M/s.SICAL Logistics Limited v. M/s.Marg Constructions Limited

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 03.02.2009CORAMTHE HONOURABLE MR. JUSTICE D.MURUGESAN andTHE HONOURABLE MR. JUSTICE M.SATHYANARAYANANOriginal Side Appeal No.197 of 2007M/s.SICAL Logistics Limited,(formerly known as M/s.South India Corporation (Agencies) Limited)"South India House",73, Armenian Street, Chennai 600 001.... AppellantVs.1.M/s.Marg Constructions Limited, rep. by its Managing Director, Mr.GRK Reddy, No.501, Apex Chamber, 20, T.Nagar, Chennai 600 017.2.Mr.S.Vasudevan, Managing Director M/s.South India Corporation3.State Bank of India, No.232, NSC Bose Road, Commercial Branch, EA & Division, No.232, NSC Bose Road, Chennai 600 001.4.The State Bank of India, Bazullah Road Branch, T.Nagar, Chennai 600 017.... RespondentsOriginal Side Appeal under Clause 15 of Letters Patent r/wOrder XXXVI and Rule 9 of O.S. Rules, praying to set aside the orderdated 30.10.2006 made in Appln. No.2521 of 2006 in C.S.No.811 of 2004.For Appellant: Mr.AR.L.Sundaresan SC for Mrs.AL.Ganthimathi For Respondents: Mr.T.R.Rajagopalan SC for Mr.S.Raghunathan for R1Proposed Respondent : Mr.Satish Prasaran https://hcservices.ecourts.gov.in/hcservices/ JUDGMENTD.MURUGESAN, J. The appellant M/s.SICAL Logistics Limited (hereinafterreferred to as "SICAL") is the first defendant in C.S.No.811 of 20o4and the first respondent M/s.Marg Constructions Limited (hereinafterreferred to as "Marg Constructions Limited") is the plaintiff in thesuit.2. M/s.Marg Constructions Limited is a company registeredunder the Indian Companies Act. SICAL and Marg Constructions Limitedentered into two sale agreements dated 27.07.2004 and 02.08.2004 inrespect of A & B Plaint Schedule properties. The total extent of theland covered under the agreements is 46.915 Acres situate atSholinganallur Village. The sale consideration was Rs.19,00,000/-(Rupees Nineteen Lakhs only) per acre. Pursuant to the saleagreements, a sum of Rs.2.00 Crores was paid as advance in the form ofFixed Deposit, drawn on State Bank of India, Bazullah Road Branch,T.Nagar and the Fixed Deposit Receipt was handed over toMr.P.B.Ramanujam, learned counsel for Marg Constructions Limited.Though Marg Constructions Limited expressed their willingness tocomplete the sale, SICAL failed to perform their part of contract.Hence, Marg Constructions Limited approached this Court by filing thesuit for specific performance of contract of agreements of sale dated27.07.2004 and 02.08.2004 in respect of plaint A & B ScheduleProperties and for other reliefs. Along with the suit, MargConstructions Limited also filed an application for grant of interiminjunction restraining SICAL from entering, alienating, leasing ordeveloping or handing over possession of the scheduled mentionedproperties in favour of any third party. The said application wasdismissed by the single Judge and the Original Side Appeal preferredas against the said order was also dismissed and ultimately theSpecial Leave Petition at the instance of Marg Constructions Limitedwas also dismissed.3. Thereafter, Marg Constructions Limited filed anapplication in Appln.No.2521 of 2006 for the following amendments:- "A. Insert the following in Paragraph 9 of theplaint:There was a concluded contract between theplaintiff and the 1st defendant in respect of the suitproperty at a consideration of Rs.19 lacs per acre asset out above. Thereafter, the plaintiff and the 1stdefendant agreed to an enhanced consideration computedat the rate of Rs.21 lacs per acre. The plaintiff, videits letter dated 18.08.2004, wrote to the 1st defendantrecording in alia, the agreement for sale considerationfor the A and B schedule properties at Rs.21 lacs peracre. The 1st defendant wrote a letter dated 21.08.2004to Mr.P.B.Ramanujam, Advocate, Chennai, informing that https://hcservices.ecourts.gov.in/hcservices/ the 1st defendant expected the sale consideration ofRs.9,97,50,000/- (calculated at the rate of Rs.21 lacsper acre for 46.915 acres) to be paid in singleinstalment within from the 1st defendant obtaining a NoObjection Certificate from the 3rd defendant for thesale of A and B schedule properties. The 1st defendantalso instructed Mr.Ramanujam to advise Mr.G.R.K.Reddy,the Managing Director of the plaintiff, accordingly.B. Add the following words to the next sentencein paragraph 9 of the plaint after the words"Sholinganallur Property"..... as soon as the 1st defendant gets aclearance / No objection Certificate from the 3rddefendant.C. Insert the following in Paragraph 9 of theplaint.The plaintiff is entitled to the specificperformance of its contract with the 1st defendant forthe sale of A and B Schedule Properties pursuant to thecontract finalized on 27.07.2004, 28.07.2004, 02.08.2004and 02.09.2004 for a consideration of Rs.8,91,41,500/- (at the rate of Rs.19 lacs per acre for 46.915 acres).Without prejudice and in the alternative, the plaintiffis entitled to the specific performance of the contractevidenced by the letters dated 18.08.2004, 21.08.2004and 02.09.2004 for a consideration of Rs.9,97,50,000/-(at the rate of Rs.21 lacs per acre for 46.915 acres)D. Insert the following in para 11 of theplaint:In the event that this suit is decreed for thesale consideration of Rs.9,97,50,000/- the plaintiff isready and willing to pay the difference in Court Fees onsuch amount.E. Insert the following in paragraph (a-1) inparagraph 12 of the plaint:-a-1 Without prejudice and in the alternative,for the specific performance of the contract of saleentered into between the plaintiff and defendants 1 and2 on 18.08.2004, 21.08.2004 and 02.09.2004 for the A andB schedule properties by directing the defendants 1 and2 to execute and register the sale deeds in favour ofthe plaintiff.F. Insert the following in the list of documentsunder the Order VI, Rule 14(1)of the CPC. https://hcservices.ecourts.gov.in/hcservices/

718.08.2004Letter from theplaitniff to the 1stdefendantCopy821.08.2004 Letter from the 1stdefendant toMr.Ramanujam Copy4. The said application was filed on the ground that on18.08.2004 Marg Constructions Limited, pursuant to the conversationexpressed their willingness to pay a total sum of Rs.9,97,50,000/-towards sale consideration thereby at Rs.21 lacs per acre. Inresponse to the said letter, SICAL by their letter dated 21.08.2004had informed that they were willing to adjust the face value of FDR ina sum of Rs.2,00,00,000/- and receive the balance sale considerationof Rs.7,97,50,000/-. On 02.09.2004 Marg Constructions Limited furtherexpressed their willingness to get registration of the documents. Asthose communications were not referred to in the plaint, theamendments in the plaint as referred to above were sought. The saidapplication was allowed by the learned single Judge by order orderdated 30.10.2006 which is challenged in this original side appeal. 5. While the Original Side Appeal is pending MargConstructions Limited took out an application in M.P.No.2 of 2008seeking direction to implead one M/s.Haciendaa Infotech Realtors (P)Limited as the 6th defendant in the suit and consequently permit themto carry out the consequential amendment. The very same company alsotook out another application viz., M.P.No.3 of 2008 seeking furtheramendment of the plaint in the suit, while M/s.Haciendaa InfotechRealtors (P) Limited took out applications viz., M.P.No. 4 of 2008seeking interim order of injunction restraining SICAL as well as MargConstructions Limited from in any manner dealing with the plaint BSchedule Property pending disposal of the suit and M.P.No.5 of 2008seeking direction to exempt the lands forming part of the plaint A-Schedule transaction between themselves and SICAL from the rigours ofsection 52 fo the Transfer of Property Act. 6. We have heard Mr.ARL Sundaresan, learned senior counselfor the SICAL, the appellant, Mr.T.R.Rajagopalan, learned seniorcounsel for Marg Constructions Limited, the 1st respondent and alsoMr.Satish Parasaran, learned counsel for the petitioner in impleadingpetition.7. Mr.AR.L.Sundaresan, learned senior counsel for theappellant viz., SICAL has submitted that as the suit for specificperformance of contract of agreements of sale was filed with thespecific averments that the agreements dated 27.07.2004 and 02.08.2004are concluded contracts; that the sale consideration was fixed atRs.19 lacs per acre. Having failed to obtain an order of injunctionright upto the Apex Court in view of the dismissal of the applicationfor injunction, SICAL is now making an attempt to bring a new case byintroducing documents viz., letter correspondences dated 18.08.2004and 21.08.2004. In the event, the amendments are allowed, it would https://hcservices.ecourts.gov.in/hcservices/ amount to pleading a new case before the Court. Inasmuch as the suitwas filed with a definite cause of action that the agreements dated27.07.2004 and 02.08.2004 were concluded and the present cause ofaction is sought to be introduced and therefore, the cause of actionitself is changed. Even the sale consideration as put forth in theplaint in a sum of Rs.19 lacs per acre is now sought to be put atRs.21 lacs per acre. There is a great variance with regard to totalsale consideration in respect of the entire property. The Court Feewas paid only for a total sale consideration as per the allegedagreements dated 27.07.2004 and 02.08.2004 and by virtue ofamendments and the variance in the sale consideration, the plaintcannot be entertained due to insufficiency of court fee as well. As anew case is made out by shifting the grounds, the amendments soughtcannot be allowed. 8. He would further submit that in view of the inconsistentstand, the learned Judge ought not to have allowed the amendment. Hewould also submit that in view of the direction for amendment, SICALis seriously prejudiced as their valuable right to oppose the plainton the ground that there was no concluded contract is taken way. Insupport of the of the above submissions, he would rely upon a seriesof judgements in 1.Kanda v. Waghu, AIR 1950 Privy Council 7682.Bhagavatula Gopalakrishnamurthyi and othersvs. Dhulipalla Sreedhara Rao and another, AIR 1950Mad 323.Bhubaneswar v. Janak, AIR 1976 Orissa 2164.Uma Gupta v. Sushila, AIR 1989 MP 1695.Jayaram Mudaliar v. Ayyaswami and others,AIR 1972 (2) SCC 2006.Sukhad Raj v. Ram Harsh AIR 1977 SC 6807.2001 ALL India High Court Cases 26358.M/s.Bank Kreiss AG v. Ashok K.Chauhan, AIR2004 Delhi 429.State of A.P. and others v. PioneerBuilders, A.P., 2006 (8) Supreme 310.BombayCorporation v. Pancham, AIR 1965 SC100811.South Konkan Distilleries and antoher v.Prabhakar Gajanan Naik and others, 2008 J.T. (10) SC405 https://hcservices.ecourts.gov.in/hcservices/

9. Mr.T.R.Rajagopalan, learned senior counsel for the firstrespondent (Marg Constructions Limited) would on the other contendthat the cause of action has not been sought to be amended. It is thefirm case of Marg Constructions Limited that even in the unamendedplaint there was concluded contract pursuant to the two saleagreements dated 27.07.2004 and 02.08.2004. However, by virtue of theamendment, all that, Marg Constructions Limited seeks only to relyupon those two correspondences viz., letters dated 18.08.2004 and21.08.2004 which were in existence and were not in fact disputed. Bythe order of the learned single Judge permitting the amendment, thecharacter of the plaint is not changed, particularly the cause ofaction is not changed, as there was no amendment to the same. Hewould also submit that the pre-trial amendments should be liberallyconstrued and the objection as to the new case is made out, is totallymisconceived. He would also submit that it is the defence of SICALthat there was no concluded contract as per agreements dated27.07.2004 and 02.08.2004 and even after the amendment ordered, theabove defence of SICAL is not taken away and such defence is stillavailable and in fact, in the counter affidavit SICAL had taken astand that those two subsequent letters dated 18.08.2004 and21.08.2004 also do not amount to any concluded contract. Hence, thelearned senior counsel would submit that the challenge to theamendment is liable to be rejected. In this regard, the learnedsenior counsel would rely upon the following Judgements in1. Sampath Kumar v. Ayyakannu, 2002 (7) SCC 5592.Rajesh Kumar Aggarwal and others v. K.K.Modi andothers, 2006 (4) SCC 3853. Hi. Sheet Industries v. Litelon Limited, 2006(5) CTC 609 4. Rajkumar Gurawara (Dead) v. S.K.Sarwagi and Co.Pvt. Ltd., 2008 (5) CTC 2535. North Eastern Railway Administra-tion, v. BhagwanDas, AIR 2008 SC 213910. The plaint was laid based on the two sale agreements27.07.2004 and 02.08.2004. There is no dispute that by thoseagreements a sum of Rs.19 lacs per acre was agreed as saleconsideration. Pursuant to the agreement, a sum of Rs.2.00 Crores wasalso kept in the form of fixed deposit and a receipt was handed overto the counsel for Marg Constructions Limited. The Court Fee also waspaid on the basis of the total sale consideration at the rate of Rs.19lacs per acre. By the amendment Marg Constructions Limited is nowpleading a case of Rs.21 lacs per acre only and has not paid thecorresponding court fee. As far as the cause of action is concerned,the plaint could be still prosecuted on the basis of the earlier twodocuments in addition to the letter dated 02.08.2004 when theManaging Director of SICAL forwarded a draft sale agreement to Marg https://hcservices.ecourts.gov.in/hcservices/ Constructions Limited on 02.08.2004. The cause of action furtherrefers to a letter dated 03.08.2004 wherein Marg ConstructionsLimited requested both SICAL and Managing Director of SICAL to obtainNo Objection Certificate from the State Bank of India and the handingover of the receipt for Rs.2.00 crores to Mr.P.B.Ramanujam, Advocateon 02.09.2004. This cause of action is not sought to be amended.Rather in addition to the above, the two correspondence between SICALand Marg Constructions Limited are sought to be introduced. It is notthe case of Marg Constructions Limited, the plaintiff puts up a newcase for specific performance, as still it is their case that thespecific performance suit is laid on the basis of the earlier twoagreements and by virtue of the subsequent amendments all that theywould plead is, the increase in sale consideration. We do not findany change of character in the plaint as such by virtue of theamendment sought by Marg Constructions Limited. It must be noted thatthe two communications sought to be introduced by the amendments arenot disputed. In fact, it is argued by Mr.AR.L.Sundaresan, learnedsenior counsel for SICAL that those two letters would also indicatethat there was no concluded contract. The nature and the basis forthe suit viz., that there was a concluded contract is not altered bythe amendment. Equally the defence that was available to SICALnamely, there was no concluded contract on the basis of the earliertwo agreements as well in view of the subsequent correspondence inletters dated 18.08.2004 and 21.08.2004 is not taken away. Theevidentiary value of those communications in question could betestified only at the time of trial. In the absence of any prejudiceand in the absence of any change in the character of the suit assuch, in our opinion, the order in allowing the petition to amend theplaint requires no interference. 12. In this context we may usefully refer the followingjudgements: 12. (1). In Rajesh Kumar Aggarwal and others v. K.K.Modiand others 2006 (4) SCC 385, at page No. 393 the Apex Courtobserved thus:18. As discussed above, the real controversy testis the basic or cardinal test and it is the primaryduty of the court to decide whether such anamendment is necessary to decide the real disputebetween the parties. If it is, the amendment will beallowed; if it is not, the amendment will berefused. On the contrary, the learned Judges of theHigh Court without deciding whether such anamendment is necessary have expressed certainopinions and entered into a discussion on merits ofthe amendment. In cases like this, the court shouldalso take notice of subsequent events in order toshorten the litigation, to preserve and safeguardthe rights of both parties and to subserve the endsof justice. It is settled by a catena of decisionsof this Court that the rule of amendment is https://hcservices.ecourts.gov.in/hcservices/ essentially a rule of justice, equity and goodconscience and the power of amendment should beexercised in the larger interest of doing full andcomplete justice to the parties before the court." 12.(2). In Sampath Kumar v. Ayyakannu,(2002) 7SCC 559, at page 563, the Supreme Court has observed thus:9. Order 6 Rule 17 CPC confers jurisdictionon the court to allow either party to alter or amendhis pleadings at any stage of the proceedings and onsuch terms as may be just. Such amendments as aredirected towards putting forth and seekingdetermination of the real questions in controversybetween the parties shall be permitted to be made.The question of delay in moving an application foramendment should be decided not by calculating theperiod from the date of institution of the suit alonebut by reference to the stage to which the hearing inthe suit has proceeded. Pre-trial amendments areallowed more liberally than those which are sought tobe made after the commencement of the trial or afterconclusion thereof. In the former case generally itcan be assumed that the defendant is not prejudicedbecause he will have full opportunity of meeting thecase of the plaintiff as amended. In the latter casesthe question of prejudice to the opposite party mayarise and that shall have to be answered by referenceto the facts and circumstances of each individualcase. No straitjacket formula can be laid down. Thefact remains that a mere delay cannot be a ground forrefusing a prayer for amendment.13. The law on the issue as to the allowing of amendment atthe pre-trial stage seems to be consistent in view of the law laiddown by the Apex Court.14. In fact, the very same view was also expressed by the ApexCourt in North Eastern Railway Administration V. Bhagwan Das, AIR2008 SC 2139 at page 2142, page 15 which reads as under:- "15. Insofar as the principles which governthe question of granting or disallowing amendmentsunder Order 6 Rule 17 C.P.C. (a it stood at therelevant time) are concerned, these are also wellsettled. Order 6, Rule 17 C.P.C. postulatesamendment of pleadings at any stage of theproceedings. In Pirgonda Hongonda Patil vs. KalgondaShidgonda Patil &others which still holds the field,it was held that all amendments ought to be allowedwhich satisfy the two conditions: (a) of not workinginjustice to the other side, and (b) of beingnecessary for the purpose of determining the realquestions in controversy between the parties. https://hcservices.ecourts.gov.in/hcservices/ Amendments should be refused only where the otherparty cannot be placed in the same position as if thepleading had been originally correct, but theamendment would cause him an injury which could notbe compensated in costs. 15. While considering the application for amendments at thepre-trial stage, the court must liberally construe such application.Further, the court is bound to take note that while such amendmentsare ordered, the character or the basis and the substratum of theplaint is not taken away. In other words, the Court should also ensurethat the plaintiff should not be allowed to put up entirely a newcase thereby giving go-by to the earlier case. The Court is alsobound to consider the fact that by such amendments, whether thecause of action for the suit itself is entirely changed. As has beenheld in North Eastern Railway Administration case, all the amendmentsshould be allowed subject to the satisfaction that such amendments donot work in justice to the other side, they are necessary for thepurposes of determining the real question in controversy between theparties and by such amendments an injury which could not becompensated in cost, could occur. 16. Insofar as the prejudice is concerned, factually we do notfind any such prejudice as the defence open to SICAL that there wasno concluded contract, is not taken away even if the amendmentssought are ordered to be made. Further, the amendments are at the pre-trial stage and in this regard we may usefully refer to the recentjudgement in Rajesh Kumar Aggarwal and others v. K.K.Modi and others2006 (4) SCC 385, the Apex Court observed thus:"15. The object of the rule is that the courts shouldtry the merits of the case that come before them andshould, consequently, allow all amendments that maybe necessary for determining the real question incontroversy between the parties provided it does notcause injustice or prejudice to the other side.17. In fact, in Rajkumar Gurawara (Dead) through LRs v.S.K.Sarwagi & Co Pvt. Limited and antoher 2008 (5) CTC 253,the ApexCourt while allowing the pre-trial amendment had also considered theprejudice that may be caused to the party's defence only after thecommencement of the trial. In fact, only by the amendment, if, a newcase is sought to be made out, such amendment should not be allowed[see, Bombay Corporation V. Pancham,1965 SC 1008]. Inasmuch no newcase or new cause of action had arisen in view of the amendments, thegrievance as to the prejudice also cannot be accepted. 18. Order VI, Rule 17 of the Code of Civil Procedure, 1908consists of two parts. Whereas the first part is discretionary (may)and leaves it to the court to order amendment of pleading. The secondpart is imperative (shall) and enjoins the court to allow allamendments which are necessary for the purpose of determining the realquestion in controversy between the parties. https://hcservices.ecourts.gov.in/hcservices/

19. On the facts of the case we find that by the amendmentssought to be made, neither the character of the suit; nor the causefor the suit is changed. In the event, the amendments are notallowed, the plaintiff would be seriously prejudiced. On the otherhand, the defence viz., that there was no concluded contract is nottaken away and therefore, no prejudice is caused to the appellantswho are defendants in the suit. By such amendment no injury, whichcould not be compensated in terms of cost, is caused. Further, theexchange of letter communications is not in dispute and the contentsin the communications can be the subject matter of challenge only atthe time of trial. None of the rights of the appellant (SICAL) istaken away to effectively defend the suit. In view of the settledlaw which appears to be consistent, the pre-trial amendments areshould be liberally construed.20. For all the above reasons, we are of the considered viewthat the appellant company (SICAL) have not made out any case forinterference with the order of the learned single Judge. There cannotbe any dispute as to the above settled law on the issue. The series ofjudgements relied upon by Mr.AR.L.Sundaresan, learned senior counselfor the appellant (SICAL) also laid down the very same law, but thedecisions were rendered by taking into the facts of each case. Inview of our above findings that the amendments could be ordered onthe facts of this case, we are not inclined to refer each decisionrelied upon by the learned senior counsel for the appellant (SCAL). 21. For the foregoing reasons, we find no infirmity in theorder dated 30.10.2006 made in Appln. No.2521 of 2006 in C.S.No.811 of2004. Accordingly, the Original Side Appeal is dismissed. 22. Insofar as M.P.Nos.2 to 5 are concerned, as all theseMiscellaneous Petitions have been filed pending Original Side Appealand that the trial of the suit was stayed, we are not inclined toconsider each of the applications on merits, particularly in view ofthe order passed in the Original Side Appeal. Therefore, M.P.Nos.2 to5 of 2008 are closed giving liberty to petitioner in the respectivepetitions to approach the learned single Judge for similar reliefs bymaking necessary applications, if necessary and those applicationsshall be dealt with on their own merits. Sd/Asst.Registrar/true copy/Sub Asst.Registrarkmk https://hcservices.ecourts.gov.in/hcservices/ ToThe Sub Assistant Registrar,Original Side,High Court, Madras.1 cc To Mrs.AL.Gandhimathi, Advocate, SR.5044.1 cc To Mr.Satish Parasaran, Advocate, SR.4897.1 cc To Mr.S.Raghunathan, Advocate, SR.4866.O.S.A.No.197 of 2007 SR(CO)RVL 16.02.2009