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  • mistake.17. Order 6, Rule 17 of the Code of Civil Procedure
  • sec. 293 of the Companies Act.8.
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  • mistake.17. Order 6, Rule 17 of the Code of Civil Procedure
  • sec. 293 of the Companies Act.8.
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This is an application by the defendant for amendment of its written statement in a suit originally instituted by the plaintiff for specific performance of an agreement to grant a lease of the ground floor and the first, second and third floors of premises No. 1, Lower Circular Road, Calcutta; alternatively for damages and other reliefs. The defendant seeks to amend after seven years.

Both parties are limited companies. The plaintiff alleges negotiations conducted through Messrs. Talbot & Co., that it was ready and willing to perform and that the defendant refused to execute a lease and attempted to let the premises to third parties at higher rent. The defendant's original written statement denied that any concluded, binding or valid agreement was entered into, and alternatively pleaded that no agreement was approved by its Board of Directors; it also pleaded that parts of the premises had been let to the Railway Electrification Department and to Asiatic Investment Ltd., and that possession had been given to those lessees.

The proposed amendments (paras. 2A–2G) supply the defendant's date of incorporation and certain objects, set out relevant Articles of Association (Articles 98, 99, 101 and 131) in extenso, and assert that Babulal & Co. Ltd. were the Managing Agents with power to make and sign contracts (including leases). The defendant contends that (i) only the Managing Agents could validly lease the property, (ii) Sm. Asarfi Debi, though a director of the defendant, was not a director of the Managing Agents and lacked authority to bind the Managing Agents, (iii) the alleged agreement was ultra vires the Articles and the Companies Act and therefore invalid, and (iv) the transaction amounted to substantially the whole undertaking and no shareholder consent (under s. 293 Companies Act) had been obtained.

Documentary material disclosing board resolutions and formal leases was inspected by the judge. The records show board resolutions in July–September 1958 dealing with authorisations to Sm. Asarfi Debi and approvals to grant leases; formal agreements/leases dated 30 September and 1 October 1958 were executed, and Sm. Asarfi Debi signed the lease on behalf of the defendant. The defendant explained the seven-year delay as due to legal advice at a conference held 19 April 1966 that the facts now sought to be introduced were relevant and should be incorporated, and said the omission in the original written statement was inadvertent and bonafide.

Legal Issues Presented

  1. Whether leave should be granted to the defendant to amend the written statement after a delay of seven years under Order 6, Rule 17 of the Code of Civil Procedure (identical in principle to O.20, R.1 of the Rules of the Supreme Court of England).
  2. Whether allowing the proposed amendment would cause irreparable prejudice to the plaintiff by extinguishing or rendering time-barred any remedy against the alleged responsible third party (the Managing Agents), thereby justifying refusal of amendment.
  3. Whether the application to amend is bona fide or mala fide, and whether the explanation for the delay (inadvertence and legal advice) is satisfactory.
  4. What standard or test should be applied where an amendment would, if allowed, effectively cast responsibility on a third party who cannot now be sued due to lapse of limitation.

Arguments of the Parties

Defendant's Arguments

  • The proposed amendments set out facts showing that Babulal & Co. Ltd. were the Managing Agents under the Articles and that only they were competent to lease the property; thus the alleged agreement is ultra vires or otherwise invalid.
  • The omission of these particulars from the original written statement was inadvertent and due to a bona fide mistake; the defendant received legal advice at a conference on 19 April 1966 that these matters should be pleaded by amendment so the Court has all relevant facts.
  • The proposed pleading does not seek to make the Managing Agents responsible for the plaintiff's injury; rather it alleges want of authority in the defendant and that the Managing Agents alone had competence under the Articles.

Plaintiff's Arguments

  • The defendant's application is barred by undue delay (seven years) and should be dismissed on that ground alone.
  • Allowing the amendment will cause serious injury to the plaintiff because the plaintiff will be unable now to sue the Managing Agents for damages as the statutory limitation period has elapsed; this prejudice cannot be compensated by costs.
  • The plaintiff's affidavit denied the defendant's explanation for delay and did not admit the asserted inadvertence or bona fides.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Tildesley v. Harper (1878) 10 Ch. D. 393 Permissive practice: leave to amend is generally given unless the applicant acted mala fide or the blunder caused uncompensable injury to the opponent. The court cited Bramwell, L.J.'s passage to illustrate the general rule favouring amendments unless mala fides or irremediable prejudice exist.
Clarapede & Co. v. Commercial Union Association (1883) 32 W.R. 262 Even if negligent or late, an amendment should be allowed if it can be made without injustice to the other side (compensation by costs may suffice). The court relied on Sir Balliol Brett, M.R.'s statement to reinforce that lateness/neglect alone do not bar amendment if injustice can be compensated.
Mahony v. East Holyford Mining Co. (1875) L.R. 7 H.L. 869 Persons dealing with a company are taken to have notice of the company's Memorandum and Articles of Association. The court applied this principle to hold the plaintiff ought to have known or been able to discover the relevant Articles and thus could have ascertained the Managing Agents' role earlier.
Shaik Masthan Shaib v. Balarami Reddy, A.I.R. 1953 Madras 958 (Cited by plaintiff's counsel in support of prejudice argument) The opinion records the citation but notes the Madras decision did not appear to be of much assistance to the plaintiff's contention.
Hashim Ali Khan v. Hamidi Begum, A.I.R. 1942 Calcutta 180 (Cited by plaintiff's counsel) The opinion records the citation but does not treat it as significantly helpful to the plaintiff's case.
Steward v. North Metropolitan Tramways Co., 16 Q.B.D. 178 Test: amendment refused where it would place the plaintiff in a position where his remedy against the true defendant is time-barred and cannot be compensated. The court described the decision and Pollock B.'s test; it considered but distinguished the authorities on the facts of the present case (not applied as determinative here).
Weait v. Jayanbee Joinery Limited (1963) 1 Q.B.D. 239 Amendment allowed where defendants had not been at fault in failing to discover a matter earlier and plaintiff's possible remedy against third parties was not unfairly prejudiced. The court compared the facts of that case with the present case and observed distinctions; the case was used to illustrate circumstances where amendment is permissible.
Turner v. Ford Motor Company Limited (1965) 2 All E.R. 583 Where an amendment does not cast blame on a third party but on the plaintiff himself, leave to amend may be granted even if the statutory period for joining a third party has elapsed; mere theoretical loss of a claim against a third party is insufficient without evidence. The court found the principles underlying Turner to be applicable to the present facts and treated it as the more appropriate analogue, favouring allowance of amendment.
Bombay Corporation v. Pancham, A.I.R. 1965 S.C. 1008 Courts are reluctant to permit amendments alleging fraud by way of amendment of pleadings; amendments introducing a new case in a plaint may be disfavoured. The court cited this authority to note general reluctance to allow new allegations of fraud and that courts are more ready to refuse amendments of a plaint than amendments of a defence.
Nrisingh Prosad Paul v. Steel Products Ltd., A.I.R. 1953 Cal. 15 (Local authority) Example where amendment after delay was refused though judge indicated he might have allowed it absent an attempt to overreach the Court. The court cited this as an example where long delay and new defence led to refusal, but noted the circumstances and concern about overreaching the Court.

Court's Reasoning and Analysis

The court began by recognising that Order 6, Rule 17 of the Code of Civil Procedure governs amendment of pleadings and that English authorities establish longstanding principles favouring amendments unless mala fide or causing irreparable prejudice.

The court examined whether any special circumstance in the present case should preclude amendment despite the ordinary rules. It addressed the plaintiff's central contention that allowing amendment would deprive the plaintiff of any remedy against the Managing Agents (because of limitation), thus causing irreparable prejudice which could not be compensated by costs.

Applying the principle in Mahony v. East Holyford Mining Co., the court held that a plaintiff dealing with a company is taken to have notice of the company's Memorandum and Articles and therefore the plaintiff ought to have been aware of the Managing Agents' appointment and powers at the institution of the suit. The court found the plaintiff could, if desired, have joined the Managing Agents in time after making reasonable enquiries.

The court examined the documentary evidence and observed there was no indication that the Managing Agents had taken part in the agreement for lease or had knowledge of the negotiations with the plaintiff. The Managing Agents had been told only that an offer had been received for a portion of the first floor; there was nothing to show they were apprised of negotiations with the plaintiff or of any concluded agreement. The court therefore concluded there was no prima facie case against the Managing Agents and that the plaintiff had not demonstrably lost an actionable right against them by reason of the defendant's failure to plead earlier.

The court then formulated the appropriate test where an amendment seeks to affect the plaintiff's remedy against a third party: amendment should be refused if (a) the plaintiff can make out a prima facie case against that third party, and (b) the plaintiff shows he could not, by reasonable enquiry, have known the facts at the time of instituting the suit and the defendant had knowledge and could have originally pleaded those matters. If both are satisfied, refusing amendment is justified to prevent prejudice that cannot be compensated. Where the defendant by amendment does not seek to make the third party responsible, these questions do not arise.

Applying this test, the court found (i) the defendant's proposed amendment did not seek to cast responsibility on the Managing Agents but to assert that under the Articles the Managing Agents, not the defendant company, had competence to lease; (ii) the plaintiff ought to have been aware of the Articles and could have joined the Managing Agents if it had a case; and (iii) there was no prima facie case disclosed against the Managing Agents from the documents before the court. The court also found no mala fides in the application and accepted the defendant's explanation of inadvertence and bona fide mistake.

On balance, and distinguishing authorities which required refusal where amendment would unfairly extinguish the plaintiff's remedy, the court concluded the principles in Turner v. Ford Motor Co. (which favoured amendment where the proposed change did not effectively place the plaintiff in an uncompensable position) were the proper analogue. Accordingly, the court allowed amendment but imposed costs and procedural conditions in light of the inordinate delay.

Holding and Implications

Holding: LEAVE TO AMEND THE WRITTEN STATEMENT IS GRANTED.

Direct consequences and procedural directions imposed by the court:

  • The defendant (petitioner) is granted leave to amend its written statement in terms of Clause (a) of the summons.
  • Because of the inordinate delay, the defendant is ordered to pay the plaintiff Rs. 1,020 as costs of the amendment application.
  • Leave is given to the plaintiff to file an additional written statement within three weeks from service of a copy of the amended written statement.
  • The petitioner will pay the costs of the additional written statement and the costs of any additional discovery arising from the amendments.
  • A copy of the amended written statement is to be served by the defendant's solicitor on the plaintiff's solicitor within one week after the amendments are incorporated; amendments to be effected within a fortnight after filing of this order.
  • Additional discovery to be made within one week after filing of the additional written statement, inspection to follow forthwith, and the suit is to appear in the peremptory list a fortnight thereafter. Liberty to mention; order to be drawn up expeditiously.
  • The court certified that this is a fit case for employment of counsel.

Broader implications: The opinion does not proclaim a new legal precedent. It applies existing principles governing amendment of pleadings (as derived from Order 6, Rule 17 CPC and analogous English authorities) to the facts before it and outlines a specific test to assess prejudice to a plaintiff where amendment may affect a remedy against a third party. The decision's practical effect is limited to allowing the defendant's amendment subject to costs and the procedural timetable set out above.

Prepared from the judgment text provided. No information outside the opinion has been added.

    Bata Shoe Co. Ltd. v. National Properties Limited.

    The Judgment of the Court was as follows:

    1. This in an application for amendment of the written statement. The defendant asks for an amendment after seven years. The suit is for specific performance of an agreement to grant a lease of the ground floor and the first, second and third floors of premises No. 1[1, Lower Circular Road, Calcutta, alternatively for damages and for other reliefs.

    2. The plaintiff and the defendant are limited companies. The plaintiff's case is that the agreement was negotiated through Messrs. Talbot & Co., Land and Estate Agents and the terms and conditions of the agreement are to be found in certain correspondence; that the plaintiff has been and is ready and willing to perform its part of the agreement but the defendant is wrongfully refusing to execute a lease and in breach of the agreement is trying to let out the premises to third parties at higher rent. In the original written statement it is contended that no concluded or binding or valid agreement was ultimately entered into in the alternative no such agreement was approved or confirmed by the Board of Directors of the defendant and no lawful agreement was entered into which in any way binds the defendant; that the defendant let out the ground floor and the first floor of the premises to Railway Electrification Department, Ministry of Railways and the second and third floors to Asiatic Investment Ltd. and that possession of the respective portions have been made over to the the lessees.

    3. The amendments are to be found in paragraphs 2A to 2G of the proposed amended written statement. In paragraphs 2A and 2B the defendant company have indicated the date of their incorporation and some of their objects as specified in the Memorandum of Association. In paragraph 2C, Articles 98, 99, 101 and 131 of the Articles of Association have been set out in extenso. Articles 99 and 101 which are relevant for the purpose of the application provide as follows:—

    Article 99. Messrs. Babulal & Co. Limited or their assignees or successors shall be the Managing Agents of the Company and shall be entitled to retain that office for a period of fifty years certain, with an option to extend the same for a period of twenty-five years on the said terms and conditions, provided they continue to hold not less than 10,000 shares in the capital of the Company. An agreement will be entered into between Messrs. Raj-garhia Limited on the one part and Messrs. Babulal & Co. Limited on the other appointing the latter as Managing Agents of the Company on terms and conditions as set forth or any other terms as may be determined by the Directors.

    Article 101. The Managing Agents so long as they shall continue to hold that office shall have the engagement and dismissal of all employees, servants and agents of the Company and the general direction, management and superintendence of the business of the Company with full power to make and sign all such contracts and to exercise all the powers, authorities and discretions of the Company except only such of them as under the Companies Act or these presents are expressly directed to be exercised by the Board of Directors or by the shareholders in General Meeting.

    4. In paragraphs 2D and 2E the defendant states that at the time when the alleged agreement was entered into, Babulal & Co. Limited were the Managing Agents of the defendant enjoying all the powers under the Article of Association including the power to let out the property which is the subject-matter of the suit and that the said Managing Agents were the only body or party empowered or authorised to validly lease out or enter into any agreement for leasing out the said property.

    5. Paragraph 2F states that Sm. Asarfi Debi Rajgharia, although a director of the defendant was never at any material time a director of the Managing Agents and never had the power to enter into any agreement for lease of the said property, and that in any event the alleged agreement is ultra vires the Articles of Association of the defendant company and the Companies Act and as such invalid, void and inoperative.

    6. Paragraph 2G states that the Managing Agents never authorised Sm. Asarfi Debi to enter into the alleged agreement or any agreement for lease of the said property on behalf of the defendant or on behalf of the Managing Agents and that the said transaction being a lease for a long term is an unusual transaction not ordinarily expected to be within the scope of a director's powers and as such not within the scope of her power and authority.

    7. In paragraph 2H the defendant states that the said property constitutes approximately 75 per cent of the entire assets of the defendant and the agreement purports to grant a lease substantially of the entire undertaking of the defendant and no consent of the shareholders has been accorded to the said agreement. This is a defence on the basis of sec. 293 of the Companies Act.

    8. Although in the pleadings reference has been made only to certain correspondence, I was invited by the plaintiff's, counsel, without any objection from the defendant's counsel, to look into the disclosed documents to enable me to decide the application.

    9. It appears that on 25th July, 1958, at a meeting of the Board of Directors of the defendant a resolution was passed authorising Sm. Asarfi Debi, a Director of the Company to sign and execute the documents in connection with the lease of a portion measuring 4,000 sq. ft. in the first floor of the premises in suit. It seems that Babulal & Co. Limited, the Managing Agents had taken a lease of 4,000 sq. ft. of the same portion on the first floor. By a letter dated 29th July 1958, the defendant requested Babulal & Co. Ltd. not to occupy the said portion and treat the lease as cancelled. The reason given was that the defendant has received a proposal for a lease of the entire ground floor and the first, second and third floors. By this letter similar space was offered to Babulal & Co. on the fourth floor. On the receipt of this letter Babulal & Co. agreed to surrender their lease. It should be noted that all that the defendant intimated to Babulal & Co. was that merely a proposal had been made for lease of a portion of the first floor from a party whose name was not disclosed in the letter. It was nowhere suggested that a lease was to be executed in respect of the said portion.

    10. On the 31st July, 1958, the defendant company intimated to Talbot & Co. who were acting on behalf of the plaintiff, that they were agreeable to grant a lease of 60,000 sq. ft. of space representing either three or four complete floors to the plaintiff on certain terms and conditions.

    11. On 21st August, 1958, Talbot & Co. wrote to the defendant company advising them that the plaintiff company had accepted the terms and conditions proposed in the letter of 31st July, with certain modifications. On 22nd August, 1958, Talbot & Co. wrote again to the defendant company recording that the defendant company had accepted the terms proposed by the plaintiff company with slight modifications and that the modifications in the terms proposed by the defendant company had been accepted by the plaintiff company. By this letter Talbot & Co. Limited asked the defendant to forward a draft lease as soon as possible.

    12. It appears from letters dated 24th September and 25th September 1958 that the defendant had agreed to execute a lease in favour of the Ministry of Railways in respect of two floors and a lease in favour of Asiatic Investment Limited in respect of the entire second and third floors of the premises.

    13. On 25th September, 1958, at a meeting of the Board of Directors of the defendant company a resolution was passed approving of the draft agreement for lease of the ground and the first floors to the Railways. By another resolution Sm. Asarfi Rajgharia, one of the directors of the defendant company was empowered to sign and execute the documents in connection with the said lease. On the 26the September 1958, at another meeting of the Board of Directors of the defendant company it was resolved that the second and third floors be leased out to Messrs. Asiatic Investment Co. Limited on certain terms and conditions. By another resolution passed at a meeting of the Board of Directors of She defendant company on 29th September, 1958, it was resolved that Sm. Asarfi Debi be empowered to sign and execute the documents in connection with the lease granted to Messrs. Asiatic Investment Limited.

    14. The formal agreement for lease dated 30th September, 1958, between the defendant company and Asiatic Investment Company and the lease dated 1st October, 1958, granted by the defendant company in favour of the President of India have been disclosed. It may be noted that Sm. Asarfi Debi executed the said lease on behalf of the defendant company.

    15. The defendant has sought to explain delay of the long period of 7 years in paragraphs 9, 10, and 11 of the petition. It is said that when the suit was appearing at the warning list and was likely to be heard in the near future a conference was held on 19th April, 1966. At the conference the defendant were advised by counsel that the facts which are sought to be introduced by amendment are very relevant to the questions in controversy in the suit and that those facts should be incorporated in the written statement by way of amendment so that the Court may have before it all the facts relevant for proper adjudication of the relevant issues in controversy in the suit. The said facts were not stated in the written statement through inadvertence and on account of bonafide mistake.

    16. In paragraph 13 of the petition, it is submitted that the proposed amendments will not introduce any new claims or alter or modify the nature or character of the defence. In the affidavit used in opposition, Sailendra Nath Bose a director of the plaintiff company has stated that he has no knowledge of and does not admit the statements made in the petition in whi-ch the delay has been sought to be explained. He submits that the defendant is guilty of undue delay and on this ground alone the application should be dismissed. He does not admit that the facts sought to be introduced were not stated in the written statement inadvertently or on account of bonafide or any mistake.

    17. Order 6, Rule 17 of the Code of Civil Procedure by which amendment of pleadings is governed, is in terms identical or almost identical with O. 20, R. 1 of the Rules of the Supreme Court of England. The general principles by which applications for leave to amend should be decided were laid down, nearly a century ago, in certain classical judgments which remain as valid today as on the day they were pronounced, and in the latest edition of Annual Practice the learned editors could do no better than to have cited liberally from those judgments. A passage is cited from (1) Tildesley v. Harper, (1878) 10 Ch. D. 393, in which Bramwell, L.J said:

    “My practice has always been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by his blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise.”

    18. There is another citation from the judgment of Sir Balliol Brett, M.R, in (2) Clarapede & Co. v. Commercial Union Association, (1883) 32 W.R 262, where he says:

    “……..however negligent or careless may have been the first omission, and, however late the proposed amendment, the amendment should be allowed if it can be made without, injustice to the “other side. There is no injustice if the other side can be compensated by costs.”

    19. The question arises whether, notwithstanding the application of the ordinary rules governing the amendment of pleadings there is some special circumstance in this case which presents an obstacle in the way of such amendments as the defendant seeks to introduce.

    20. Mr. Subrata Roy Chowdhury appearing for the plaintiff contended that if the amendments are allowed, serious injury will be done to his client because the plaintiff will not be able to sue the Managing Agents for damages by reason of limitation. He submitted that if the defendant had taken the defence in the original written statement that only the Managing Agents were competent to enter into an agreement for lease, the plaintiff could have joined the Managing Agents as a party and pleaded that the Managing Agents by their conduct had held out that the defendant company were competent to enter into the agreement, Now that the statutory period for pursuing such a course against the Managing Agents has elapsed, his client will be left without a remedy against the Managing Agents. If it transpires, that the plaintiff had a good prima facie case against the Managing Agents and was prevented from making that case by reason of the defendant not having taken the defence that only the Managing Agents were competent to act in the matter, that may be a good ground for refusing leave to amend.

    21. The plaintiff in dealing with the defendant, a public limited company must be taken to have notice of the Memorandum & Articles of Associa tion of the defendant company. As was said by Lord Hatherley in (3) Mahony v. East Holyford Mining Co., 1875 L.R 7 H.LL 869:

    “Every joint stock company has its Memorandum and Articles of Association open to all who are minded to have any dealings whatsoever with the company, and those who so deal with them must be affected with notice of all that is contained in those two documents.”

    22. The plaintiff, therefore, at the time of the institution of the suit was aware or ought to have been aware that the Articles of Association of the defendant company provide that Babulal & Co., Limited or their assigns or successors were to be the Managing Agents provided they continued to hold not less than 10,000 shares in the capital of the company and an agreement was entered into appointing Babulal and Company Limited as Managing Agents. Moreover, the plaintiff ought to have been aware that under the Articles of Association the Managing Agents enjoy full powers to make and sign all contracts as was necessary for carrying on business of the company.

    23. The plaintiff could, therefore, sue the Managing Agents if the plain tiff had felt that there was a case to be made against the Managing Agents. Mr. Roy Chowdhury submitted that whether the Managing Agents held not less than 10,000 shares in the capital of the company and whether an agreement had been made by which Babulal and Company Limited were appointed Managing Agents were matters which could not be gathered from the Arti-cles. But then, the relevant Articles should have put the plaintiff on gaurd and the plaintiff could have easily ascertained on enquiry whether Babulal and Company Limited were, in fact, acting as the Managing Agents.: I am, therefore, unable to agree that non-diclosure of the relevant Articles of Association in the original written statement or absence of any pleading that only the Managing Agents were coni-petent to enter into agreement for lease on behalf of the defendant prevented the plaintiff from suing the Managing Agents, if they chose to do so. There was nothing which was not within the knowledge of or should not have been within the knowledge of the plaintiff at the time of the institution of the suit which has been brought to the knowledge of the planitiff by the proposed amendments.

    24. It is contended that the plaintiff has lost the right of action against the Managing Agents by reason of lapse of time. Mr. Roy Chowdhury conceded that there is nothing in the correspondence or documents from which it appears that the Managing Agents have anything to do with the agreement for lease. He submitted however, that by their silence and inaction the Managing Agents held out that the defendant was competent to enter into the contract. In that view of the matter Mr. Roy Chowdhury argued that if the suit fails against the defendant, the plaintiff might have succeeded against the Managing Agents in their claim for damages. Mr. Roy Chowdhury relied on the decision in (4) Shaik Masthan Shaib v. Balarami Reddy, reported in A.I.R 1953 Madras 958. He also relied on the decision in (5) Hashim Ali Khan v. Hamidi Begum, A.I.R 1942 Calcutta 180, and (6) Steward v. North, Metro politan Tramways Co., 16 Q.B.D 178. The Madras and Calcutta decisions do not appear to be of much assistance. In the case reported in 16 Q.B.D 178, the defendants a tramway company, were sued in respect of injuries occas-sioned to the plaintiff through failure to repair the road on which the tramway ran. Six months after the close of pleadings they applied for leave to amend their defence by setting up a contract under which the liability for maintenance of the road had been shifted from them to the road authority for the district. As a period of limitation during which the plaintiff could have sued the road authority had elapsed, it was held that the defendents ought not to be allowed to amend their defence. In his judgment Pollock B. observed as follows:

    “The plaintiff said that if he had been told that this was the defence some months ago he could have maintained an action against the local authority, and if they were liable, have recovered from them. But by the usual clause in Acts relating to public bodies, actions against such authority must be brought within six months, which time has elapsed, so that if the defendants now pleaded in the manner proposed, the plaintiff might fail against the present defendant as not being the proper defendant, and yet if he brought an action against the vestry, he would be too late. That no doubt puts the plaintiff into a very difficult position, which he may not be supposed to have contemplated when he commenced his action. The test as to whether the amendment should be allowed, is whether or not the defendants can amend without placing the plaintiff in such a position that he cannot be recouped, as it were by any allowance of costs or otherwise.”

    25. In (7) Weait v. Jayanbee Joinery Limited, (1963) 1 Q.B.D 239,. the plaintiff started an action against his employers for damages for injuries sustained by him after an accident which occurred in August 1958, and which the plaintiff alleged was caused by the defendant's negligence. In the statement of claim, it was pleaded that as a result of the accident, the plaintiff had suffered serious incapacity. In their defence, the defendants denied negligence and pleaded contributory negligence. From the time of the delivery of the statement of claim onwards, the defendant tried to arrange for an examination of the plaintiff by a neurosurgeon. Through no fault of the defendant, the examination did not take place until November 1961. The neurosurgeon was of the view that the plaintiff had not been given proper medical treatment in time as a result of which the plaintiff had developed a permanent deformity and in January 1962 he concluded on certain materials which came into his hands in December 1961 that there was a prima facie case of negligent failure of treatment by the plaintiffs surgeon. On February 5, 1962, when the period of limitation for an action by the plaintiff against those responsible for his medical treatment had expired, the defendants applied for leave to amend their defence so as to plead that the injuries were more serious than they need have been owing to the negligence of the plaintiff's surgeon.

    26. In the judgment delivered by Holroyd Pearce, L.J, the decision in (6) Steward v. North Metropolitan Tramways, on which the plaintiff relied was referred to but not applied because the Court held that the defendant had not been guilty of any fault in failing to discover the fact of the plaintiff's surgeon's negligent treatment earlier. In that view of the matter, the Court granted leave to amend the defence.

    27. In this connection, I may refer to (8) Turner v. Ford Motor Company Limited, a recent decision of the Court of Appeal in England (1965) 2 All E.R 583. While working for his employers the first de-fendant, the plaintiff was seriously in jured, by a brick falling from above. He brought an action for negligence against the first defendant and against the second defendant who had been working on the site. The defendants, after the time within which the plaintiff could join his employers as defendants, applied for leave to amend their defence by adding the following plea.

    “Further or in the alternative, if the plaintiff sustained injury in the manner as has been alleged, the same was occasioned wholly or in part by reason of his own negligence in failing to wear the safety helmet with which he had been provided by his employer.

    28. It was contended on behalf of the plaintiff that had the amendment been made within three years from the date of the accident the plaintiff could have joined his employers alleging negligence on their part by their failure to insist on his wearing the helmet. In the course of his judgment Russel, L.J said:

    “For the plaintiff it is stated that, had the amendment been made within three years from the date of the accident, he could have joined his employers in order to allege a failure by them sufficiently to insist on his wearing the helmet provided, that he cannot be blamed for not originally joining them as defendants under that head, because to have done so would have been to invite from the employers the very plea of contributory negligence that is now being advanced. The fact remains that he could have done so had he wished and I cannot find in this any ground for denying to the defendants the opportunity of eliciting facts in evidence relevant to establishing wherein in truth and in law responsibility lies. Moreover, I do not in any way consider that it should suffice merely to adumbrate in argument the theory that the case might have been made to show some degree of fault on the part of the employers without a half-penny worth of evidence to suggest that it is more than a theory. To say that in theory a case might have been pleaded against the employers is I think, very far from showing that a chance of recovery against them had been lost to the plaintiff and to the plaintiff's injury.”

    29. In the same case, Willmer, L.J, approaching the matter from another angle came to the same conclusion and said:

    “The argument for the plaintiff is largely founded on the decisions of this Court in (7) Weait v. Jayanbee Joinery Limited. The question which was discussed in that case, and in several cases which were cited in the course of the argument in this case, was whether leave should be granted to amend a defence after the statutory period had elapsed where the proposed amendment sought to cast blame on to some third party. In such a case there is, of course, a great deal to be said for refusing leave to amend. If blame is sou-ghat to be cast on some third party, then it can well be said that such a plea ought to be put on the file in time to enable the plaintiff to join that additional party, and to join that additional party with some hope that, even if he fails against that additional party, he will be covered for his costs.

    The significant thing about this case, however, is that the amendment here proposed does not in any way seek to blame the plaintiff's employers. It puts the blame fairly and squarely on the plaintiff himself, and indeed alleges that the safety helmet which, it is said, he ought to have worn, was in fact provided by his employers. In those circumstances, it does not seem to me that this proposed amendment of the defence does anything by way of encouraging the plaintiff to do anything that he could not perfectly well have done at any time for himself during the three years following the accident,”

    30. In these circumstances, leave to amend was granted.

    31. In (6) Steward v. North Metropolitan Tramways Company Limited and in (7) Weait v. Jayanbee Joinery Limited responsibility for the injury or damage was sought to be cast on a third party by the defendant by way of amendment. In the present case, the defendant by the proposed amendment is not seeking to make the third party i.e, the Managing Agents responsible. The facts of the present case are distinguishable from the facts of Weait v. Jayanbee Joinery Limited, in so far as here the defendant was aware of the powers and functions of the Managing Agents under the Articles of Association at the time of the institution of the suit and yet did not disclose the same in the original written statement. Be that as it may, the plaintiff also, as I have said, ought to have known what the powers and functions of the Managing Agents were under the Articles of Association.

    32. Moreover, it is necessary to examine what rights the plaintiff has prima facie lost by not having instituted this suit against the Managing Agents. The documents before me, Mr. Roy Chowdhury has admitted, do not involve the Managing Agents in the agreement for lease. _ In fact, there is no indication that the Managing Agents had even any knowledge of the agreement. It may be that some directors of the Managing Agents were also the directors of the defendant company but knowledge on the part of a particular director cannot be ascribed to the company of which he is a director. Sm. Asarfi Debi, it has been stated by the defendant, was not a director of the Managing Agents. The argument that the Managing Agents were liable for damages by reason of their facts of omission loses much of its force in the context of the absence of any knowledge on their part of the agreement for lease. The Managing Agents had only been told that an offer had been received for lease of a portion of the first floor on certain terms and conditions and nothing more.

    33. There is nothing on record to indicate that the Managing Agents were ever apprised of any negotiations with the plaintiff or of any agreement having been entered into with the plaintiff. It is difficult to see now any duty to act on the part of the Managing Agents arises. I am, therefore, unable to hold that prima facie the plaintiff has lost any right of action by reason of which the plaintiff may be said to have suffer ed injury or prejudice.

    34. I may now indicate the principles which in my view ought to apply in these cases.

    35. Where the plaintiff opposes amendment of the defence on the ground that by the amendment the defendant is seeking to make a third party responsible for the injury and con tends that if what is sought to be pleaded by way of amendment were plead ed in the original written statement he could have sued the third party which he cannot do now in view of lapse of time, amendment should be refused provided the plaintiff is able to make out a prima facie case against the third party and also satisfy the court that he could not make that case against the third party in the plaint because he did not know or could not reasonably have known what is sought to be introduced by amendment at the time when he instituted the suit and the defendant had knowledge of and therefore could have pleaded in the original written statement what he is pleading by amendment. Where the defendant by amendment does not seek to make a third party responsible for the injury of which the plaintiff complains, these questions do not arise at all.

    36. In the present case, the defendant, by way of amendment, is not blaming the Managing Agents but is merely contending that under the Articles of Association, not they, but the Managing Agents were competent to grant the lease and if the defendant is blaming any one it is blaming the plaintiff for not entering into the agreement through the Managing Agents, who were the only party competent to enter into such an agreement on behalf of the defendant. Moreover, the plaintiff ought to have known the Articles and the provisions in the Articles by which Managing Agents are appointed and their powers and duties, and the plaintiff could have made the Managing Agents a party in proper time, if the plaintiff had a case against the Managing Agents. In any event, the plaintiff has failed to make out a prima facie case against the Managing Agents.

    37. In my opinion, the principles underlying the decision in (8) Turner v. Ford Motor Company rather than in (6) Steward v. North Metropolitan Tramways Company Limited are applicable to the facts of this case.

    38. It was contended that the defendant is seeking to introduce a new case. In paragraph 2 of the original written statement the defendant stated that no valid agreement was entered into. In the same paragraph it is said that, in any event, and in the alternative, no alleged agreement was confirmed by the Board of Directors and no lawful contract or agreement was entered into which in any way binds the defendant. It appears, therefore, that when the defendant states that no valid agreement was ever entered into, the defendant is not referring to the absence of approval or confirmation by the Board of Directors. The defendant is referring to something else but what it is, has not been made, explicit. It may be that the defendant is referring to the incapacity of Sm. Asarfi Debi to enter into the agreement as a director or to the infirmity in the agreement by reason of the Managing Agents not acting in the matter. In so far as the defendant did not expressly say that only the Managing Agents were competent to enter into the agreement which they now say by way of amendment, the defendant is making a new case. Even assuming that a new case has been made, I do not see any reason why the amendment should be refused on that ground alone if the plaintiff has not suffered by prejudice thereby. Amendment of the defence should not be refused on the ground that the defendant is making a new case if the plaintiff does not suffer some injury by the amendment, which cannot be compensated by costs.

    39. In (9) Bombay Corporation v. Pancham, A.I.R 1965 S.C 1008 an application for amendment of the plaint by which the plaintiff sought to make out a new case of fraud for which there was no basis in the plaint as it originally stood was rejected. But then the Courts have always been reluctant to allow allegations of fraud to be made by way of amendment. Moreover, Courts have refused more readily amendments of the plaint on the ground of a new case than amendments in the nature of a new defence.

    40. In the case of (10) Nrisingh Prosad Paul…Applicant; v. Steel Products Ltd.…Defendant Petitioner., A.I.R 1953 Cal. 15, P.B Mukharji, J., dismissed an application for amendment of the written statement but observed that in spite of the delay of five years and the fact that the defendant was taking and pleading an entirely new defence, he would have been prepared to allow the amendment if he were not satisfied that the application and the grounds taken in the application were in the nature of an attempt to overreach the Court.

    41. It was contended by Mr. Roy Chowdhury, that the application is mala fide and therefore ought to be dismissed. In his affidavit, Sailendra Nath Bose, a director of the plaintiff company has not admitted that the application is bana fide. Nothing has been stated in the affidavit from which it is possible for the Court to come to the conclusion that the application is not bonafide or that the grounds given for delay in the application are not bonafide. Mr. Roy Chowdhury indicated in his argument that I should come to the conclusion that the application is mala fide because in the lease and in the agreement for lease into which the defendant entered with Asiatic Investment Limited and the Ministry of Railways, the Managing Agents did not take any part and no point was taken by the defendant that only the Managing Agents were competent to enter into the agreement. It may be that the defendant did not take those objections at that time through inadvertence just as they did not plead, as they say, their incapacity to enter into the agreement in the original written statement, through inadvertence of the company.

    42. In the present case, I do not find any mala fides in the grounds of the application or in the expalanation given for delay nor has any such mala fides been alleged, or if alleged, no particulars have been given.

    43. In the result, leave is granted to the petitioner to amend the written statement in terms of Clause (a) of the summons.

    44. There will be also an order in terms of Clause (b) of the summons. In view of the inordinate delay in making the application the petitioner is directed to pay to the plaintiff a sum of Rs. 1,020/- as costs of this application. Leave is given to the plaintiff to file an additional written statement within three weeks from the date of service of a copy of the amended written statement. The petitioner will pay the costs of additional written statement and also the costs of additional discovery, if any. A copy of the amended written, statement will be served by the defendant's solicitor on the plaintiff's solicitor within a week after the amendments are incorporated. Amendments are to be effected within a fortnight after the filing of this order. Additional discovery to be made within a week after the filing of the additional written statement, inspection to be taken forthwith thereafter and the suit will appear in the peremptory list a fortnight thereafter. This order is to be drawn up expeditiously, liberty to mention.

    45. I certify that this is a fit case for employment of Counsel.

    C.R.D

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    Bata Shoe Co. Ltd. v. National Properties Limited.
    (Jul 12, 1966)