Baijnath Bhalotia v. State Bank Of India And Others

Mahapatra, J.:— Defendant No. 2 is the appellant. The appeal arises out of a suit brought by the State Bank of India for recovery of Rs. 1,60,076-4.11 will) interest pendente lite and future from the defendants. The case of the plaintiff Bank was that the defendants had opened a cash credit account with the Bank and had entered into an arrangement that they would pledge goods with the Bank as security against the advances and, later on, on payment of proportionate amount, would take the release of the pledged goods and gradually discharge the loan of the Bank. In addition to this arrangement which was evidenced by the documents of agreement, they had also given letters to the Bank that each one of them will be responsible to the Bank for any act done by other defendants in regard to taking advance and furnishing security of goods. On the date when the suit was instituted, the defendants, according to the plaintiff-Bank owed Rs. 1,60,076-4-11. I should make it clear that the suit was instiltiled only on the contract of loan and not on the contract of pledge or any other agreement entered into by the parties in respect of the cash credit account.

2. The defence put up by the different defendants was not the same though they were all in common in denouncing the plaintiff's claim in their respective written statements, each one of them tried to throw the blame on the one or the other of the defendants; particularly defendant No. 2 made it clear in his written statement that lie was not responsible for anything done by defendant No. 1 which he alleged to be the fraudulent acts on his part with the motive to deceiving other defendants who were working in partnership with him in carrying on the business of the mills known as Shree Bhagwati Rice Oil and Flour Mills' at Jamui. On the trial of the suit, the plaintiff's claim was decreed on contest against defendants 1, 2 and 4 with costs, and if was also declared that the plaintiff-Bank had the first charge on the sum of Rs. 33,959-2-3 which was then in deposit in the State Treasury at Jamui as the sale proceeds of the pledged goods in a criminal action instituted by the Bank against the defendants. Against that, defendant No. 2 alone has come in appeal.

3. Learned Counsel, appearing for the appellant, did not address us on the merits of the appeal at all. He only pressed an application which he filed to-day for amendment of his written statement in which he wants that a new paragraph should be added as paragraph 26 as follows:

“That this defendant is entitled to a set of Rs. 91,561 as against the claim of the plaintiff.”

4. Learned Counsel's argument is that the foundation for this claim of set off was laid in the appellant's written statement, if not also in the written statement filed by the other defendants; but the prayer for set off was not made specifically either in the written statement as it was then filed or at any later stage when the trial was in continuance. He contends that defendant No. 2 and, for the matter of that, other defendants would be seriously prejudiced if really the claim of set off as sought now to be put in the written statement by way of amendment is not allowed.

5. As for the delay suffered in making this prayer, learned Counsel urged that would not be the sole criterion for deciding the justifiability or otherwise of allowing the amendment of he written statement at this stage. His further contention is that the plaintiff-Bank had adduced all evidence in regard to the fraud alluded to in the written statement. A pure of the case put up in the defence was that the Bank or some employees of the Bank were responsible for interfering with the contents of the pledged goods and thereby the price that was fetched by the sale of those goods became very much Jess. The Bank was responsible for the low price and as such, the defendants were not liable for the entire claim in the cash credit account as prayed in the suit Alternatively, it was contended that even if the plaintiff would now choose to adduce flirt he evidence to refute this counter claim of set off it may he open to them to do so and they can the compensated by any proper order of costs or other conditions.

6. Learned Counsel referred to some decisions in support of his contentions, namely, cases of Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil, AIR 1957 SC 363, L.J Leach and Co. Ltd. v. Jardine Skinner and Co., AIR 1957 SC 357, A.K Gupta and Sons Ltd. v. Damodar Valley Corporation, 1966 BLJR 340 (AIR 1967 SC 96). and Union Of India v. Shalimar Tar Products* (1935) Ltd., AIR 1953 Pat 131. I shall deal with these cases later. The most that these decisions and other decisions on the question of amendment of pleadings lays down is that the paramount consideration that should weigh with a Court in such a matter is to see whether the ends of justice call for the amendment to be introduced at a later stage. No doubt, the Court has got power to allow the amendment of pleadings of the parties at any stage as provided under Order 6, rule 16 of the CPC, but the amendment which is now being sought for is of a different nature.

7. It is not a mere amendment of the pleading, namely, the written statement filed by defendant No. 2 but it is really a prayer under Order 8, rule 6 of the CPC to introduce a claim of set off against the plaintiff's money claim, which was the basis of the suit. This was undoubtedly permissible to any of the defendants. That would he really a different cause of action —a cause of action different from the cause of action on which the plaintiff's suit was based. But Order 8, rule 6 of the Code permits the trial of two such different causes of action in one suit, so that one of the parties may not inequitably be driven to another suit in regard to his claim arising out of the same transaction with the other side. The provisions under Order 8, rule 6 are no doubt confined to legal set off and equitable set off is not hedged by those provisions in the present case learned Counsel contended that his claim is an equitable set off and not a legal set off. I am unable to see how this can be classified as an equitable set off.

8. According to his own case, the arrangement with the Bank was that the goods would be pledged with the Bank against advances of money from it and now the defendant wants that whatever goods were in pledge with the Bank on the date of the institution of the suit must be valued and adjusted to the credit of the defendant and in that way the Bank's money claim will be reduced. This is clearly, in my view, a legal set off and will be covered by the provisions of Order 8, rule 6 of the Code. such a claim of set off could only be made at the first hearing of the suit. If it has not been so done, it can be claimed at a later stage with the leave of the Court. We are really at that stage. The defendant wants to put in his claim of set off which he failed to do at the first hearing of the present suit and for that, lie seeks the permission of the Court. Though the present application has been labelled as one under Order 6, rule 17 of the Code, it is, in effect an application under Order 8, rule 6 of the Code.

9. In dealing with an application of this nature at a belated stage like this, the question of delay cannot be completely overruled; and along with it the convenience or otherwise, prejudice or otherwise of the other party will have to be borne in mind before this belated prayer can be permitted. In our view, no sufficient cause or explanation has been made out to condone this long delay of several years. The suit was instituted in 1952 The first hearing was in 1959, and all these seven years the defendant kept quiet.

10. Even if this claim of set off is taken to be not as a legal set off but as an equitable set off there may not be much in favour of the appellant also Order 6, rule 17 of the Code is wide enough to cover a case of this nature even if it is taken only as an amendment of the pleading by inserting an equitable relief of set off. There, the question of delay may be relegated to a remote place, if the ends of justice would justify the allowance of such an amendment. Even if the claim of set off is barred by limitation as in the present case is, that may also occupy a subordinate position in the consideration of the Court and may be outweighed by the paramount consideration of ends of justice. But, all the same, the prejudice that may be caused to the other side or the difficulty to which the other side may be driven cannot be completely overlooked if that is inevitable in allowing an amendment of this nature at this late stage.

11. In permitting amendment of the pleadings, the Court has to consider two things; (1) ends of justice, and (2) the other which is equally important is that a new case is not permitted to be made out by such an amendment. If a case is already there in the original pleading and it is sought to be extended either by way of adding another relief or putting another ground of defence or claim alternatively or in addition to what he stated in the original pleading, it can be permitted. But if a new case is sought to be made out and facts or claims based upon a different cause of action are sought to be introduced by way of amendment, that has to be prevented because that would cause unnecessary prejudice to the other side in the instant case, the cause of action of the suit was based upon the contract of loan. The cause of action for the claim of set off is undoubtedly based on the contract of pledge. Though two causes of action would have been combined in the same trial with reference to the provision of Order 8, rule 17 of the CPC that alone cannot be borne in mind in considering this amendment as a mere amendment of the written statement as contemplated by Order 6, rule 17 of the Code.

12. No doubt if a separate cause of action was there in the written statement of the defendant because it was permissible to be raised therein, then the present amendment which would be in the nature of an extension of that cause of action or the relief based upon that cause of action could be permitted. But, reading the written statement of defendant No. 2 or, for the matter of that, the other written statements filed by other defendants, it does not appear that at any stage before today the appellant had ever wanted to raise his cause of action based upon the contract of pledge or wanted that the money claim of the Bank should be reduced by whatever would be found due to the defendant or defendants on account of the pledged goods with the Bank in absence of that cause of action or the case by way of set off in the original written statement the present application cannot but mean to introduce an amendment in the written statement by incorporating therein new facts, a new cause of action and a new claim. In my view, this is not permissible within the meaning of Order 6, rule 17 of the Code. I have already indicated that such a prayer cannot be allowed within the meaning of Order 8, rule 6 of the Code.

13. Coming to the cases cited by learned Counsel for the appellant in support of his prayer for amendment of the written statement it is only to be mentioned that none of those cases goes to support him to the extent he wants. In the case of AIR 1957 SC 363, the plaintiff had obtained a decree in another suit for ejectment against the defendant B. When he executed the decree. C came and objected to the execution and succeeded. The plaintiff was thereupon forced to launch another suit against C in which he claimed reliefs against C. He had not stated in the plaint of the second suit anything about his original claim. He started with the decree that he had already obtained against B. The suit was not successful on account of absence of the claim of the plaintiff's title, independent of the decree to which the other defendant C was not a party. At that stage, the plaintiff wanted to amend his plaint by bringing to his plaint facts relating to his claim prior to the decree) on which he had obtained a decree in the earlier suit.

14. That was permitted. The reason given in support of the permission was that the relief, us mentioned in the plaint, remained unchanged in spite of the amendment sought for. The suit itself was clearly to establish the plaintiff's claim against the defendant C, but the omission to state the facts relating to the plaintiff's claim, prior to the earlier suit, was an omission and could be condoned both for ends of justice and also because that would not create any prejudice or surprise to defendant C. In the instant case, the position is entirely different. Neither the relief which the defendant wanted in his written statement will remain the same if this amendment will be allowed, nor, the facts which would be necessary to establish the present claim of were there during the trial. The dispute in controversy was not in regard to the quality or quantity or the prices of the goods pledged but only about the money that was due to the Bank from the defendants on the cash credit account in my view, that decision of the Supreme Court does not lend any assistance to the appellant.

15. The other case of AIR 1957 SC 357, was in which the original action was based on a tort on account of conversion of goods. At later stage, it was converted into a suit for damages for breach of contract. The facts are entirely distinguishable. The case of 1966 BLJR 340 : (AIR 1967 SC 96), was mostly relied, from which learned Counsel wanted to draw support. There the suit by the plaintiff was for declaration that the plaintiff was entitled to the full rate mentioned in a particular agreement for execution of contract. The defendant's plea was that the plaintiff contractor was entitled to only a part of that. The amount to which the plaintiff would be entitled on the full contract-rate was mentioned in the plaint. The suit had been valued at that amount also, but as it was only of a declaratory nature, ad valorem court-fee was not paid. The trial Court allowed the declaration sought for by the plaintiff to the extent that he was entitled to the full rate mentioned in the contract.

16. In appeal by the defendant, the High Court dismissed the suit because it was not maintainable under Section 42. Specific Relief Act. The plaintiff went in appeal to the Supreme Court against that, and there it was frankly conceded that the finding as to the maintainability of the suit as held by the High Court was unchallengeable. The plaintiff-appellant however, asked for an amendment of the plaint at that stage by introducing a claim for recovery of money due as calculated at full rule mentioned in the contract. That amendment was allowed it is noteworthy that the considerations which weighed with their Lordships of the Supreme Court in that case were in detail, mentioned in paragraph 10 of the report. None of those considerations is available to the appellant in the present case Learned Counsel, however, relied upon an observation of the Supreme Court in that case to the following effect:

“It is not in dispute that at the date of the application for amendment, a suit for a money claim under the contract was barred. The general rule, no doubt, 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 case or cause of action is barred Weldon v. Neale, (1887) 19 Q.B.D 19. But it is also well recognised that where the amendment does not constitute the addition of a new cause of action or raise a different case, but amounts to no more than a different or additional approach to the same facts, the amendment will be allowed even after the expiry of the statutory period of limitation: see Charan Das v. Amir Khan, 47 Ind APP 255 : (AIR 1921 PC 50). and 1957 SCR 438 : (AIR 1957 SC 357).”

17. It is on this part of the observation that the learned Counsel has relied upon; but there it has been clearly stated that where a new cause of action or a different case is not sought to be introduced by the amendment, it can be permitted as I have already indicated, the amendment which the appellant wants now is not an extension of the case that he had pleaded in his original written statement, but he wants to put in an entirely different new case it is a new set of claim arising from a new cause of action and therefore, it cannot be permitted. Their Lordships at another place in the judgment, referring to Robinson v. Unicos Property Corporation Ltd., (1962) 2 All ER 24, and Dornan v. J.W Ellis & Co. Ltd., (1962) 1 All ER 303, observed that a new claim made on a new basis constituted by new facts' mean a new set of ideas Considering in that light, the present amendment is exactly that.

18. The other case on which learned Counsel very much relied is AIR 1953 Pat 131 The plaintiff's suit there was for recovery of damages against the railways, as their laboratory was destroyed by the negligent shunting of an engine. The defendant railway pleaded absence of negligence on their part in the original written statement. Later on they wanted by way of an amendment to introduce another defence that the laboratory was situate on a land which did not belong to the plaintiff but belonged to the railway. This prayer was made before the actual hearing was taken up. It had been refused by the trial Court. On appeal, that was allowed. The defendant in that suit in its original written statement had denied the liability to damages. They had given one reason in support of that plea of no liability. By amendment they sought to introduce another ground it was an addition of a thing which had originally found place in he first written statement it did not introduce a new case although the nature of the defence was different from the other defence that had been pleaded originally in the written statement. Secondly, the stage at which this amendment was sought for was important, and in that view, the Court thought that the plaintiff was not going to be prejudiced or to be on an inconvenient surprise if that amendment was allowed at that stage. In our view, the facts of that case cannot be brought on an analogy with the facts of the instant case.

19. For all the reasons given above, it is difficult to allow this amendment as prayed for. The application is, therefore, rejected.

20. Since the merit of the appeal was not pressed, the appeal will stand dismissed but in the circumstances of the case there shall be no order for costs, particularly for the reason that the learned Counsel for the appellant frankly conceded that he was not able to challenge the decree as it is unless his claim for set off is allowed to be raised by way of amendment.

21. A.B.N Sinha, J.:— I agree that the application of the defendant-appellant for amendment of his written statement is without any merit and must be rejected.

22. The principles on which voluntary amendment is allowed are well settled. It is contained in Order 6, rule 17 of the CPC which reads as under:

“The Court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.”

23. One of the principles which has been uniformly followed while determining the question whether an amendment prayed for should be allowed or not is that however negligent or careless may have been the first omission and however late the proposed amendment the amendment will be allowed if it can be made without injustice to the other side if there is no injustice caused to the other side by the amendment sought for, it has been held that on allowing cost to the opponent which will compensate him adequately, an amendment can be allowed in the present case, apart from the fact that from the written statement of the defendant-appellant, it is impossible to spell out a case of a claim against the plain-tiff-Bank it is obvious that if the defendant-appellant were to file a case making a claim against the Bank to-day it will be barred by limitation Reliance was placed by the Counsel for the appellant on paragraphs 11 and 17 of the written statement, and it is urged that upon the statements made in those paragraphs a foundation for a claim for set-off against the plaintiff-Bank has already been laid in the pleadings.

24. I foil to see any substance in this contention. In paragraph 11, a list of the articles together with their quantities and value which had been pledged with the Bank is given. That by itself, however, does not in any manner imply that a claim against the Bank was being sought to be made out.

25. In paragraph 17, it has been alleged by the defendant-appellant that the aforesaid articles pledged with the Bank had been tampered with and portions thereof had been removed and some bags had been changed by the employees of the Bank due to the neglect and misconduct of the Bank it will appear, however, from the subsequent paragraphs of the written statement that the defendant-appellant purported to disclaim all liability not on the ground alleged in para graph 17 but on the ground that it was defendant No. 1 who was carrying on the whole show and was responsible for whatever fraud or misrepresentation had been committed and that in any case the seizure of the goods by the police during and in connection with the criminal case started against the defendants by the Bank was illegal and without jurisdiction.

26. From the content of the written statement as also from its general tenor it, accordingly, appears that no case whatsoever of any claim against the Bank was made out; and if by the amendment sought for now such a case will be allowed to be introduced, it will obviously be a new case altogether. Upon the authorities on which so much reliance has been placed by the learned Counsel appearing for the appellant and to which elaborate reference has been made in the judgment delivered by my learned Brother, it is clear that the defendant cannot be permitted to make out a new case at this stage, specially when it involves a case which is otherwise barred under the law of limitation.

AK/NRK/G.G.M

27. Appeal dismissed.