P.P Mukherjee v. Sagarmal

Ramaswami and Ahmad, JJ.:— This rule was obtained by the defendant Pramada Prasad Mukherjee against an order of the Subordinate Judge of Dhanbad, dated the 21st of August, 1952, refusing, in the first place, certain amendments which were sought to be made in the written statement, and directing, in the second place, court-fee to be assessed on certain items which the petitioner claimed by way of restitution.

The opposite party brought the suit on the allegation that on the 28th of June, 1948, there was a Managing Agency Agreement which the parties entered into for a period of seven years in respect of a colliery known as Ramkrishna Colliery located at mauza Patalbari. It was alleged in the plaint that the petitioner took a salami of Rs. 20,000 and also a security deposit of Rs. 30,000 from the opposite party. There was a further claim that the opposite party had paid the price of 120 tons of coal and the price of water tank amounting to Rs. 20,020. The total claim of the opposite party was, therefore, a sum of Rs. 55,000. The main allegation in the plaint was that the Managing Agency Agreement was obtained as a result of mis-representation and fraud practised upon the opposite party. The opposite party prayed for rescission of the contract on the ground that the Agreement was not binding on the parties and for recovery of the sum of Rs. 55,000. The main ground of defence was that the Agreement was not vitiated either on account of fraud or on account of misrepresentation. The case of the petitioner was that the mauza Patalbari contained valuable seams of coal and, in fact, the opposite party had raised 5,398 tons of coal valued at Rs. 75,572; It was said that the opposite party were not in a satisfactory financial position and that was the reason why they had to abandon the colliery. There was a further plea taken by the petitioner that if the court should hold that the Agreement was vitiated on account of fraud and misrepresentation, the petitioner was entitled to restitution and the opposite party were bound to restore such benefits they have received under the contract. The petitioner, therefore, claimed that the opposite party should refund the price of 5,398 tons of coal that they have raised. Written statement was filed on the 17th of March, 1952. The petitioner filed an application on the 20th of August, 1952, asking the court to allow an amendment to the written statement. In this application the petitioner made claims as regards eight items. The learned Subordinate Judge allowed the written statement to be amended only so far as items 1 and 4 are concerned and rejected the prayer of the petitioner as regards the other six items.

There are two matters argued in this case. In the first place, Counsel for the petitioner argues that there is no justification why the Subordinate Judge should disallow the claim of the petitioner to amend the written statement as regards six items. The reason given by he Subordinate Judge for disallowing the prayer of the petitioner is that “no such case was made in the written statement before”. These items relate to the claim of the petitioner with respect to the price of materials supplied to the opposite party, damage to the building, cost of remedying violation under the Mines Act, cleaning debris in the quarry and loss of income due to circumstance that, the opposite party had taken away boiler parts. Counsel for the petitioner contends that items 1 and 2 were matters which arise directly out of the contract to which the parties entered into. As regards the other six items, Counsel maintains that the petitioner ought not to be driven to a separate suit for seeking relief. Counsel said that these items arise out of the same transaction, and it was essential that amendment on these items should be allowed and the petitioner ought not to be required to file a separate suit. The issues in this case appear to have been framed on the 20th of March, 1952, and the preliminary issues, namely, Issues 7 and 8, have been decided, but it does not appear that the case has yet actually been taken up by the Subordinate Judge, and the hearing of the evidence has not begun. In these circumstances we do not think any injustice would be done to the opposite party if the amendments are allowed to be made in the written statement and further issues raised between the parties. The general rule which is applicable to a case of this description is that leave to amend written statement ought to be granted unless the party applying is acting mala fide or by his blunder has done some injury to his opponent which cannot be compensated by award of costs. Otherwise, whether the original omission arose from negligence, carelessness, or accidental error, the defect may be allowed to be remedied if no injustice is done to the other side. That is the view taken by this High Court in Union Of India v. Shalimar Tar Products*. Applying the principle to the present case we are of opinion that the petitioner should be allowed to amend the written statement even as regards items 2, 3 and 5 to 8 mentioned in his application, dated the 20th of August, 1952. This is subject to the condition precedent that the petitioner pays, in the court of the Subordinate Judge, a sum of Rs. 80 as costs to the opposite party.

The second question arising for determination in this case is whether the learned Subordinate Judge was right in holding that the petitioner ought to pay court-fee on the value of 5,398 tons of coal and also on items 1 and 4 of the amendment petition, dated the 20th of August, 1952. The argument on behalf of the petitioner is that the Subordinate Judge was in error in holding that the claim was in the nature of a legal or equitable set-off, and schedule 1, Article 1 of the Court-Fees Act would apply to the case. It was contended that the claim of the petitioner was in the nature of defence of confession and avoidance and not in the nature of a counter claim or a set-off. In our opinion, the argument of learned Counsel is correct so far as the value of 5,398 tons of coal and items 1 and 2 of the amendment petition, namely, (1) unpaid price of Parada Seam Slack coal valued at Rs. 2,531-10-0 and (2) price of materials supplied Rs. 1,718-5-0 are concerned. The essence of a set-off is that the defendant should have a cause of action against the plaintiff apart from the suit and not merely as a defence to the plaintiff's claim. To put it differently, the set-off is in the nature of a cross-action which could be separately entertained. In Bow McLachiland and Co., Ltd. v. The Ship “Camosun”, and in Williams Brothers v. Agius, Ltd., the English courts have laid it down that a counterclaim must be of such a nature that the court would have jurisdiction to entertain it as a separate action. In Amon v. Bobbett, it was observed by Bowen, L.J

“A counter-claim is, therefore, to be treated, for all purposes for which justice requires it to be so treated, as an independent action.”

In the present case the claim of the petitioner is not of this character. The allegation of the defendant in the written statement is that if the contract be vitiated by fraud or by misrepresentation, the opposite party must, before rescission of the contract, restore all the benefits they have obtained on the contract. The case of the defendant is based upon section 64 of the Contract Act which provides that in a case of rescission of contract on the ground of fraud the party rescinding must restore any benefit received under the contract to the person from whom the benefit was received. Even if the petitioner had not set up the plea, it is clear that a court, before making an order for rescission of the contract on the ground of fraud must make an order that the opposite party should restore the benefit they had received under the contract. For the principle is that there must be restitutio in integrum as a condition of rescission of the contract. It is obvious that for a relief of this description the defendant-petitioner cannot be asked to bring a separate suit. It follows, therefore, that the claim of the petitioner as regards items 1 and 2 and the value of 5,398 tons of coal raised by the opposite party was really a claim in the nature of defence. We are of opinion, therefore, that no court-fee is leviable on these two items and also on the value of 5,398 tons of coal raised by the opposite party under the provisions of schedule 1, Article 1 of the Court-Fees Act. The view we have taken is supported by three decisions, Mt. Raj Rani v. Rajaram, Katie Graham v. Colonial Government of British Guiana, and A. Koyam v. Rajammal.

As regards the other items stated in the petition of amendment, dated the 20th of August 1952, namely, items 3 to 8, we are of opinion that they are in the nature of a set-off and the petitioner is liable to pay court-fee on the value of these items as mentioned in the petition of amendment.

For the reasons set forth above we allow the application to the extent indicated above. There will be no orders as to costs of the hearing of this case.

K.D

Order accordingly.