Delhi High Court
Mr Jagvinder Singh And Ors vs Mr Preminder Singh And Anr on 20 July, 2017
$~13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 20.07.2017
+ CS(OS) 580/2016
MR JAGVINDER SINGH AND ORS ..... Plaintiffs
versus
MR PREMINDER SINGH AND ANR ..... Defendants
Advocates who appeared in this case:
For the Plaintiffs : Mr. Abhijat with Mr. Nikhil Parikshit,
Advocates.
For the Defendants : Mr. Ritin Rai with Mr. S.Santanam
Swaminadhan, Ms. Nishtha Khurana and
Mr. Aabhas Kshetar Pal, Advocates for
defendant No.1.
Mr. Darpan Wadhwa, Sr. Advocate with Mr.
Zoheb Hossain, Advocates for defendant
No.2.
CORAM:-
HON'BLE MR JUSTICE SANJEEV SACHDEVA
JUDGMENT
20.07.2017
SANJEEV SACHDEVA, J. (ORAL)
IA No. 971/2017
1. This is an application on behalf of the plaintiffs under Order VI
Rule 17 of the Code of Civil Procedure seeking amendment of the
plaint.
2. The plaintiffs are shareholders in the defendant No.2 Company.
Defendant No.1 is also a shareholder of the defendant No.2 Company.
3. It is the case of the plaintiffs that the defendant No.1 has retired
as a Director of the defendant No.2 Company by the operation of the
rule of retirement by rotation.
4. As per the plaintiffs, the 71st Annual General Meeting of the
defendant No.2 Company was scheduled on 27.10.2016. The meeting
could not be concluded. Thereafter, the meeting was reconvened to
19.11.2016. As per the plaintiffs, the meeting of 19.11.2016 was
concluded. It is the case of the plaintiffs that the defendant No.1 did
not offer himself for being reappointed as a Director either in the
meeting scheduled on 24.10.2016 or in the reconvened meeting on
27.10.2016.
5. As per the Defendants, the meeting was concluded on
27.10.2016.
6. The case of the plaintiffs is that the defendant No.1 did not
offer himself for being reappointed as a Director either in the meeting
held on 24.09.2016 or in the reconvened/adjourned to 24.10.2016.
7. The plaintiffs filed the suit contending that the plaintiffs had
received the notice dated 27.10.2016 informing the plaintiffs that
reconvened/adjourned meeting from 24.10.2016 was to be held on
19.11.2016.
8. The plaintiffs were aggrieved by the agenda seeking to appoint
the defendant No.1 as a Director in the reconvened meeting of
19.11.2016.
9. When the plaintiffs filed the suit, this Court did not interdict the
meeting scheduled on 19.11.2016. However, directed that any
Resolution passed therein would not be given effect to.
10. As per the plaintiffs, the defendant No.1 claims to have been
elected in the reconvened/adjourned meeting on 19.11.2016.
However, in terms of the orders of the Court, the Resolution could not
be given effect to.
11. Subsequently, the plaintiffs got to know that the Board of
Directors, in a meeting held on 15.12.2016, appointed the defendant
No.1 as an Additional Director.
12. Subsequent to the Resolution of the Board of Directors dated
15.12.2016, appointing the defendant No.1 as an Additional Director,
the plaintiffs have filed the present application seeking amendment of
the plaint.
13. It is contended that the cause of action giving rise to the
amendment is relatable to the earlier cause of action, which is the
subject matter of the suit, as filed. The case of the plaintiffs is that
the issue is really with regard to the appointment of the defendant
No.1 as a Director.
14. The plaintiffs also seek to incorporate certain legal objections
with regard to the appointment of the defendant No.1 as a Director on
the ground that the defendant No.1 is, inter alia, disqualified under the
Companies Act, 2013 from being appointed as a Director.
15. Learned counsel for the plaintiffs relied on the decision in the
case of a Coordinate Bench of this Court in NTPC (UP) Limited vs.
Swadesh Polytex Limited.: 1998 (45) DRJ 478 and the judgments of
the Supreme Court in Ganesh Trading Co. vs. Mozi Ram: (1978) 2
SCC 91 and Sampath Kumar vs. Ayyakannu and Anr.: (2002) 7 SCC
559 to contend that where the basic nature of the Suit is not altered by
the proposed amendment, the Court should allow such an amendment.
16. Further, it is contended that the approach with regard to the
amendment is liberal and unless grave prejudice is caused to the
defendant, the amendment of plaint should normally be allowed.
17. Per contra, learned senior counsel for the defendant No. 2 has
opposed the application for grant of amendment. It is contended that
the suit, as framed, was with regard to the reconvened meeting of
27.10.2016 and the further reconvened/adjourned meeting of
19.11.2016. It is contended that since the two meetings had already
been held and the Resolution passed, the suit of the plaintiffs had
became infructuous.
18. Further, it is submitted that grievance of the plaintiffs was
relatable to appointment of the defendant No.1 as a Director in the
Annual General Meeting.
19. Learned senior counsel for the defendant submits that since the
defendant No.1 was appointed as an Additional Director by the Board
of Directors in their meeting held on 15.12.2016, the suit, in any
eventuality, had become infructuous.
20. Learned senior counsel for the defendant submits that an
amendment, which alters the very cause of action, cannot be
permitted. It is submitted that the only question in the suit pertains to
the 71st Annual General meeting and, by way of an amendment, the
plaintiffs are now questioning the appointment of the defendant No.1
as an Additional Director in a separate Board of Directors meeting
having no connection with the Annual General Meeting, which is the
subject matter of the suit.
21. Learned senior counsel for the defendant relies on the decisions
in the case of a Coordinate Bench of this Court in Prof. Dalip Singh
vs. Sant Singh & Ors.: 1998 (46) DRJ 298 and of the Supreme Court
in Revajeetu Builders and Developers vs. Narayanswamy and Sons
& Ors.: (2009) 10 SCC 84 to contend that unless the amendment is
necessary for determining the real question in controversy, the
amendment cannot be allowed.
22. Learned counsel for the plaintiffs submits that the real
controversy is with regard to the appointment of the defendant No.1 as
a Director. He further submits that the issues are overlapping.
23. This Court, while considering an application under order VI
Rule 17, has to examine the real controversy in question. The real
controversy in question, to my mind, is not the 71 st Annual General
Meeting but the appointment of the defendant No.1 as a Director.
24. The plaintiffs have challenged the move of the defendants to
appoint the defendant No.1 as a Director. The cause of action, as
stated in the plaint, as originally filed, in paragraph 15 reads as under:-
"15 That the cause of action for filing the present Suit
first arose in September 2016 when the Defendant No.1
retired as a Director of the company by virtue of the
principle of rotation incorporated in Article 25 of the
AoA. The cause of action further arose on 29.08.2016
when the Defendant No.1 issued the First Notice for
convening the Company's 71st AGM. The cause of action
also arose on the said date when the Defendant No.1 did
not offer himself for re-election in the First Notice. The
cause of action further arose on 24.09.2016 when the
AGM was held but was adjourned as it proved to be
inconclusive. The cause of action also arose on the said
date when the Defendant No.1 did not offer himself for re-
election at the AGM. The cause of action further arose on
28.09.2016 when the Defendant No.1 issued the Second
Notice. The cause of action also arose on the said date
when the Defendant No.1 did not offer himself for re-
election in the Second Notice. The cause of action further
arose on 29.09.2016 when the Defendant No.1 issued the
Third Notice which scheduled the adjourned 71st AGM
for 24.10.2016, which was well beyond the one-week time
prescribed by Article 26 of the Company's AoA. The
cause of action further arose on the said date when by
virtue of the AoA of the Company the 71st AGM stood
concluded. Without prejudice thereto the cause of action
further arose on the said date when the Defendant No.1
did not offer himself for re- election in the Third Notice.
The cause of action further arose on 24.10.2016 when the
Defendant No.1 vide the Impugned Notice sought to
illegally reconvene the 71st AGM, which had already
been concluded. Without prejudice thereto the cause of
action also arose on the said date when the Defendant
No.1 did not offer himself for re-election in the Impugned
Notice. The cause of action further arose when the
purported reconvened meeting was held on 24.10.2016
and was abruptly concluded by the Defendant No.1.
Without prejudice thereto the cause of action also arose
on the said date when the Defendant No.1 did not offer
himself for re-election. The cause of action further arose
when the Defendant No.2 failed to circulate the minutes
or share the video recording of the meeting held on
24.10.2016. The cause of action further arose on
27.10.2016 when the Defendant No.1 without any
authority issued the Impugned Notice and sought to
illegally re-convene the concluded 71st AGM on
19.11.2016 at 10:00 am at 179, Golf Links, New Delhi-
110 003. The cause of action also arose on the said date
when the Defendant No.1 had illegally and as a
complete afterthought sought to have himself re-elected
at the meeting scheduled on 19.11.2016. The cause of
action further arose 11.11.2016 when a group of
shareholders circulated to all the shareholders of the
Defendant No.2 a letter inter alia highlighting the
illegal conduct of the Defendant No.1. The cause of
action is continuing and subsisting, as the Defendants
are giving affect to the aforesaid Impugned Notice dated
27.10.2016 and are going ahead with the illegal and
void purported adjourned AGM on 19.11.2016. The
cause of action is also subsisting and arising everyday
as the Defendant No.1 despite having ceased to be a
Director on the Board of Directors of the Defendant
No.2, continues to hold himself out as the Director and
Chairman of the Defendant No.2."
25. A reading of the cause of action as pleaded in the plaint, as it
stands, shows that the plaintiffs are aggrieved by the defendant No.1
being sought to be appointed as a Director apart from the alleged
manner in which the Annual General Meeting is adjourned,
reconvened and held.
26. To my mind, the issues are overlapping. The real controversy is
not only the 71st Annual General Meeting but the appointment of the
defendant No.1 as a Director. The Annual General Meeting, which is
challenged by the plaintiffs, is only the mode by which the defendant
No.1 is sought to be appointed. As per the plaintiffs, when the
defendant No.1 could not be appointed at the Annual General
Meeting, the Board of Directors came up with an alternative method
of electing the defendant No.1 as an Additional Director on the Board.
27. A Coordinate Bench of this Court in NTPC UP Ltd. (supra) has
held that, while deciding the application for amendment, the Court has
not to go into the merits of the controversy and the purpose of
allowing an amendment is also to avoid multiplicity of litigations.
Admittedly, if the plaintiff is aggrieved by the appointment of the
defendant No.1 as an Additional Director in the meeting held on
15.12.2016, and the plaintiffs were to challenge the same, the same
would still be within the period of limitation.
28. As per the defendants, the remedy of the plaintiffs is to initiate
appropriate fresh proceedings and not to seek an amendment in the
original plaint as it stands.
29. To my mind, if the plaintiffs can file a suit impugning the
meeting dated 15.12.2016, which even today would be within
limitation, nothing precludes the plaintiffs from seeking the
amendment of the plaint. This, in any eventuality, would avoid
multiplicity of litigation, which is one of the principles to be examined
while considering an application for amendment. Further, the nature
of the suit is not altogether changed or altered.
30. In NTPC (UP) Ltd. (supra), the Court further held:-
"At this stage, while deciding the application for
amendment, the Court has not to go on the merit of the
controversy, the cardinal principle of allowing the
amendment is that the Court should avoid multiplicity of
litigation. What has to be looked by the Court at this
stage while disposing of the application for amendment is
that by proposed amendment whether the nature of the
suit is altogether changed; whether amendments sought
for are Mala fide; and whether by allowing of the
amendment the period of limitation is going to be
extended. Even the authority cited by Mr. Kapur, Vineet
Kumar v. Mangal Sain Wadhera's case (AIR 1985 SC
817) is of no help as the Apex Court held that where the
amendment does not constitute an addition of a new
cause of action, or raise a new case, but amounts to no
more than adding to the facts already on records, the
amendment would be allowed even after the statutory
period of limitation. In the case before me, it is in the
interest of justice and to do complete justice between the
parties that subsequent events, which have taken place,
should be allowed to be amended by this application."
***** ***** *****
The test in allowing the amendment is as to what was the
cause of action which gave occasion and formed the
foundation for original suit and whether the same was
different from the cause of action which gave occasion
for the amendment application, in the present case it
cannot be said that bundle of facts are different from
original facts."
31. In Ganesh Trading Co. (supra), the Supreme Court has held as
under:-
"4. It is clear from the foregoing summary of the main
rules of pleadings that provisions for the amendment of
pleadings, subject to such terms as to costs and giving of
all parties concerned necessary opportunities to meet
exact situations resulting from amendments, are intended
for promoting the ends of justice and not for defeating
them. Even if a party or its counsel is inefficient in setting
out its case initially the shortcoming can certainly be
removed generally by appropriate steps taken by a party
which must no doubt pay costs for the inconvenience or
expense caused to the other side from its omissions. The
error is not incapable of being rectified so long as
remedial steps do not unjustifiably injure rights accrued.
" 5. It is true that, if a plaintiff seeks to alter the cause of
action itself and to introduce indirectly, through an
amendment of his pleadings, an entirely new or
inconsistent cause of action, amounting virtually to the
substitution of a new plaint or a new cause of action in
place of what was originally there, the Court will refuse
to permit it if it amounts to depriving the party against
which a suit is pending of any right which may have
accrued in its favour due to lapse of time. But, mere
failure to set out even an essential fact does not, by itself,
constitute a new cause of action. A cause of action is
constituted by the whole bundle of essential facts which
the plaintiff must prove before he can succeed in his suit.
It must be antecedent to the institution of the suit. If any
essential fact is lacking from averments in the plaint the
cause of action will be defective. In that case, an attempt
to supply the omission has been and could sometimes be
viewed as equivalent to an introduction of a new cause of
action which, cured' of its short-comings, has really
become a good cause of action. This, however, is not the
only possible interpretation to be put on every defective
state of pleadings. Defective pleadings are generally
curable if the cause of action sought to be brought out
was not ab initio completely absent. Even very defective
pleadings may be permitted to be cured. so as to
constitute a cause of action where there was none,
provided necessary conditions, such as payment of either
any additional court fees, which may be payable, or, of
costs of the other side are complied with. It is only if
lapse of time has barred the remedy on a newly
constituted cause of action that the Courts should,
ordinarily, refuse prayers for amendment of pleadings."
32. In Sampath Kumar (supra), the Supreme Court has held as
under:-
"7. In our opinion, the basic structure of the suit is not
altered by the proposed amendment. What is sought to be
changed is the nature of relief sought for by the plaintiff.
In the opinion of the Trial Court it was one to the
plaintiff to file a fresh suit and that is one of the reasons
which has prevailed with the Trial Court and with the
High Court in refusing the prayer for amendment and
also in dismissing the plaintiff's revision. We fail to
understand, if it is permissible for the plaintiff to file an
independent suit, why the same relief which could be
prayed for in a new suit cannot be permitted to be
incorporated in the pending suit. In the facts and
circumstances of the present case, allowing the
amendment would curtail multiplicity of legal
proceedings."
33. In Ganesh Trading Co. (supra) the Supreme Court has held
that if a plaintiff seeks to alter the cause of action itself and to
introduce indirectly, through an amendment of his pleadings, an
entirely new or inconsistent cause of action, amounting virtually to the
substitution of a new plaint or a new cause of action in place of what
was originally there, the Court will refuse to permit it if it amounts to
depriving the party against which a suit is pending of any right which
may have accrued in its favour due to lapse of time.
34. The Supreme Court in Ganesh Trading Co. (supra) clearly
shows that even inconsistent and an entirely new plea could be
permitted in the facts and circumstances of a case where such an
amendment would not deprive the party against whom the suit is
pending, of any right which may have accrued due to lapse of time.
35. Admittedly, in the present case, the alleged cause of action
leading to the amendment is still within limitation and it is not the
case of the defendant that any right has accrued in favour of the
defendant by lapse of time which the defendant is going to be
deprived of. A fresh Suit by the Plaintiff challenging the appointment
of Defendant No. 1 as an Additional Director in the Meeting of the
Board of Directors dated 15.12.2016, would still be within limitation.
Allowing of an amendment would only avoid the necessity of filing a
fresh Suit by the plaintiff and would avoid multiplicity of litigation.
36. The Judgment of the Coordinate Bench of this Court in Prof.
Dalip Singh (supra), relied upon by the leaned senior counsel for the
defendant, in my view, does not help the case of the defendant.
37. In Professor Dalip Singh (supra), the learned Judge has held as
under:-
"The principle which should govern the question of
granting or disallowing amendments are well settled. In
Pirgonda Hongonda Patil Vs. Kalgonda Shidgonda Patil
and Ors AIR 1957 SC 363 which still holds the field, it
was held that all amendments ought to be allowed which
satisfy the two conditions: a) 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. Amendments 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"
38. In Prof. Dalip Singh (supra), the Court has held that the
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 an injury which could not be
compensated in cost.
39. The Judgment Revajeetu Builders and Developers (supra), also
does not help the case of the defendant. The Supreme Court has
referred to several decisions of the English Courts. A reading of
which show that the cases, referred to, in fact support the case of the
plaintiffs. The Supreme Court has culled out in the following
paragraph the decision of the English Courts as under:-
"36. In the leading English case of Cropper v. Smith,
the object underlying amendment of pleadings has been
laid down by Browen, L.J. in the following words:
"..........it is a well established principle that the
object of the courts is to decide the rights of the
parties and not punish them for mistakes they make
in the conduct in their cases by deciding otherwise
than in accordance with their rights ... I know of
no kind of error or mistake which, if not fraudulent
or intended to overreach, the court ought not to
correct if it can be done without injustice to the
other party. Courts do not exist for the sake of
discipline but for the sake of deciding matters in
controversy, and I do not regard such amendment
as a matter of favour or grace ... it seems to me
that as soon as it appears that the way in which a
party has framed his case will not lead to a
decision of the real matter in controversy, it is as
much a matter of right on his part to have it
corrected if it can be done without injustice, as
anything else in the case is a matter of right.
***** ***** *****
38. In another leading English case Weldon v. Neal, A
filed a suit against B for damages for slander. A
thereafter applied for leave to amend the plaint by
adding fresh claims in respect of assault and false
imprisonment. On the date of the application, those
claims were barred by limitation though they were within
the period of limitation on the date of filing the suit. The
amendment was refused since the effect of granting it
would be to take away from B the legal right (the defence
under the law of limitation) and thus would cause
prejudice to him.
39. The rule, however, is not a universal one and
under certain circumstances, such an amendment may be
allowed by the court notwithstanding the law of
limitation. The fact that the claim is barred by law of
limitation is but one of the factors to be taken into
account by the court in exercising the discretion as to
whether the amendment should be allowed or refused,
but it does not affect the power of the court if the
amendment is required in the interests of justice.
42. In a concurring judgment, Beaman, J. observed
that
"..........the practice is to allow all amendments,
whether introducing fresh claims or not, so long as
they do not put the other party at a disadvantage
for which he cannot be compensated by costs."
His Lordship proceeded to state:
"In my opinion two simple tests, and two only,
need to be applied, in order to ascertain whether a
given case is within the principle. First, could the
party asking to amend obtain the same quantity of
relief without the amendment? If not, then it
follows necessarily that the proposed amendment
places the other party at a disadvantage, it allows
his opponent to obtain more from him than he
would have been able to obtain but for the
amendment. Second, in those circumstances, can
the party thus placed at a disadvantage be
compensated for it by costs? If not, then the
amendment ought not, unless the case is so
peculiar as to be taken out of the scope of the rule,
to be allowed."
***** ***** *****
53. In Jai Jai Ram Manohar Lal v. National Building
Material Supply, A sued B in his individual name but
afterward soughts leave to amend the plaint to sue as the
proprietor of a Hindu Joint Family business. The
amendment was granted and the suit was decreed. The
High Court, however, reversed the decree observing that
the action was brought by a `non-existing person'.
Reversing the order of the High Court, this Court (per
Shah, J., as he then was) made the following oft- quoted
observations:
"5... Rules of procedure are intended to be a
handmaid to the administration of justice. A party
cannot be refused just relief merely because of
some mistake, negligence, inadvertence or even
infraction of the rules of procedure. The Court
always gives leave to amend the pleading of a
party, unless it is satisfied that the party Applying,
was acting mala fide, or that by his blunder, he
had caused injury to his opponent which may not
be compensated for by an order of costs. However
negligent or careless may have been the first
omission, and, however late the proposed
amendment, the amendment may be allowed if it
can be made without injustice to the other side."
(Emphasis Added)
***** ***** *****
57. In Haridas Aildas Thadani & Others v. Godraj
Rustom Kermani this Court said that":
"1......It is well settled that the court should be
extremely liberal in granting prayer for
amendment of pleading unless serious injustice or
irreparable loss is caused to the other side. It is
also clear that a revisional court ought not to
lightly interfere with a discretion exercised in
allowing amendment in absence of cogent reasons
or compelling circumstances."
(underlining supplied)
40. The amendments as sought is not completely distinct or disjoint
from the plaint that was originally filed. The case of the plaintiff is
really with regard to the appointment of the defendant No.1 as a
Director and the manner of appointment. The real question in
controversy is the appointment of the defendant No.1 as a Director to
the Board of the defendant No.2, which is also the subject matter of
the amendment that is sought by way of the present application.
41. Applying the above principles, I am of the view that the
amendment sought is not completely disjoint or alien to the plaint that
is originally filed and is necessary for determining the real question in
controversy between the parties.
42. The plaintiffs have filed the application within one month of the
meeting of the Board of Directors appointing the defendant No.1 as an
Additional Director. The plaintiffs have been diligent in filing the
application and there is no delay on the part of the plaintiffs in seeking
amendment of the plaint.
43. The suit is still at the stage of completion of the pleadings and
has not even reached the stage of admission/denial of the documents.
No prejudice is going to be caused to the defendants as no right has
accrued to them by elapse of time.
44. In view of the above, the application is allowed.
45. The plaintiff is permitted to amend the plaint.
46. Since the application has been filed within one month of the
impugned Board of Directors Meeting and the plaintiffs have not
delayed in the filing of the amendment application, there shall be no
orders as to cost.
CS(OS) 580/2016
1. The amended plaint is taken on record.
2. Written statement to the amended plaint be filed by the
defendants within four weeks. Replication be filed within four weeks
thereafter.
3. Plaintiffs may file additional documents within two weeks.
Defendants are permitted to file additional documents, if any, with the
written statement.
4. List before the Joint Registrar for completion of pleadings and
admission/denial of the documents on 25.09.2017.
5. The Joint Registrar shall place the matter before Court for
framing of issues after the completion of the pleadings.
SANJEEV SACHDEVA, J
JULY 20, 2017
st
