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Andhra Bank v. Abn Amro Bank N.V And Others
Factual and Procedural Background
ABN AMRO Bank instituted Suit No. 3 of 1998 (originally filed in the Delhi High Court and later transferred to the Special Court at Bombay under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992). The Bank seeks recovery of Rs 15,66,66,591 and other incidental reliefs on the allegation that the appellant failed to deliver one lakh 17% NPC Bonds despite receipt of consideration and instead furnished instruments relating to IRFC bonds.
The appellant (Defendant 1 in the suit) filed a written statement denying the allegations. Years later, it moved (i) Chamber Summons No. 1 of 2007 to amend the written statement by adding a plea that, under Section 230 of the Contract Act, the suit was not maintainable against it, and (ii) Chamber Summons No. 2 of 2007 to tender an affidavit of examination-in-chief of one Suhail Chander as evidence.
The Special Court rejected both applications by orders dated 13-4-2007 and 4-5-2007 respectively. The present consolidated Supreme Court opinion decides the appellant’s two civil appeals challenging those interlocutory orders.
Legal Issues Presented
- Whether an application to amend a written statement can be refused solely on the ground of delay and on an evaluation of the proposed amendment’s merits at the interlocutory stage.
- Whether the Special Court was justified in rejecting an application to tender an affidavit-in-chief merely because it contained no admissions and some statements overlapped with the plaint.
Arguments of the Parties
Appellant’s Arguments
- Delay alone is not a valid ground to refuse amendment; the proposed plea under Section 230 of the Contract Act is essential to determine the real controversy.
- The affidavit sought to be tendered contains material relevant to the issues and its admissibility cannot be denied for lacking admissions.
- The appellant undertook to file the amended written statement expeditiously so the trial date would not be affected.
Respondent (ABN AMRO Bank) Arguments
- The amendment application was filed after an inordinate delay and was a tactic to stall the trial fixed for 13-7-2007.
- The affidavit offered nothing new beyond the plaint and therefore should not be accepted in evidence.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court examined the original written statement, the amendment application, and the impugned orders. It identified two erroneous bases for the Special Court’s refusal to allow amendment:
- Delay: Consistent with settled law, mere delay cannot defeat a plea for amendment when it is necessary for adjudicating the real dispute. The appellant's undertaking to file the amended pleading immediately negated any prejudice.
- Assessment of Merits at Amendment Stage: The Special Court prematurely evaluated the substantive validity of the Section 230 Contract Act defence. At the amendment stage, the court must only consider whether the plea is necessary; adjudication on its merits occurs at trial.
On the affidavit issue, the Court held that an affidavit containing statements “relevant and germane” to the issues cannot be excluded simply for lacking admissions or overlapping with pleadings. Such exclusion amounted to “illegality and material irregularity.”
Finding both impugned orders unsustainable, the Court exercised appellate jurisdiction to set them aside, emphasising that it expressed no opinion on the merits of the suit or the newly added defence.
Holding and Implications
HOLDING: Both appeals are ALLOWED; the Special Court’s orders dated 13-4-2007 and 4-5-2007 are SET ASIDE. The appellant’s application to amend the written statement and the application to tender the affidavit-in-chief are allowed.
Implications: The appellant must file the amended written statement by 12-7-2007, and the Special Court is to proceed with trial from 13-7-2007 without adjournment. No costs were awarded. The Supreme Court clarified procedural principles on amendments and admissibility of affidavits but created no new substantive precedent beyond reinforcing settled law.
Tarun Chatterjee, J.—
CA No. 2946 of 2007 [arising out of SLP (C) No. 10844 of 2007]
1. Leave granted.
2. This appeal is directed against the order dated 13-4-2007 passed by the Special Court (Trial of Offences Relating to Transactions in Securities) at Bombay in Chamber Summons No. 1 of 2007 in Suit No. 3 of 1998 for recovery of Rs 15,66,66,591 with other incidental reliefs by which the application for amendment of the written statement filed at the instance of the appellant was rejected.
3. Initially the suit was filed in the High Court of Delhi and was later transferred to the Special Court at Bombay constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 where the suit is now pending decision. It has been alleged in the plaint by the respondent, abn amro Bank that on 3-3-1992, the New Delhi Branch of the Bank had ordered transfer of one lakh numbers of 17% NPC bonds of Rs 100 from Respondent 2 at a price of Rs 97. It has been the further case of abn amro Bank in the plaint that the appellant had failed to deliver to the respondent Bank the NPC bonds and instead on or about 18-3-1992 Respondent 2 delivered to abn amro Bank the original Letter of Allotment No. 0016 covering one lakh 9% tax-free IRFC bonds of the value of Rs 10 crores endorsed in blank along with contract note dated 9-3-1992. Accordingly, abn amro Bank has prayed for a decree for the amount mentioned hereinabove and for other incidental reliefs. In the written statement the appellant clearly denied the allegations made by the Bank. It is true, long thereafter an application for amendment of the written statement was filed by the appellant in which the appellant sought to amend para 7 of the written statement by inserting a new para, namely, para 7-A which is as follows:
“7-A. Defendant 1 says that the plaintiffs have admittedly agreed to purchase the said NPC bonds as also the said IRFC bonds and also allegedly paid the purchase price of the said bonds for and on behalf of their principal viz. the said Punjab Housing Development Board who is a disclosed principal. Defendant 1 says and submits that the suit has been filed to enforce the said alleged agreement viz. for recovery of the purchase price of the said NPC bonds by the plaintiff in its personal capacity. Defendant 1 says and submits that the plaintiff cannot personally enforce the said alleged agreement entered into by the plaintiff on behalf of its principal. In the circumstances Defendant 1 submits that the suit is not maintainable and is liable to be dismissed with costs.”
4. As noted herein earlier it is this prayer for amendment of the written statement which was rejected by the Special Court by the impugned order which is now under challenge in this appeal by special leave.
5. We have heard Mr Rohit Kapadia, learned Senior Counsel appearing for the appellant and Mr S. Ganesh, learned Senior Counsel for the respondent. We have perused the original written statement as well as the application for amendment of the written statement. After going through the written statement and the application for amendment of the written statement, we are of the view that the amendment sought to be introduced by the appellant must be allowed. From a perusal of the impugned order of the Special Court we find basically that two grounds have been taken by the Special Court for rejecting the prayer for amendment of the written statement. The first ground is that considerable delay has been caused by the appellant in filing the application for amendment of the written statement. It is well settled that delay is no ground for refusal of prayer for amendment. Mr Ganesh, appearing for abn amro Bank submits before us that by filing of such an application for amendment of the written statement which has been filed with long delay, the appellant sought to stall the hearing of the suit which has been fixed on 13-7-2007. In response to this Mr Kapadia, learned counsel for the appellant, submits that in the event the prayer for amendment is allowed by us his client undertakes to file the amended written statement by day after tomorrow i.e 12-7-2007 before the Special Court. Since, we are of the view that delay is no ground for not allowing the prayer for amendment of the written statement and in view of the submissions made by Mr Kapadia, we do not think that delay in filing the application for amendment of the written statement can stand in the way of allowing the prayer for amendment of the written statement. So far as the second ground is concerned, we are also of the view that while allowing an application for amendment of the pleadings, the Court cannot go into the question of merit of such amendment. The only question at the time of considering the amendment of the pleadings would be whether such amendment would be necessary for decision of the real controversy between the parties in the suit. From a perusal of the amendment application we find that the appellant in its prayer for amendment has only taken an additional defence that in view of Section 230 of the Contract Act, the suit itself is not maintainable. It is well settled, as noted herein earlier, that at the time of considering the prayer for amendment of the written statement it would not be open to the Court to go into the fact whether in fact the suit in view of Section 230 of the Contract Act was or is not maintainable.
6. That apart it is permissible in law to amend a written statement of the defendant by which only an additional ground of defence has been taken.
7. In view of the reasons stated hereinabove we are of the view that the order of the Special Court rejecting the application for amendment of the written statement filed by the appellant is liable to be set aside and the prayer for amendment of the written statement must be allowed. Accordingly, the application for amendment of the written statement is allowed and the impugned order is set aside. We are informed by the learned counsel for the parties appearing before us, as noted herein earlier, that the suit has been fixed for hearing on 13-7-2007 and the parties will not seek any adjournment on that date. In that view of the matter we direct the appellant to file the amended written statement by 12-7-2007 positively and thereafter the Special Court shall proceed with the hearing of the suit. The appeal is allowed to the extent indicated above. There will be no order as to costs.
CA No. 2947 of 2007 [arising out of SLP (C) No. 10845 of 2007]
8. Leave granted.
9. This appeal is directed against the order dated 4-5-2007 passed by the Special Court (Trial of Offences Relating to Transactions in Securities) at Bombay in Chamber Summons No. 2 of 2007 in Suit No. 3 of 1998 by which the Special Court has rejected the chamber summons taken out by the appellant as it was of the view that the most of the submissions made in the affidavit were also to be found in the plaint.
10. The question that arose in this appeal is whether an application of the appellant in a suit for tendering in evidence an affidavit-in-chief of the plaintiff containing statements which are relevant and germane to the issues involved in the suit can be rejected only on the ground that the affidavit does not contain any admission. As noted herein earlier the suit which has been filed by abn amro Bank is a suit for recovery of Rs 15,66,66,591 and for other incidental reliefs. In the suit the appellant has filed a written statement in which the appellant has clearly denied the allegations made by Respondent 1. It has further been clearly stated in the written statement that there was no privity of contract between the appellant and Respondent 1 and no transaction was even entered into between them. Although, the Special Court by an order dated 13-4-2007 rejected the prayer for amendment of the written statement made by the appellant but by our order of this date in CA No. 2946 of 2007 arising out of SLP (C) No. 10844 of 2007, the prayer for amendment of the written statement has been allowed by us. Chamber Summons No. 2 of 2007 arising out of Suit No. 3 of 1998 was filed seeking permission to tender in evidence the affidavit of examination-in-chief of Suhail Chander. This application was rejected by the Special Court in respect of which this appeal by special leave has been filed.
11. We have heard learned counsel for the parties and on consideration of the material on record, we are of the view that the Special Court has acted illegally and with material irregularity in the exercise of its jurisdiction in passing the impugned order. In the facts and circumstances of the present case and also after considering the affidavit filed by the appellant, we are of the view that such a prayer of the appellant to tender in evidence of certain paragraph and affidavit of examination-in-chief of the appellant containing statements are relevant and germane to the issues involved in the suit and, therefore, cannot be rejected only on the ground that the same did not contain any admission. Accordingly, we set aside the impugned order and allow the appeal.
12. As noted herein earlier, we are informed by the learned counsel for the parties that the suit has been kept for hearing on 13-7-2007 and in this view of the matter, we request the Special Court to go on with the hearing of the suit from 13-7-2007, as directed in CA No. 2946 of 2007 arising out of SLP (C) No. 10844 of 2007.
13. We make it clear that we have not gone into the merits of the suit or the amendment incorporated in the written statement. All such questions shall be taken into consideration by the Special Court at the time of disposal of the suit.
14. The appeal is allowed to the extent indicated above. There will be no order as to costs.
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