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State Bank Of Hyderabad v. Town Municipal Council .
Factual and Procedural Background
The appellant Bank purchased a plot measuring 610 ft × 250 ft in Yadgir at a public auction. Conflicting claims over ownership led the Bank to institute a suit seeking an injunction. The respondent filed a separate suit in the same court praying for a permanent injunction to restrain the Bank from constructing on the land.
The trial court dismissed the Bank’s suit and decreed the respondent’s suit. Both parties appealed. During the first-appeal stage the Bank applied to amend its plaint, and on 7-4-2003 the appellate court allowed the amendment and remanded both suits to the trial court for fresh disposal.
The respondent filed second appeals before the High Court. The High Court held that, because of the proviso to Order 6 Rule 17 of the Code of Civil Procedure (inserted by the 2002 Amendment Act), the amendment should not have been allowed. It therefore set aside the order permitting amendment, allowed the second appeals and remitted the matters to the first appellate court for reconsideration.
The Bank appealed to the Supreme Court.
Legal Issues Presented
- Whether the proviso to Order 6 Rule 17 of the Code of Civil Procedure, 1908—introduced by the Code of Civil Procedure (Amendment) Act, 2002—applies to a suit filed in 1998.
- If the proviso does not apply, whether the appellate court was correct in permitting amendment of the plaint at the appellate stage.
Arguments of the Parties
Respondent's Arguments
- The application for amendment was belated and therefore should not have been entertained by the appellate court.
The opinion does not detail the appellant’s specific submissions.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| L.J. Leach and Co. Ltd. v. Jardine Skinner and Co., 1957 SCR 438, AIR 1957 SC 357 | Court’s discretion to allow amendments even if a fresh suit would be time-barred; limitation is a factor but not a bar to power. | Relied on to emphasise that limitation considerations affect discretion, not jurisdiction, to allow amendments. |
| Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil, 1957 SCR 595, AIR 1957 SC 363 | Two-fold test for amendments: (a) no injustice to the other side, (b) necessary for determining the real controversy. | Cited to reinforce that amendments should be refused only if they cause irremediable prejudice to the opposing party. |
| Rajesh Kumar Aggarwal v. K.K. Modi, (2006) 4 SCC 385 | Guidelines on liberal approach to amendments when required to resolve real issues. | Referenced in support of permitting amendments where justice so demands. |
| Pankaja v. Yellappa, (2004) 6 SCC 415 | Liberal construction of Order 6 Rule 17 prior to 2002 amendment. | Used to illustrate continued applicability of pre-amendment jurisprudence. |
| Baldev Singh v. Manohar Singh, (2006) 6 SCC 498 | Scope of amendment power and relevance of limitation. | Cited consistently with earlier authorities on discretion in amendments. |
| Gajanan Jaikishan Joshi v. Prabhakar Mohanlal Kalwar, (1990) 1 SCC 166 | Principles governing amendment and determination of real controversy. | Referenced as part of the line of authorities favouring liberal amendment. |
| A.K. Gupta and Sons v. Damodar Valley Corporation, 1966 1 SCR 796, AIR 1967 SC 96 | Amendment should be permitted if it can be compensated in costs and furthers justice. | Cited to bolster the discretionary nature of amendment power. |
| Kisandas Rupchand, ILR (1909) 33 Bom 644 | Amendments permissible unless they cause irremediable injury to the opposite party. | Quoted through Pirgonda Hongonda Patil for the same principle. |
Court's Reasoning and Analysis
1. Statutory Applicability: The Court examined Section 16(2)(b) of the Code of Civil Procedure (Amendment) Act, 2002. The provision expressly states that the substituted Order 6 Rule 17 does not apply to pleadings filed before the commencement of the 1999 and 2002 amendments. Because the original suit was instituted in 1998, the amended proviso did not govern the application.
2. Error of the High Court: By applying the proviso, the High Court required the Bank to prove that it could not, despite due diligence, have raised the amendment before trial. The Supreme Court held that this was a clear misapplication of law because the proviso itself was inapplicable.
3. Discretion to Amend: Even apart from statutory inapplicability, the Court reviewed its prior jurisprudence—particularly L.J. Leach and Co., Pirgonda Hongonda Patil and subsequent cases—emphasising that delay alone does not bar amendment unless it causes irreparable prejudice or defeats a limitation defence.
4. Prejudice and Limitation: The respondent did not demonstrate that the proposed amendment would defeat a limitation defence or cause uncompensable prejudice. Therefore, the appellate court’s decision to allow amendment was within its discretionary authority.
5. Conclusion: The High Court’s reliance on an inapplicable statutory proviso and failure to apply established principles on amendments constituted legal error, warranting reversal.
Holding and Implications
HELD: The Supreme Court set aside the High Court’s judgment, allowed the appeal and remitted the matter to the High Court for fresh consideration of the second appeals in accordance with law. All contentions of the parties remain open.
Implications: The decision restores the appellate court’s order permitting amendment and clarifies that the 2002 proviso to Order 6 Rule 17 CPC does not affect pleadings filed before its commencement. No new precedent is created, but the judgment reinforces settled principles governing retrospective application of procedural amendments and judicial discretion in allowing amendments.
S.B Sinha, J.— Leave granted.
2. The appellant Bank filed a suit against the respondent. The suit related to ownership of a plot admeasuring 610 ft × 250 ft situated in Town Yadgir. It was purchased by the plaintiff in a public auction. Allegedly, the respondent is now claiming back the said amount. The suit was initially filed for a decree for injunction. The respondent filed another suit in the same court for permanent injunction restraining the Bank from constructing any building. The suit of the appellant was dismissed whereas the suit of the respondent was decreed. Appeals were preferred thereagainst by both the parties. In the said appeals, an application was filed for grant of leave to amend the plaint. The said application for grant of leave to amend the plaint was allowed by the appellate court by an order dated 7-4-2003. The appellate court remanded both the suits to the trial court for their disposal afresh on merits. Second appeals were filed by the respondent herein before the High Court. The High Court by reason of the impugned judgment opined that the said application for amendment was not maintainable in view of the proviso appended to Order 6 Rule 17 of the Code of Civil Procedure (“the Code”). On the said finding not only the order granting leave to amend the plaint was set aside, the appeals were also allowed and the matter was remitted to the first appellate court for its consideration afresh in accordance with law.
3. The appellant is, thus, before us.
4. The short question which arises for consideration is as to whether the proviso appended to Order 6 Rule 17 of the Code is applicable in the instant case.
5. Order 6 Rule 17 of the Code reads thus:
“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.”
6. The proviso appended thereto was added by the Code of Civil Procedure (Amendment) Act, 2002 which came into force with effect from 1-7-2002. It reads as under:
“Provided that no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial.”
7. Section 16(2) of the amending Act of 2002 reads as under:
“16. (2) Notwithstanding that the provisions of this Act have come into force or repeal under sub-section (1) has taken effect, and without prejudice to the generality of the provisions of Section 6 of the General Clauses Act, 1897,—
(a)***
(b) the provisions of Rules 5, 15, 17 and 18 of Order VI of the First Schedule as omitted or, as the case may be, inserted or substituted by Section 16 of the Code of Civil Procedure (Amendment) Act, 1999 and by Section 7 of this Act shall not apply to in respect of any pleading filed before the commencement of Section 16 of the Code of Civil Procedure (Amendment) Act, 1999 and Section 7 of this Act;”
8. In view of the said provision there cannot be any doubt whatsoever that the suit having been filed in the year 1998, proviso to Order 6 Rule 17 of the Code shall not apply.
9. The High Court relied upon the said proviso and opined that having regard thereto the plaintiff was obligated to establish that in spite of due diligence it could not have raised the matter before the commencement of the trial of the suit. The High Court evidently committed an illegality in relying upon the said proviso.
10. The learned counsel appearing on behalf of the respondent, however, would submit that the application for amendment being belated, the same should not have been entertained.
11. It is one thing to say that the application for amendment suffers from delay or laches but it is another thing to say that thereby the defendant was prejudiced. It is also not a case of the respondent that by reason of such an amendment, the relief which could not be granted having regard to the law of limitation has become available. The court even in such a case is not powerless although the question as to whether the relief sought for would be otherwise barred by limitation is a relevant factor to determine the issue.
12. This aspect of the matter has been considered by this Court in L.J Leach and Co. Ltd. v. Jardine Skinner and Co. 1957 SCR 438, AIR 1957 SC 357 in the following terms: (AIR p. 362, para 16)
“16. 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 interests of justice.”
13. L.J Leach and Co. Ltd. 1957 SCR 438, AIR 1957 SC 357 was referred to in Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil 1957 SCR 595, AIR 1957 SC 363 holding: (AIR p. 366, para 10)
“We think that the correct principles were enunciated by Batchelor, J. in his judgment in the same case viz. Kisandas Rupchand case ILR (1909) 33 Bom 644, 11 Bom LR 1042, when he said at pp. 649-50:
‘All amendments ought to be allowed which satisfy the two conditions (a) of not working injustice to the other side, and (b) of being necessary for the purpose of determining the real questions in controversy between the parties. … but I refrain from citing further authorities, as, in my opinion, they all lay down precisely the same doctrine. That doctrine, as I understand it, is that amendment should be refused only where the other party cannot be placed in the same position as if the pleading had been originally correct, but the amendment would cause him an injury which could not be compensated in costs. It is merely a particular case of this general rule that where a plaintiff seeks to amend by setting up a fresh claim in respect of a cause of action which since the institution of the suit had become barred by limitation, the amendment must be refused; to allow it would be to cause the defendant an injury which could not be compensated in costs by depriving him of a good defence to the claim. The ultimate test therefore still remains the same: can the amendment be allowed without injustice to the other side, or can it not?’
Batchelor, J. made these observations in a case where the claim was for dissolution of partnership and accounts, the plaintiffs alleging that in pursuance of a partnership agreement they had delivered Rs 4001 worth of cloth to the defendants. The Subordinate Judge found that the plaintiffs did deliver the cloth, but came to the conclusion that no partnership was created. At the appellate stage, the plaintiffs abandoned the plea of partnership and prayed for leave to amend by adding a prayer for the recovery of Rs 4001. At that date the claim for the money was barred by limitation. It was held that the amendment was rightly allowed, as the claim was not a new claim.”
(See also Rajesh Kumar Aggarwal v. K.K Modi (2006) 4 SCC 385, Pankaja v. Yellappa (2004) 6 SCC 415, Baldev Singh v. Manohar Singh (2006) 6 SCC 498, JT (2006) 7 SC 139, Gajanan Jaikishan Joshi v. Prabhakar Mohanlal Kalwar (1990) 1 SCC 166 and A.K Gupta and Sons v. Damodar Valley Corpn. (1966) 1 SCR 796, AIR 1967 SC 96)
14. As the High Court has failed to invoke the law as it then existed, we do not think that it was correct in its view.
15. For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. The appeal is allowed and the matter is remitted to the High Court for consideration of the appeal afresh in accordance with law. All contentions of the parties shall, however, remain open.
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