviously an insufficient and inadequate remedy for the breach.

It gradually came to be realised with experience that there were cases where the contract, although sued for specific performance, damages were the more adequate remedy, and it was expedient that, in such cases, the court should not be compelled in England to send the plaintiff to the Common Law courts, but should itself have the power to award damages. This was met in 1858 by Lord Cairn's Act. Section 2 of Lord Cairn's Act provided:

In all cases in which the Court of Chancery has jurisdiction to entertain an application for specific performance of any covenant contract or agreement it shall be lawful for the same Court, if it shall think fit, to award damages to the party injured, either in addition to or in substitution for such specific performance and such damages may be assessed as the Court shall direct.

The difficulties did not end with the passing of the Lord Cairn's Act. The question was soon to arise and it did arise whether this new power in the Court of Chancery to award damages in a claim for specific performance was merely an ancillary or alternative power in aid or substitution of specific performance, so that this new power granted under Lord Cairn's Act did not help in the case in which the plaintiff could not proceed with or prosecute his basic claim for specific performance. The point found favour with Lord Selborne and Brett L.J in Hipgrave's Case(1), where it was held that the plaintiff having by the form of his pleadings and by his conduct elected to put his claim as one of specific performance with an alternative claim for damages in case the Court felt unable to give effect to his prayer for specific performance, could not be allowed to change the nature of his action by turning it into an ordinary action for damages at Common Law. The same view was taken by Chitty, J. in Lavery v. Pursell(2). That is now taken by Mr. Sanyal as the foundation of his objection to the present application before me for amendment.

Before the fusion of law and equity by the Judicature Act of 1877 in England a plaintiff's claim for specific performance had to be before the Court of Equity, which did not award damages for breach of contract. As a result a bill for specific performance in the Court of Equity could not be converted into an action for damages for breach of contract at Common Law. This procedural dichotomy soon developed into a legal theory that a claim for specific performance could not be converted into a claim for damages.

Even after the fusion this theory survived. The justification for its survival was put on the juristic ground that, when a party sued in Common Law for a breach of contract he elected to treat the contract as at an end discharging him from its obligation while in a suit for specific performance, he not only treated, but was required by equity to treat, the contract as still subsisting and that he was ready and willing to perform the same. Readiness and willingness, therefore, were regarded as an integral part of the very foundation of his claim for specific performance.

This legal dialectics developed a catechism that bade fair to become a Law and Code.

It appears to me that the technicality of the form and procedure, which are to be found in the history of the evolution of Law and Equity in England, need not conclude the question in India. Although the Specific Relief Act of 1877 in India maintains a good many of the English principles of proceedings in equity for specific performance, it is nonetheless a fact that in India both legal and equitable reliefs could be had in one set of court unlike in England before the Judicature Act. The change effected by the Judicature Act, however, was one of procedure only because it enabled every Division of the High Court in London to give both legal and equitable remedy but such a fusion did not alter the consideration or effect of a claim framed under s. 2 of Lord Cairn's Act nor the principles upon which the different systems of Law and Equity were administered. The fusion of courts did not lead to the fusion of principles. The legal ghosts of an outworn and bygone procedure continued to haunt the holy precincts of law, refusing to be laid to rest.

On the basis of first principle, I am of the opinion that the cause of action, either for a specific performance or for damages, is breach of contract. In some cases, the appropriate relief for the breach may be specific performance and in other cases the appropriate relief may be damages. A party who sues for specific performance must allege against the other party that the latter has not performed the contract. That is the breach on which he asks for specific performance. It is true that when such claim is made for specific performance, the party claiming must show that on his part he has performed and is and has been ready and willing to perform the contract. But that is a requirement in aid of his claim which has already arisen by the other party's breach. The foundation in my judgment nevertheless remains the breach of contract by the other side. Equally so when the party claims damages. The cause of action for damages is the breach of contract. In the claim for damages the party claiming need not say that he is ready and willing because the contract is put an end to. The consideration that in the claim for specific performance the party claiming must he ready and willing and must treat the contract as subsisting although the other party has broken it or the consideration that a party claiming for damages need not treat the contract as subsisting does not, in my view, alter the nature and character of the cause of action in the suit which remains in either case breach of contract. These seemingly different considerations in either case are only incidental and ancillary to the very nature of the relief asked. Naturally, if the court is to decree specific performance, the party claiming, at whose instance the court is acting, must himself be ready and willing to perform the contract. Equally, naturally when the party is claiming only damages, he need not be ready and willing to perform the contract, because he is not asking for performance but only damages for the other party's breach as sufficient recompense. Election of a remedy in such case cannot and should not be said to be the cause of action. In my opinion, a mental attitude or conduct in such context cannot alter the cause of action.

The Privy Council decision in Ardeshir Mama v. Flora Sassoon has launched a thousand legal battles and is an authority so well-known on this branch of the law. Lord Blanesburgh observes:

For that amendment, properly construed, did not, as it should have done to be effective, operate to convert that suit into one for the recovery of damages for breach of contract.

That seems to be an observation which suggests that, in a proper case, amendment to convert the suit for specific performance into one for damages for breach of contract can be made. Later on at that page the learned Lord observes further that the court has the power to make such amendment. Although whether in the circumstances of a case such power should be exercised or not is quite another matter. One of the reasons which Lord Blanesburgh adduced to come to this conclusion is the provision contained in s. 29 of the Specific Relief Act which makes the dismissal of a suit for specific performance of a contract a bar to a right to sue for compensation for breach from which it could be deduced and implied and the learned Lord so deduced and implied that prior to such dismissal the right is not barred.

My reading of the Privy Council decision in Ardeshir Mama v. Flora Sassoon (supra) is that, in a proper case, such an amendment as is sought now in the application before me can be allowed.

It is necessary, however, to refer to certain other decisions of the Privy Council in this connection on which Mr. Sanyal has relied for his arguments. The first one is the case of Ramsaran Mandar v. Mahabir Sahu. Although Lord Sinha delivered judgment in this case, Lord Blanesburgh was one of the Members of the Board. In that case, a suit was brought against the members of a Hindu joint family for specific performance of a written agreement for the sale of a joint family property alleged to have been made by the kartâ or for damages, namely, the earnest money with interest. The plaintiff, however, did not allege nor was there any evidence in the trial court that the sale was for necessity. It was held by the trial judge that the agreement was a forgery and the suit was accordingly dismissed. There was an appeal and, pending that appeal, the kartâ died and the title of the suit was amended by adding as his heirs his sons and grandsons who were already parties to the suit. In the appeal, the plaintiff who abandoned his claim for specific performance was given a decree for the earnest money with interest. In that case, it was held by the Privy Council that the decree could not stand because it was not permissible amendment to change the suit into one for money had and received or one to recover a debt. On the first reading of this decision, it looks as though it is an authority that a suit for specific performance cannot be amended into a suit for damages for breach of contract. On a closer consideration, however, it does not appear to me that is the ratio of the case. At p. 60 of the report Lord Sinha made the following observation:

It is not permissible by amendment to change the nature of the suit as framed and even if it were, the defendants affected by such amendment must have an opportunity to rebut such new cause of action, a course which would involve fresh written statement and fresh trial. Their Lordships are unable to permit such a course at this stage.

The point that was decided in that case turned on the question whether the heirs of a kartâ under the Hindu law could be liable in the circumstances of that case for money had and received or for debt. The case of Ma Shwe Mya v. Maung Mo Hnaung is an authority for the proposition that an amendment of a plaint should not be allowed if such an amendment alters the nature of the suit or the real matter of controversy between the parties. There was a further question in that case of limitation. The facts of that case show that the original plaint was based on an agreement of 1912, but the amendment that was sought to be made introduced a totally different cause of action based on a separate agreement of December 18, 1903. See the observations of Lord Buckmaster in that case at p. 216. That case, therefore, is no authority one way or the other on the question whether a plaint for specific performance could be converted into a plaint for damages for breach of contract. The principle that amendment should not be permitted which alters the very nature of the suit or the cause of action is very well settled and the latest pronouncement of the Judicial Committee in Kanda v. Waghu confirms such principle.

No difficulty is presented in deciding the theoretical problem whether an amendment is permissible to alter the cause of action or the nature of the suit. That cannot be done. The important legal problem is the more practical and specific one. Is it altering the cause of action of a suit when a claim for specific performance of a contract is amended into a claim for damages for breach of such contract? On an anxious consideration of this point, I have come to this conclusion that it is not. The cause of action is breach of contract whether the claim is specific performance or damages. The reliefs follow as a consequence of the breach of contract. If the party aggrieved is ready and willing to carry out his part and the party complained against commits the breach, then the party aggrieved may either sue for specific performance or for damages. It is a choice of reliefs. It has been said that it is also an election of remedy. I cannot persuade myself to the conclusion that the election is such that an event subsequent to the filing of the suit which makes specific performance impossible prevents the plaintiff from converting the plaint into a suit for damages.

Some relevant facts should be set out here. The suit in this case was filed on December 19, 1946. About a year later, when the suit was ready for hearing on December 17, 1947, the plaintiff was served with orders of requisition from the Government. It is another well-known principle that the court can always modify the decree according to subsequent events, i.e, events which happen subsequent to the filing of the plaint rendering the relief claimed in the plaint inadequate. See the observations of Mookerjee, J. in Nuri Miya v. Ambika Singh and in Annapurna Dasi v. Sarat Chandra Bhattacharjee.

An analysis of the different provisions of the Specific Relief Act will not be out of place in coming to the conclusion that I have arrived at. I have already referred to s. 29 of Specific Relief Act. That section provides that the dismissal of a suit for specific performance bars the plaintiff's right to sue for compensation for breach of such contract. As Lord Blanesburgh points out, this implies that before dismissal the power to amend is there. In William's Vendor and Purchaser, 4th Ed., 1025, the law is stated in the following terms:

It has been mentioned that on breach of an essential stipulation in the contract the injured party electing to affirm the agreement has the alternative of suing at law for damages for the breach or suing in equity for specific performance of the contract. Under the present practice he can pursue these remedies in one action claiming alternative relief.

On the election of remedy the provision contained in s. 24(c) of the Specific Relief Act is, in my opinion, relevant. It provides that specific performance of a contract cannot be enforced in favour of a person “who has already chosen his “remedy and obtained satisfaction for the alleged breach of “contract”. Therefore, the choice of remedy is not enough, but super added to that must be the obtaining of satisfaction of the alleged breach in order to exclude the relief of specific performance. The plaintiff in this case cannot be said to have obtained the satisfaction of the breach of contract. But neither the provision contained in sub-s. (b) nor sub-s. (c) of s. 24 of the Specific Relief Act, in any event can be said to exclude a claim for damages. A claim for specific performance under the Specific Relief Act can, in my judgment, co-exist with a claim for damages under the Indian Contract Act and claim under One Act cannot preclude claim on the other so long as the requirements of the respective Statutes are satisfied. Section 37, Specific Relief Act, shows how even in a suit for specific performance the plaintiff may claim in the alternative that the contract be rescinded. If rescission can be claimed as alternative to specific performance, I can see no principle why claim for damages should be excluded. The view that I take finds some support from the observations of Ameer Ali, J. in Calcutta Improvement Trust v. Subarnabala Debi.

I see no reason why the procedural dichotomy and the legal dialectics of the history of English law and equity, for which I find no fundamental juridical basis, should limit the operation of complete justice in India. I, therefore, hold, both on the authority of Mama v. Sassoon (supra) and the special observation made by Lord Blanesburgh, which I have quoted, and on analysis of the different sections of the Specific Relief Act that, in a proper case, a plaint for specific performance can be converted by amendment into a claim for damages for breach of contract and such an amendment does not amount to altering the cause of action or the nature of the suit.

The next argument of Mr. Sanyal is based on the question of limitation. He formulates his point in this way. The suit was filed on December 17, 1946. The amendment, that is now sought today, is more than three years after. The claim for damages, if the plaintiff were to institute the suit today, would, therefore, be barred by limitation. It is on that ground argued that the defendant has acquired a valuable right and the amendment should not be now permitted which will defeat that right. Here again there is controversial ground. The classic authority on which Mr. Sanyal relies for this branch of his argument is Weldon v. Neal where Lord Esher M.R said:

We must act on settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments. If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment, Would be barred by the Statute of Limitation, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be, in my opinion, improper and unjust. Under very peculiar circumstances the Court might perhaps have power to allow such an amendment, but certainly a general rule it will not do.

Lindley L.J and Lopes L.J concur with Lord Esher M.R

On the basis of this authority, Mr. H.N Sanyal argued that amendment should not be allowed in this case, because there are no special circumstances. In fact, the special circumstances, in his opinion, are against such amendment. He points out that the requisition was made as long ago as December 17, 1947, and, if the plaint were amended at that time, the claim for damages would not have been barred by limitation. But Mr. Sanyal argued that the plaintiff delayed and took no steps and allowed by his laches the claim for damages to be barred by limitation. There is considerable force in the argument put forward by Mr. Sanyal. But I am distressed by one fact which seems to me to afford the special circumstances in this case for allowing the amendment. It is true that the requisition was made in 1947, about a year after the institution of the suit, but it might have been released before the suit came for hearing, and it might have been possible for the plaintiff to show his capacity to convey at the date when the decree was about to be made as that is the material point of time for consideration. Now, therefore, when the suit is ready for hearing, the plaintiff finds that there is no chance of the requisition being released. What happened in this case was that the suit did appear before me for hearing on June 15, 1949, and then the plaintiff contended that it was doubtful whether there was any effective requisition at all and even if so what was its nature and scope. The defendant contended that the property could not be conveyed, as it was under effective requisition by the Government. Upon that, an order was made on June 15, 1949, pursuant to the plaintiff's prayer in the plaint as to enquiry, adjourning the further hearing of the suit and referring the matter to the Registrar to enquire as to the good marketable title and whether there was any requisition and if so the nature and scope thereof. The plaintiff urges now in his petition that he made diligent efforts to get the property released from requisition but has not succeeded, with the result that the plaintiff has come to the conclusion and he has been so advised that no useful purpose will be served by proceeding with the enquiry as to title before the Registrar. This conduct is consistent with the desire of the plaintiff to try his best until the very last to convey the property according to the agreement. I should, therefore, think that it will be a very great hardship on the part of the plaintiff if he is not allowed this amendment. It will mean that he will neither get specific performance nor will be get damages even if he is right in showing defendant's breach.

The Privy Council in the case of Charan Das v. Amir Khum, says that, although the power of a court to amend the plaint in a suit should not, as a rule, be exercised, where the effect is to take away from the defendant a legal right, which accrued to him by lapse of time, yet there are cases in which that consideration is outweighed by the special circumstances of the case. In that case, the suit asked for a declaration of right of pre-emption under s. 42 of the Specific Relief Act, but not for possession and the question arose whether plaint could be amended by claiming possession on pre-emption, although the time had expired for bringing a suit to enforce the claim for possession. It was allowed and was said that such an amendment could be made in spite of limitation.

Now, in the case before me, there was the prayer made alternatively to the claim for specific performance, for the forfeiture of the earnest money and damages in addition to or in lieu of specific performance. This alternative claim, of course, was obviously made under s. 19 of the Specific Relief Act. While it is true that any defence, which could defeat a claim for specific performance, could defeat such an alternative claim for compensation, it appears to me that this is a matter of mere form and not of substance in India. In Mama v. Sassoon (supra) the Privy Council said that an amendment should not be allowed when the suit had been pending as one for specific performance for a long period, during which the defendant had been prevented from dealing with the property. But that consideration does not apply here. In the case before me, it is a vendor's suit for specific performance. In the case before the Privy Council, the case was a purchaser's suit for specific performance. The consideration, therefore, that defendant was prevented from dealing with the property during the pendency of the suit for specific performance does not arise here.

As I am of the opinion that the amendment does not alter the cause of action which remains the breach of contract and it only modifies the relief in the sense that it gives up the claim for specific performance and asks for damages for the same breach, I, in the exercise of my discretion, allow the amendment.

There will, therefore, be an order in terms of clauses (a) and (b) of the summons. The applicant must, however, bear the costs of this application and the costs of any additional written statement that the defendant may be advised to file by reason of such amendment. Certified for counsel.

Application allowed.

Attorneys for applicant: S.R Mehta & Co.

Attorney for respondent: P.N Roy.

K.B