K.S Kumaran, Chairperson:— First respondent-State Bank of India (hereinafter referred to as ‘the respondent-Bank) filed O.A 121/98 before the Debts Recovery Tribunal, Jaipur against the appellant/1st defendant-company (hereinafter referred to as the Appellant/defendant’) and the respondents 2 to 12 herein. This O.A was subsequently transferred to Debts Recovery Tribunal, Chandigarh (hereinafter referred to as ‘the DRT’) and taken on its file as O.A 915/2001.
2. The appellant/defendant filed a written statement dated 21.12.98 to the said O.A The appellant defendant urged, among other things, that the respondent-Bank had assured to enhance the limit of the facilities granted to the appellant/defendant to Rs. 19 crores since the appellant/defendant had entered into various MoUs and agreements, but did not allow the appellant/defendant to enjoy the enhanced limit and, therefore, the appellant/defendant had suffered loss. The appellant/defendant pleaded in the written statement that it is reserving its right to file a separate suit for damages against the respondent-Bank.
3. The appellant/defendant, thereafter, filed an application dated 6.1.2003 for amendment of the written statement for including a prayer to allow set off of Rs. 18,62,94,202.42 with interest thereon against the claim made in the O.A, and also a counter-claim for Rs. 99,86,83,797.58. In this application, the appellant/defendant apart from referring to the loss mentioned, also urged that the respondent-Bank arbitrarily put security guards at the factory premises of the appellant/defendant in November 1996, and that on account of the illegal acts of the respondent-Bank the business of the appellant/defendant had to be closed, consequently the entire machinery, plant and premises of the factory remained idle. It has also been urged by the appellant/defendant that the value, of the stock, machinery and plant was reduced to scrap and iron dust. The appellant/defendant has further alleged that the respondent-Bank moved an application before the DRT for a direction that the appellant/defendant should not use the premises or lease out the same, which application was dismissed by order dated 20.9.2002 The appellant/defendant also urged that despite this order, the respondent-Bank created hurdles in the way of appellant/defendant, on which the defendant-company moved an application for direction to the respondent-Bank not to do so. According to the appellant/defendant, from November 1996 to October 2002 it was illegally debarred from using the premises on account of which the appellant/defendant had suffered a loss of more than 2000 lakhs.
4. It is on these, among other, allegations that the appellant/defendant wanted to amend the written statement to take the plea of set-off and the counter-claim. The respondent-Bank filed a reply opposing the application, and urged that the claim for set-off/counter-claim could be made only along with written statement, whereas, the averments have been made with regard to happenings after the filing of the written statement and, therefore, cannot be allowed.
5. The learned Presiding Officer of the DRT, by the impugned order dated 21.3.2003, dismissed the said application for amendment of the written statement. The learned Presiding Officer of the DRT observed that the O.A was registered on 20.2.98, that the appellant/defendant filed its written statement on 21.12.98 but reserved its right to file a separate suit for damages against the respondent-Bank, and had moved this application four years after the filing of the written statement. He further observed that the counter-claim has to be filed at the earliest so that it can be tried with the suit, and that it should be filed before the commencement of the evidence. The learned Presiding Officer of the DRT opined that if it is entertained, it would amount to reopening the entire trial of the suit, and that the defendants have been moving one application or other to delay the proceedings of the case. Therefore, he dismissed the application for amendment of the written statement. Aggrieved, the appellant/defendant has preferred this appeal. The respondent Bank has filed a suitable reply opposing this appeal.
6. I have heard the Counsels for both the sides, and perused the records.
7. The learned Counsel for the appellant/defendant contends that the amendment to the written statement could be allowed at any stage and ought not to have been dismissed. The, learned Counsel for the respondent-Bank opposes the amendment by urging that this is not a case of mere amendment of written statement, but, is a case where appellant/defendant wants to set up the plea of set-off and counter-claim. He points out that so far as the claim of the appellant/defendant that the respondent-Bank agreed to enhance the limit, but it did not advance the amount as per limit and thereby the appellant/defendant sustained loss is concerned, the case of the appellant/defendant is that this happened in the year 1995, whereas, this application for amending the written statement to include a plea of set-off and a counter-claim was filed only in the year 2003, which is clearly barred by time. He further points out that in the written statement already filed in the year 1998 itself the appellant/defendant had reserved its right to file a suit with regard to the alleged loss on this account, but had not filed any suit at all. He contends that the fact that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as ‘the Act’) was amended in January 2000 enabling the defendants to take the plea of set-off and counterclaim in these proceedings itself would not save the bar of limitation.
8. The respondent-Bank also contends that the appellant abandoned the factory in November, 1996, and also requested the respondent-Bank to provide security guards to guard the premises and, therefore, the guards were provided. The respondent-Bank also contends that the appellant/defendant had even stated that it had suffered loss, and it became sick due to various reasons not attributable to the respondent-Bank, and had even given a proposal for one-time settlement. The respondent-Bank also contends that the liability of the appellant/defendant to pay the amount to the respondent-Bank has also been admitted in the Annual Report and the Balance Sheet of the company. The respondent-Bank also contends that the claim for set-off made by the appellant/defendant is also vague, and that it is not regarding an ascertained amount. According to the respondent-Bank, the counter claim based upon the cause of action which arose prior to the filing of the written statement in December 1998 is barred by limitation, while, the claim based on any cause of action which arose subsequent to the filing of the written statement in December 1998 cannot be made the basis of the set-off or counter-claim. But, the appellant/defendant, on the other hand, contends that since it was prevented from November 1996 till October 2002 from using the factory premises, the cause of action continued till October 2002 and, therefore, it cannot be stated that the claim of the appellant/defendant is barred by time. The appellant/defendant also contends that the other contention raised by the respondent-Bank with regard tot he merits of the claim cannot be gone into at this stage, where the question is whether the amendment as prayed for can be allowed or not.
9. Before I deal with the respective contentions of the parties, it will be necessary to take notice of the provisions regarding ‘set-off’ and ‘counter-claim’ made in the Act. Subsection (6) of Section 19 of the Act provides as follows:
“Where the defendant claims to set-off against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the applicant, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be set-off.”
Sub-section (8) of Section 19 of the Act provides as follows:
“A defendant in an application may, in addition to his right of pleading a set-off under Sub-section (6), set up by way of counter-claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not.”
From these provisions it is clear that where the defendant claims a set-off against the Bank's demand it can be of an ascertained sum of money legally recoverable from the Bank, and the defendant has to make such claim at the first hearing of the application unless otherwise permitted by the Tribunal to present a written statement afterwards containing the particulars regarding the set-off.
10. The learned Counsel for the appellant/defendant relies upon the decision of the Hon'ble Supreme Court in Mahendra Kumar v. State of M.P, (1987) 3 SCC 265 : AIR 1987 Supreme Court 1395, wherein it has been held as follows:
“The next point that remains to be considered is whether Rule 6A(1) of Order VIII, Civil P.C bars the filing of a counter-claim after the filing of a written statement. This point need not detain us long for Rule 6A(1) does not, on the face of it, bar the filing of a counter-claim by the defendant after he had filed the written statement. What is laid down under Rule 6A(1) is that a counter-claim can be filed, provided the cause of action had accrued to the defendant before the defendant had delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not.”
He also relies upon another decision of Hon'ble Supreme Court in Shanti Rani Das Dewanjee v. Dinesh Chandra Day, (1997) 8 SCC 174 : AIR 1997 Supreme Court 3985, wherein it has been held as follows:
“In our view, the impugned decision does not warrant interference. Such question was specifically raised before this Court in Mahendra Kumar v. State of Madhya Pradesh, (1987) 3 SCC 265 : AIR 1987 SC 1395. It has been held by this Court that right to file a counter-claim under Order 8, Rule 6-A of the Code of Civil Procedure is referable to the date of accrual of the cause of action. If the cause of action had arisen before or after the filing of the suit, and such cause of action continued up to the date of filing written statement or extended date of filing written statement, such counter-claim can be filed even after filing the written statement.”
Of course, the learned Counsel for the respondent-Bank relies upon the decision in Bank of Baroda v. Gureharan Singh, AIR 1986 Punjab and Haryana 252, wherein it has been held that the defendant can file the counter claim before delivering his defence or before the time for delivering his defence expires.
11. He relies upon the decision of Hon'ble Andhra Pradesh High Court in Srikantha Spinners v. State Bank of India, 1994 (2) Bank CLR 659, wherein it has been held as follows:
“This Court respectfully agrees with such a legal principle laid down therein and reiterate that counter-claim cannot be set up by a defendant after filing the written statement and particularly in the guise of amending the written statement.”
The learned Counsel for the respondent-Bank also relies upon the decision in Kashi v. Parmananda, AIR 1985 Orissa 260, wherein it has been held as follows:
“I am, therefore, of the firm view that a counter-claim by the defendant under Order 8, Rule 6A of the Code must have to be made at the time of filing the written statement or before the time limited for submission of the written statement has expired.”
But, respondent-Bank cannot derive any support from these decisions in view of the decisions of the Hon'ble Supreme Court in the two cases referred to above.
12. Therefore, it is evident that so far as the counter-claim is concerned, a defendant can set up the same (against the claim of the Bank) in respect of a cause of action that had accrued to the defendant against the Bank either before or after the filing of the 0. A., but before the defendant has filed the written statement or before the time limited for filing written statement has expired. Therefore, it is evident that it is not necessary that the counter-claim should be made before written statement is filed or along with the written statement. It is in this background we will have to now consider whether the appellant/defendant can be allowed to amend the written statement to include the prayers for ‘set-off’ and ‘counterclaim’.
13. I will now take up the request of the appellant/defendant to amend the written statement to include the prayer for ‘set off’. As pointed out already, Sub-section (6) of Section 19 of the Act provides that the defendant will be entitled to present a written statement containing the particulars of the debt sought to be set off at the first hearing of the application itself and not afterwards, unless permitted by the Tribunal. As pointed out already, the written statement was filed by the appellant/defendant on 21.12.98 itself, wherein he has referred to the loss sustained by him, and has reserved his right to file a separate suit with regard to the alleged loss on account of the fact that the appellant/defendant was not allowed to enjoy the enhance limit. Only in the year 2003, he has filed this application for amendment of the written statement to include a prayer for claiming ‘set off.’ Therefore, it is clear that this plea of ‘set-off’ which the appellant/defendant wants to put forward has not been made at the first hearing of the O.A and the Tribunal has also not given the permission to raise the plea. As pointed out already, the appellant/defendant had reserved its right to file a suit regarding this claim in its written statement filed in December, 1998. Of course, the Act was amended in January, 2000, whereby the defendant was given the right to plead set-off in these proceedings. Even immediately thereafter, the appellant/defendant did not request the Tribunal to permit it to take the plea of ‘set-off. Only in the year 2003, filed this application for amendment to include the prayer of ‘set-off.’ In these circumstances, I find that there was no ground also to permit the appellant/defendant to take the plea of set-off at a late stage than the first hearing of the application. Therefore, on this ground alone, the request of the appellant/defendant to amend the written statement to take the plea of ‘set-off cannot be entertained, and has been rightly rejected by the learned Presiding Officer of the DRT.
14. Of course, the learned Counsel for the respondent-Bank contends that this plea is also barred by limitation since even according to the appellant/defendant, the respondent-Bank assured to enhance the limit of financial assistance in March, 1995, but did not permit the appellant/defendant to enjoy the benefit. He, therefore, contends that this claim is also barred by limitation when the application for amendment was filed in January, 2003. But, the learned Counsel for the appellant/defendant contends that the respondent-Bank had not put forward the plea of limitation before the DRT and, therefore, cannot be allowed to urge the same before this Tribunal. In my view, I need not express any opinion with regard to the plea of limitation at least for two reasons. The first is that the appellant/defendant had raised the plea regarding ‘set off’ on the first hearing of the application, and there is no ground to permit him to raise the same subsequently, in the circumstances of the case pointed out already. Therefore, it is not necessary to go into the question of bar of limitation. Secondly, the bar of limitation has to be decided after taking into consideration the relevant facts pleaded by both the sides, and the evidence thereon. Therefore, if the appellant/defendant had been allowed the amendment as prayed for with regard to the ‘set-off’, then it will be for the Trial Court to go into this question of limitation after taking into consideration the relevant facts and the evidence placed before it. This view of mine is also fortified by the following observations of the Hon'ble Supreme Court in Shanti Rani Das Dewanjee v. Dinesh Chandra Day, cited supra wherein it has been held as follows:
“It has been sought to be contended by the learned Counsel for the appellant that in the instant case, the course of action had arisen long before the institution of the said Civil Case No. 248/82 and, therefore, the suit and counter-claim were barred under the Limitation Act, Such question was not raised before the Court below and, therefore, had not been gone into. It is, therefore, not necessary for this Court to decide the same because the question of limitation regarding the suit if raised will be decided after ascertaining the date of accrual of the cause of action on the basis of relevant materials to be placed on record. We are, therefore, not expressing any opinion on the said contention sought to be raised by the learned Counsel for the appellant, for the first time before this Court.”
So far as the request for amending the written statement to include the counter-claim is concerned, the contention of the learned Counsel for the respondent-Bank is that the counter-claim should have been filed before or along with the written statement and not subsequently and, therefore, the same cannot be entertained. This contention cannot be accepted is clear from the decisions of the Hon'ble Supreme Court referred to above. The other contention put forward by the learned Counsel for the respondent-Bank is that the appellant/defendant had abandoned the factory in November 1996 and had requested the respondent-Bank to use the services of the Security Guards and, therefore, they have no reasons to complain on this account. The other contention put forward by the learned Counsel for the respondent-Bank is that the Security Guards were placed in November, 1996 and, therefore, the amendment sought for in the January, 2003 is clearly barred by time as the cause of action had arisen in the year 1996 itself.
15. So far as the first contention that the Security Guards were placed at the request of the appellant/defendant and, therefore, there is no ground for any grievance is concerned, I am of the view that this is a contention raised on the merits of the claim made by the appellant/defendant that it was prevented from using the factory premises and, therefore, the appellant/defendant sustained loss. While considering the request for amendment, this Tribunal need not go into the merits of the claim made by the party seeking the amendment. It is not proper or just for this Tribunal to consider whether the claim deserves acceptance or not, and on the basis that the claim cannot be accepted, reject the request for amendment. If and when the amendment is allowed, then only the question whether the claim introduced by way of amendment can be accepted or not, should be considered and decided.
16. The learned Counsel for the appellant/defendant relies upon the decision in Mangal Dass Sant Ram v. Union of India, AIR 1973 Delhi 96, in this regard, which clearly supports the view that the amendment cannot be rejected by considering the merits of the claim, which is sought to be introduced by the amendment.
17. So far as the contention that the clam is barred by limitation is concerned, the learned Counsel for the appellant/defendant contends that the from November, 1996 to October, 2002, the appellant/defendant was prevented by the respondent-Bank from utilising the factory premises and, therefore, the appellant/defendant has sustained a loss. The learned Counsel for the appellant/defendant contends that this is a continuing cause of action on the basis of which the appellant/defendant can make a claim for damages against the respondent-Bank and the appellant/defendant can wait and include all claims for damages which have accrued till October, 2002. He contends that the appellant/defendant need not go on filing suits after suits for each day or each month. In this connection, he relies upon the decision in Firm Sitaram Bindraban v. G.I.P Rly., AIR 1947 Nagpur 224, wherein it has been held as follows:
“I say I do not agree because the plaintiff was prevented by the railway authorities from removing his goods. He was prevented by the action of the defendant's servants. The goods kept on deteriorating right up to the last minute, that is, right up to 3.9.1942 Therefore, the injury on 8.9.1942 to the goods was much more than it was in June or July when the rain first fell. Now, the plaintiff not only was not bound to sue piecemeal for the damages caused but he could not have included in his claim damages for possible future loss had be sued earlier. Therefore, he was entitled to wait till he had one comprehensive cause of action. There was here a continuing cause of action which continued right upto 3.9.1942 Therefore, he was not bound to sue earlier.”
Therefore, the learned Counsel for the appellant/defendant contends that the request for amenament for including the counter-claim which arose on the basis of the cause of action that ???ccrued from November, 1996 to October, 2002 is not barred by limitation.
18. I have already re???erred to the decision of Hon'ble Supreme Court in Shanti Rani Das Dewanjee v. Dinesh Chandra Day (supra), which shows that the question of limitation has to be considered after all the material facts and evidence are placed before the Tribunal, therefore, I need not and I am not expressing any final opinion on this aspect, suffice it to say that this plea regarding counter-claim cannot be said to be ex facie barred by limitation. However, it will be open to the respondent-Bank to take the plea that this claim is barred by limitation, before the Tribunal, and both sides will be free to place materials and evidence on this point, so that the learned Presiding Officer of the DRT may decide the same in accordance with law.
19. Therefore, taking into consideration all these aspects, I am of the view that the impugned orderdated 21.3.2003 dismissing the application filed by the appellant/defendant to amend the written statement has to be set aside in part i.e insofar as it relates to the counter-claim for Rs. 99,86,83,797.58. To this extent only, the application will stand allowed, and the learned Presiding Officer of the DRT shall allow the amendments to be carried out with regard to the counter-claim. If the Court fees has not been paid by the appellant/defendant, the appellant/defendant shall also pay the appropriate Court fees on the same.
20. In view of all these aspects, the appeal has to be allowed in part as indicated above.
21. Accordingly, the appeal is allowed in party, setting aside the impugned order dated 21.3.2003 insofar as it relates to the request for amending the written statement for including the counter-claim for Rs. 99,86,83,797.58. The application filed by the appellant/defendant for amending the written statement to this extent will stand allowed. The appellant/defendant shall be permitted by the learned Presiding Officer of the DRT to amend the written statement to this extent. The appellant/defendant shall also pay the requisite Court fees on the counter-claim in accordance with law. The appeal in other respects is dismissed.
22. However, after allowing the appellant/defendant to amend the written statement as indicated above, the learned Presiding Officer of the DRT shall allow the respondent-Bank to file its reply to this counter-claim, and then, decide the counter-claim raised by the appellant/defendant in accordance with law.
Miscellaneous Application 201/2003
23. This is only an application seeking stay of further proceedings before the DRT till the disposal of the appeal. Since the appeal has been disposed off today, mis application is also disposed of as no longer necessary.
24. A copy of this order be furnished to the appellant/defendant and the respondent-Bank. A copy of this order also be forwarded to the DRT concerned.
Appeal partly allowed.