Delhi High Court
Deepali Designs & Exhibits Private Ltd vs Pico Deepali Overlays Consortium & Ors on 17 September, 2012
Author: Reva Khetrapal
Bench: Reva Khetrapal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 2528/2010
DEEPALI DESIGNS & EXHIBITS PRIVATE LTD ..... Plaintiff
Through: Mr. Amit Sibal and Mr. Kamal
Sawhney, Advocates
versus
PICO DEEPALI OVERLAYS CONSORTIUM
& ORS .....Defendants
Through: Mr. Dharmendra Rautray and
Ms. Tara, Advocates for
defendants Nos. 1 to 3.
Mr. Saumyen Das, Advocate
for defendant No.4.
% Date of Decision : September 17, 2012
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
JUDGMENT
: REVA KHETRAPAL, J.
IA No.12101/2011
1. This is an application filed on behalf of the Plaintiff under Order VI Rule 17 read with Section 151 CPC seeking amendment of the plaint.
CS (OS) No.2528/2010 Page 1 of 142. The Plaintiff has filed the present suit for dissolution, rendition of accounts and certain other reliefs premised on the averments made in paragraph 4 of the plaint that the first Defendant is a Compendium of the Plaintiff Company, the second Defendant Company and the third Defendant Company, which was specifically formed for bidding and execution of the Overlays Tender floated by the defendant No.5 - Organizing Committee, Commonwealth Games, 2010 (for short „OC‟). It was stated that though the Defendant No.1 has been styled as Consortium, but in fact it is an unregistered partnership firm amongst the Plaintiff, Defendant No.2 and Defendant No.3. It was further stated that the Consortium/Partnership firm is registered as an assessee under the Indian Income Tax Act and has been allotted a PAN Number.
3. By way of the present application, the Plaintiff seeks to amend the plaint, stating that the nature of the relationship was never explicitly set out by the parties in the Agreement entered into between them and, therefore, the counsel for the Plaintiff, not being able to understand the legal effect of the relationship, jumped to the conclusion that it would only be an unregistered partnership. It is submitted that the Plaintiff wishes to amend the plaint to take an alternate plea that the relationship between the parties is in the nature of a Joint Venture Contract. This position is stated to be supported by the fact that the parties had agreed in an Addendum not to incorporate a separate legal entity. Further, the Plaintiff also wishes to amend the suit to place on record the subsequent fact that the Joint Venture Contract has been formally terminated by it vide letter dated CS (OS) No.2528/2010 Page 2 of 14 23.03.2011 on account of a continuing and fundamental breach of the contract by the Defendant Nos.2 and 3, who, by their own admission, have failed to remit the amounts received towards the scope of the work of the Plaintiff (minus 23%) within ten days of the receipt of the same. In view of the above, the Plaintiff wishes to amend the plaint by adding para 4(A) after the present para 4 and by further adding paragraph 32(A) after the present paragraph 32 and to make certain consequential amendments in paragraph 35 and in prayer (viiia).
4. The amendments sought for by the Plaintiff with regard to the nature of relationship between the parties being a joint venture, and incorporation of the plea of termination of the said relationship vide termination letter dated 23.03.2011, being an event subsequent to the filing of the suit, are not opposed by the Defendants. Another amendment sought for by the Plaintiff seeking interest @ 18% per annum in the prayer clause on the ground that the Plaintiff while seeking interest of 18% per annum in para 25 omitted to do so in the prayer clause and the consequent amendment in the suit valuation, are also not opposed by the Defendants. Thus far there is no difficulty.
5. In addition to the above amendments, the Plaintiff, however, wishes to add a relief seeking declaration in respect of amounts to be received in future from the Defendant No.5 in the following terms by adding para 39A after the present para 39 of the plaint and by adding prayer (viiib) in the following terms:-
Para 39A "39A. However, the Plaintiff at this stage seeks a declaration from this Hon'ble Court that all future amounts towards the scope of work of the CS (OS) No.2528/2010 Page 3 of 14 Plaintiff would be remitted to the Plaintiff (minus 23%) within 10 days of receipt as stipulated by article 8.2 of the Addendum dated 01.06.2010. The Plaintiff is not praying for recovery at this stage as the amounts have yet to be received from the Defendant No.5."
Prayer (viiib) "(viiib) pass a decree of declaration that all future payments towards the scope of work of the plaintiff (minus 23%) be remitted directly to the account of the plaintiff on receipt from Defendant No.5 or its successor."
6. The Plaintiff submits that the said amendments are necessary to decide the real question in controversy between the parties and are likely to cause no prejudice to the Defendants. The Plaintiff submits that the matter is at an initial stage and the trial is yet to commence and thus the amendment prayed for deserves to be allowed.
7. The said amendments are contested by the Defendants on the ground that they do not assist the Court to resolve the dispute or controversy between the parties as pleaded by the Plaintiff in its plaint. It is urged that this being the main object of amendment of pleadings and since the Plaintiff‟s application does not satisfy this condition, the amendment sought for by the Plaintiff should be disallowed.
8. It is further submitted by the Defendants, that in the plaint as filed by the Plaintiff the only dispute raised is in relation to the amounts received by the Defendant No.1 from the Organizing Committee, Commonwealth Games, 2010 (OC/Defendant No.5) under the contract. The entitlement of the Plaintiff would arise under the CS (OS) No.2528/2010 Page 4 of 14 contract only when money is received by the Defendant No.1 from the OC/Defendant No.5, and only if the Defendant No.1 refuses to pay such future amounts would the Plaintiff have a cause of action against the Defendants. Future payments under the contract not having been received by the Defendant No.1 from the OC/Defendant No.5, the Plaintiff cannot seek enforcement of a right which is contingent in nature.
9. It is contended that the amendment sought for by the Plaintiff is in the nature of a declaration with regard to future payments which may be received by the Defendant No.1 from the Defendant No.5, and does not satisfy the requirements of Section 34 of the Specific Relief Act, 1963, as there is no cause of action which has accrued to the Plaintiff in relation to future payments which are yet to be made by the Defendant No.5 to the Defendant No.1. Reliance is placed by the Defendants on the following precedents:-
I. Jeka Dula vs. Bai Jivi and Others, AIR 1938 Bombay 37, wherein it was held that a suit for declaration is maintainable only if the party is able to satisfy the following conditions:-
(a) the Plaintiff must be entitled to a legal character at the time of the suit; or
(b) to a right to property;
(c) Defendant should have denied these or be interested in denying this character or right; and
(d) The Plaintiff should not be in a position to ask for relief consequential upon declaration sought.CS (OS) No.2528/2010 Page 5 of 14
After enlisting the aforesaid conditions, the Bombay High Court held that the last condition may be left out of consideration, and with regard to the first three conditions held as under:-
"I will assume that the first exists. The second is clearly wanting and the third, it is common ground, does not exist. The third condition is important. Even if the plaintiff has a present existing interest, no cause of action accrues to him until there is some infringement or threatened infringement of his right, in other words a cloud must be cast on his title before he can ask for its removal. He must allege and prove hostility on the part of the defendant, for no Court will move on merely speculative grounds."
II. Ahmad Yar Khan vs. Haji Khan and Anr., AIR (31) 1944 Lahore 110 - In this case, the Lahore High Court held as under:-
"According to Section 42 only that person can maintain a suit for declaration who is entitled to any legal character or to any right as to any property. This means that the character or the right which the plaintiff claims and which is denied or threatened by the other side must exist at the time of the suit and should not be the character or right that is to come into existence at some future time."
III. F. Gopal Das Parmanand vs. L. Mul Raj, AIR 1937 Lahore 389, wherein it was held that a declaration that certain sum deposited by the Plaintiff with the Defendants as margin money was accountable by the Defendants to the Plaintiff could not be granted under Section CS (OS) No.2528/2010 Page 6 of 14 42, Specific Relief Act, 1877 (which is pari materia with Section 34 of the Specific Relief Act, 1963) as it affects only the pecuniary relationship between the parties to the contract. It was further opined as under:-
"It was observed in AIR 1930 Bom 331, that a declaration that the defendant is liable to pay the plaintiff all monies which the plaintiff as the defendant's guarantor is liable to pay under or in respect of a decree, cannot be granted under Section 42, Specific Relief Act, as it affects only the pecuniary relationship between the parties to the contract. To the same effect are 39 Mad 80 and 1 Pat. 1. We are, therefore, of the opinion that the present case does not fall within the purview of Section 42, Specific Relief Act."
IV. Y.A. Ajit vs. Sofana Ajit, AIR 2007 SC 3151, wherein the expression "cause of action" was described as under:-
"It is settled law that cause of action consists of bundle of facts, which give cause to enforce the legal inquiry for redress in a court of law. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the allegedly affected party a right to claim relief against the opponent. It must include some act done by the latter since in the absence of such an act no cause of action would possibly accrue or would arise.
The expression "cause of action" has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider CS (OS) No.2528/2010 Page 7 of 14 sense, it means the necessary conditions for the maintenance of the proceeding including not only the alleged infraction, but also the infraction coupled with the right itself. Compendiously the expression means every fact, which it would be necessary for the complainant to prove, if traversed, in order to support his right or grievance to the judgment of the Court. Every fact, which is necessary to be proved, as distinguished from every piece of evidence, which is necessary to prove such fact, comprises in "cause of action"."
V. Alchemist Ltd. and Anr. vs State Bank of Sikkim and Others, (2007) 11 SCC 335, in which case the following enunciation of the expression "cause of action" in A.B.C. Laminart (P) Ltd. vs. A.P. Agencies, (1989) 2 SCC 163 was quoted with approval and relied upon:-
"A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action.CS (OS) No.2528/2010 Page 8 of 14
But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff."
10. Reference is also made by the learned counsel for the Defendants to the order of this Court dated 22.02.2011 disposing of an application under Order XXXIX Rules 1 and 2 CPC seeking interim relief, being I.A. No.16915/2010, and in particular to paras 61 and 72 of the said order, which reads as under:-
PARA 61 "61. It is also trite that a suit cannot be decreed by an interim order. As noticed above, no cause of action qua amount not received by the defendant no.1 has arisen and obviously cannot form the subject matter of the present suit. I, therefore, find substance in the contentions of Mr. V.P. Singh, learned Senior Counsel for the defendants that the plaintiff has failed to make out any of the requirements for grant of an order of interim injunction."
PARA 72 "72. At this stage, the plaintiff has quantified its claim against the defendants at Rs.6,99,24,861/-. No cause of action has accrued in respect of any other amount which have not been received by the defendant no.1 from the defendant no.5. No court fee on any such claim has been affixed on the plaint."
Learned counsel for the Defendants contended that the above observations of this Court in interlocutory proceedings conclusively settled the matter.
CS (OS) No.2528/2010 Page 9 of 1411. Rebutting the aforesaid contentions on behalf of the Defendants and heavily relying upon the decision of the Hon‟ble Supreme Court in Rajesh Kumar Aggarwal and Others vs. K.K. Modi and Others, (2006) 4 SCC 385, the learned counsel for the Plaintiff submitted that the object of Order VI Rule 17 of Code of Civil Procedure is that the Courts should try the merits of the case that come before them and for the aforesaid purpose allow all amendments that may be necessary for determining the real question in controversy between the parties, subject of course to the rider that they do not cause injustice or prejudice to the other side. The real controversy test is the basic or cardinal test and the merits of the pleas sought to be incorporated by way of amendment are not to be adjudged at the stage of allowing the prayer for amendment. It was also submitted that the Plaintiff‟s prayer with regard to future payments was not at all inconsistent with its earlier pleadings. In the plaint, as initially instituted, it had been clearly pleaded by the Plaintiff that the contract provided that the Consortium would pay to the Plaintiff, in respect of the work performed by it 20% of the share of all profits (after deducting 23%) on the consortium receiving the amount from the Organizing Committee. The second Defendant Company and the third Defendant Company would be entitled to their share in the profits in the ratio of 60% and 20% respectively. It was stated that the Defendant No.5/OC had released substantial payments and after deducting 23%, the total amount payable to the Plaintiff Company would be ` 23,37,25,833/-. Till date, the total payment received by the Plaintiff Company in respect of the Commonwealth Games project is ` 16,38,00,972/-.
CS (OS) No.2528/2010 Page 10 of 14Therefore, as on date the total amount due to the Plaintiff Company from the Defendants is to the tune of ` 6,99,24,861/-. It was further pleaded that there are further payments due from the Commonwealth Games Organizing Committee in respect of the said project. As and when the said payments are released by the Commonwealth Games Organizing Committee, the Plaintiff Company will be entitled to its share based on the works in its „Scope of Work‟ as detailed in Annexure-II to the Addendum duly executed by it. It was stated that the Plaintiff had filed along with the present plaint an application under Order II Rule 2 to seek the leave of the Court to sue at a later stage for the aforesaid payments, but has now moved the present application for amendment of the plaint in order to avoid multiplicity of suits.
12. The learned counsel for the Plaintiff thus contended that by seeking a declaration in respect of future payments the Plaintiff does not seek to introduce a new case. In any event, he contended that the Defendants in the written statement filed by them have clearly denied the Plaintiff‟s right as delineated in the plaint, and it is this denial by the Defendant Nos.1 and 2 which triggers the Plaintiff‟s right, and thus it cannot be said that no cause of action has accrued to the Plaintiff to seek a declaration in respect of future payments to be received from the Defendant No.5 for the works already executed by the Plaintiff. It is also contended that there is no cogent reason why an amendment should not be allowed when a fresh suit for the same relief as prayed for by way of amendment is permissible under the law. The Hon‟ble Supreme Court in the case of Rajesh Kumar Aggarwal CS (OS) No.2528/2010 Page 11 of 14 (supra) had dwelt upon this aspect of the law relating to amendment of pleadings and in the light of the law laid down in the said case, it is wholly incomprehensible as to why, if it is permissible for the Plaintiff to file an independent suit, the same relief cannot be permitted to be incorporated in a pending suit. In the said case, it was observed as under:-
"17. In our view, since the cause of action arose during the pendency of the suit, proposed amendment ought to have been granted because the basic structure of the suit has not changed and that there was merely change in the nature of relief claimed. We fail to understand if it is permissible for the appellants to file an independent suit, why the same relief which could be prayed for in the new suit cannot be permitted to be incorporated in the pending suit."
13. Having considered the rival submissions of the parties, this Court is inclined to uphold the prayer for amendment made by the Plaintiff. The Defendants in their written statement have clearly denied and repudiated the right of the Plaintiff to receive any payment in terms of the contract between the parties. As such, it cannot be said that no cause of action has accrued to the Plaintiff or that no threat has been extended by the Defendants to the right of the Plaintiff to receive payments under the contract. Thus viewed, the judgment of the Bombay High Court in Jeka Dula's case (supra) and of the Lahore High Court in Ahmad Yar Khan's case (supra) do not come to the rescue of the Defendants, for, it cannot be said that the Defendants in the foreseeable future will accede to the right of the Plaintiff to receive CS (OS) No.2528/2010 Page 12 of 14 future payments nor can it be said that the Defendants have not extended any threat or sought to infringe the right of the Plaintiff. The judgment of the Lahore High Court in the case of F. Gopal Das Parmanand (supra) is also of no avail to the Defendants, which is to the effect that declaration cannot be granted under Section 42 of the Specific Relief Act, 1877 that a certain sum deposited by the Plaintiff with the Defendants as margin money is accountable by the Defendants to the Plaintiff as it affects only the pecuniary relation between the parties to the contract. The said judgment was rendered on the peculiar facts of that case which pertained to the pecuniary relationship between principal and agent (Pacca Arhatia) which relationship had not translated into any written instrument. In the present case, there is a written agreement between the parties and an Addendum thereto, in respect of which a declaration can certainly be sought.
14. There is yet another facet of the matter which persuades me to grant the amendment prayed for. In the instant case, a dissolution of the Joint Venture/Unregistered Partnership has been sought by the Plaintiff with rendition of accounts. It is the submission of the Plaintiff that on such rendition of accounts upto the institution of the suit, a sum of ` 6,99,24,861/- is due and payable to the Plaintiff. In the event the present application for amendment is allowed, the Plaintiff shall also be entitled to rendition of accounts after the filing of the suit albeit for the works already executed by the Plaintiff prior thereto. The institution of a fresh suit seeking relief with regard to future payments received by the defendant No.1 from the O.C./Defendant CS (OS) No.2528/2010 Page 13 of 14 No.5 would needlessly complicate the matter apart from leading to multiplicity of proceedings. The grant of amendment, on the other hand, would not result in changing the nature of the case. No prejudice would be caused to the Defendants thereby, nor in fact the Defendants have averred that they would be prejudiced by the amendment. An arbitral dispute is stated to be pending between the O.C./Defendant No.5 on the one side and the Consortium on the other hand and this relates to future payments claimed to be due by the Consortium from the O.C./Defendant No.5. It would thus be unjust and inequitable to hold that the Plaintiff cannot claim a declaration in respect of such future payments. The plea taken that future payments are in the nature of contingent right is specious, for, it is trite that the merits of the case cannot be gone into at the time of considering the plea for amendment.
15. In view of the aforesaid, the amendments prayed for by the Plaintiff are allowed. Amended plaint is taken on record.
16. Application stands disposed of in the above terms.
CS(OS) 2528/2010
17. List the case before the Joint Registrar on 18th October, 2012 for filing of written statement to the amended plaint, which shall be filed by the Defendants within four weeks from the date of this order.
REVA KHETRAPAL JUDGE September 17, 2012 km CS (OS) No.2528/2010 Page 14 of 14