April 07 2009
In Sical Logistics Limited v Marg Constructions Limited(1) the High Court continued to uphold its liberalist approach in allowing pre-trial amendments provided that the prerequisites, including the preservation of the existing cause of action and the appellant's defence, are satisfied.
Sical Logistics Limited and Marg Constructions Limited entered into two sale agreements dated July 20 2004 and August 2 2004 in respect of A & B plaint schedule properties for consideration of Rs1.9 million per acre. Pursuant to the sale agreement, Rs20 million was paid in advance in the form of a fixed deposit. Although the agreement was in place, Sical failed to perform its part of the contract and, as a result, Marg filed an application for interim injunction restraining Sical from entering, alienating, leasing, developing or handing over possession of the properties in favour of any third party. This application was dismissed by a single judge. In addition, an appeal and a special leave petition filed by Marg were also dismissed.
Marg then filed an application seeking several amendments, which included reference to two letters of August 18 2004 and August 21 2004 recording an understanding between the parties to raise the consideration to Rs2.1 million per acre. It also sought relief regarding the specific performance of the contract evidenced by the amount stated in the two new letters. Sical contended that the amendments sought by Marg by introducing the two new documents had the effect of bringing a new case before the court. It further contended that the amendment would prejudice Sical, as it would take away its right to oppose the plaint on the grounds that there was no concluded contract.
Marg argued that the amendments had no impact on the character of the plaint as the plaint itself was not being amended. It further argued that the defence previously raised would not be removed as Sical had, in an earlier affidavit, argued that the two subsequent letters did not amount to a concluded contract.
The court considered Order VI, Rule 17 of the Code of Civil Procedure 1908 and the earlier decisions of the Apex Court in Rajesh Kumar Aggarwal v KK Modi,(2) Sampath Kumar v Ayyakannu,(3) North Eastern Railway Administration v Bhagwan Das(4) and Rajkumar Gurawara (Deceased) through LRS v SK Sarwagi & Co Pvt Limited.(5) The court held that the prevailing provision in the code consists of two parts: the first allowing the court discretion to order the amendment, and the second making it imperative for the court to allow the amendment where it is necessary to determine the real question at issue between the parties. The court held that the amendments sought did not have the effect of changing the character of the plaint, given that the letters which Marg sought to introduce were not disputed. The evidentiary value of the letters could be ascertained only at trial. In addition, the amended relief of specific performance did not constitute a new case as it was the plaintiff's case. The court also observed that the amendment would not prejudice Sical in any way.
This decision shows that the courts will continue to construe pre-trial amendments liberally in view of the settled decisions of the Apex Court, unless there are clear grounds to depart from those decisions (eg, findings of prejudice, a change in the character of the plaint or the non-availability of an earlier defence raised).
For further information on this topic please contact Ruchi A Mahajan or Nisha Harichandran at Amarchand & Mangaldas & Suresh A Shroff & Co by telephone (+91 11 2692 0500) or by fax (+ 91 11 2692 4900) or by email (email@example.com or firstname.lastname@example.org).
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