Bombay High Court
Bank Of Baroda vs Har Kishore Jain on 8 December, 1988
Equivalent citations: (1988)90BOMLR675
Author: Sharad Manohar
Bench: Sharad Manohar
JUDGMENT Sharad Manohar, J.
1. This order relates to an application made by the plaintiffs for amendment of the plaint. The draft amendment is submitted to the Court and the plaintiffs desire the plaint to be amended in accordance with the draft amendment.
For stating the genesis of the Chamber summons, a few facts, more or less admitted facts, need to be stated.
2. The Bank of Baroda are the plaintiffs.
3. On October 30, 1982 two Bills of Exchange, the first for Rs. 1,95,744.61 and the other for Rs. 2,08,293.66, were drawn by M/s. D. Shanalal upon the drawee, Har Kishore Jain & Sons Pvt. Ltd., the present defendants. The Bills of Exchange were presented to the drawee and they were accepted by them.
4. They were discounted with the plaintiff/Bank (hereafter, referred to as the Bank). Both the Bills of Exchange were for a period of 60 days, that is to say payable on the due date of payment, being December 29, 1982. On July 18, 1983 the Bank wrote a letter to the defendants sending therewith a statement showing the outstanding dues, viz. the above mentioned Bills of Exchange. Reference was made in the said letter to the various intimation letters sent by the Bank to the defendants. The defendants were called upon to ascertain the position at their end and to make the payment of the bills at an earlier date. To this letter, a reply was sent by the defendants on September 7, 1983 which is the most crucial document having bearing upon the present application for amendment. The said letter dated September 7, 1983 contains an unequivocal admission on the part of the defendants that a total sum of Rs. 6,14,075.01 are due from the defendants to the Bank. There is no dispute that the above mentioned two Bills of Exchange, which are the subject of this present Summary Suit, are part & parcel of the said Bills of Exchange, liability in respect of which was specifically admitted by the defendants. It is stated by the defendants in the said letter dated July 18, 1983 that the Bank's letter demanding the payment for the said bills was received by the defendants. What is stated further is extremely crucial. This is how the 2nd part of the letter runs :
Due to reasons beyond our control we could not make the payment of these bills. We assure you that the payment of these bills will be (made by the mid of November 1983.
5. There cannot be any dispute, and T may state that it has in fact not been disputed by Mr. Vajifdar, that this statement spells a clear admission on the part of the defendants as regards their liability under all the 6 Bills of Exchange, including the bills which are the subject matter of the suit.
6. This can be spelt as an admission of liability under the Bills as also the admission of liability for payment of the original consideration received by the defendants.
7. The Bills were presented for payment by the Notaries to the defendant on September 5, 1983. However, the payment was not received by the defendants. Oh September 19, 1983, therefore. Notary Certificate was issued by the Notaries together with the noting of protest and the present suit has been filed on January 23, 1984, a Summary Suit, for recovery of the amount due under the Bills of Exchange together with the interest thereon.
8. Summons for judgment was taken out on May 24, 1984 in which Affidavit of Reply was filed by the defendants on July 30, 1984. It can be safely stated that the main or rather the only plea raised by the defendants by way of defence was that the Bills of Exchange were not properly stamped as required by the Stamp Act and as such were not admissible in evidence and that hence the suit filed on the basis of the Bills of Exchange was not maintainable. A rejoinder was given to the said reply by the plaintiffs on August 31, 1984. The only thing that needs to be stated in relation to the rejoinder is that the above mentioned one letter dated September 7, 1983, written by the defendants to the Bank, containing an unequivocal admission of liability under the Hundis as also in the transaction as a whole, was produced and relied upon by the plaintiffs in support of their suit claim. Conditional leave was granted by the learned Single Judge.
9. But in Appeal, the Division Bench held that there were arguable questions raised by the defendants as a result of which triable issues arose. The Division, Bench, therefore, gave unconditional leave for the defendants to defend the suit.
10. Against this order, a Special Leave Petition was filed by the plaintiffs to the Supreme Court, which was no doubt dismissed, but the hearing of the suit was expedited by the Supreme Court, which is the reason why this Summary Suit is reaching hearing at least at the fag end of the year 1988.
11. Almost at the time when the suit reached hearing, this application was presented by the plaintiffs for amendment of the plaint. By the amendment, what is sought is the reliance upon the above mentioned letter dated September 7, 1983 as an admission of liability or as a fresh cause of action. The plea is that apart from their liability under the Hundi, the defendants are also liable for the amount claimed under the suit by virtue of the said letter dated September 7, 1983.
12. This amendment is most seriously and strenuously contested by Mr. Vajifdar, appearing for the defendants.
13. I will presently mention the planks of attack on this endeavour of amendment.
14. In support of the application for amendment, Mr. Zaiwalla placed particular reliance upon the latest judgment of a Division Bench of this Court in Dena Bank v. Gautam Ratilal Shah as also upon the judgment of the Supreme Court in Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil
15. In substance, the plea of Mr. Zaiwalla was:-
(a) that the proposed amendment did not change the nature of character of the plaint at all;
(b) no such prejudice was likely to be caused to the defendant, if the amendment is allowed, as would not be sufficiently compensated by an order as to costs.
Mr. Vajifdar has seriously contested the above pleas. His contention is:-
(a) that the amendment in fact changes the entire nature or character of this original plaint;
(b) that a Valuable right, which has accrued to the defendants by the lapse of limitation, will be lost to them if the amendment is allowed.
16. He has purported to- rely upon a few authorities of this Court, of quite an old vintage, in support of these pleas.
17. In my opinion, the only defect that this amendment application suffers from is the element of delay in presenting this application for amendment. But as against this, it must be borne in mind that nothing is being set up or set out by the plaintiffs as would take the defendants by surprise. The letter dated September 7, 1983, which contains the unqualified admission, is written by the defendants themselves. Moreover, it was produced by the plaintiffs at the earliest stage of these proceedings. The defendants must be deemed to be fully aware of the legal effect thereof. The delay as such has caused no particular loss to them. The plaintiffs' delay causes real loss to the plaintiffs themselves; none to the defendants because they have been merrily using and enjoying Bank's monies all these years and the greater the delay, the better for them. All that has cost to them are the throwaway costs over their Attorneys and Counsel. This means that no such loss is caused to them as cannot be compensated in terms of monies.
18. It follows that the amendment cannot be disallowed only on the ground of delay, in this case.
19. But the other two grounds raised by Mr. Vajifdar are more substantial.
20. His first contention is that by allowing this amendment a valuable right, which has accrued to the defendant by the lapse of limitation, will be lost to them. According to him the original claim was based upon the Bills of Exchange. The present claim is based upon the admission contained in the letter dated September 7, 1983. According to Mr. Vajifdar, this is sought to be treated as a fresh cause of action and his plea is that if this is a separate cause of action, then the amendment sought as late as in December 1988 would be barred because the suit filed as late as in December 1988 on that cause of action would be barred by limitation.
21. Let me deal with this contention, which, in my opinion, is somewhat fallacious having regard to the peculiar facts of the cases such as this.
22. In my opinion, in the instant case, the letter dated September 7, 1983 did not constitute a fresh cause of action at all. The letter no doubt incorporates an unequivocal admission of liability, but it is admission of liability already incurred. It is not as if that a new liability is created by the letter. It is an admission of the previous liability. One can say that the liability that is admitted is by the valid Bills of Exchange. One can also say that the liability which is admitted is the one which relates to the original consideration that was received by the defendants from the drawers. The drawers had a right to receive payment from the drawees, viz. the defendants. When the Bills of Exchange were discounted by the Bank, the Bank only stepped into the shoes of the drawers. The corresponding right of the payment of consideration by drawee to the drawer, stood, in essence and in substance, transferred to the Bank. But when the defendants bind themselves to pay the monies to the Bank, they do not do it as a matter of charity, without having received any consideration for the same. The concept of consideration under our law is broad enough to include a performance done in favour of somebody to form the basis of claim by a third party against the promisor. The very definition of the word "consideration" under the Contract Act is that when at the desire of the promisor, a promisee or any other person had done or abstained from doing or does or abstains from doing or promises to do or to abstain from doing something, such act or abstinence or promise is called consideration for the same.
This means that the consideration need not necessarily flow from the party of the 2nd Part. If at the desire of the promisor, the promisee does something for somebody else, it is a valid consideration. Lialibility exists towards third parties under this doctrine of consideration under our law. In my opinion, therefore, it is not correct to say that the letter dated September 7, 1983 was a cause of action. The cause of action was two-fold:-
(a) the original consideration that was received by the defendants from the drawer and the right to re-payment of which consideration stood transferred to the Bank. It can also be said that the cause of action arose by virtue of the said acceptance of the Bills of Exchange by the defendants.
(b) There is an implied promise by every drawee to pay the consideration of the Bills of Exchange to any one who is its holder in due course.
23. In fact, there was an implied contract between the drawee and the holder in due course to make payment in due course, not only to the original drawer but also to the holder in due course. But the further point is that the two causes of action are inextricably interwined. One cannot exist without the other. If there was no consideration, the Bills of Exchange would not be valid. It is true that in the case of Bills of Exchange the consideration is presumed. But that is something which relates to the Law of Evidence, not to the substantive law. There can exist no Bill of Exchange without consideration and if it is proved that the Bill of Exchange is without consideration, it would not be worth the value of the paper which it would have been written on. The only difference is that in the case of the negotiable instrument, such as the Bills of Exchange or Hundi, the consideration is presumed to have been received by the drawee until he disproves it. In the absence of such negotiable instruments, the consideration has to be proved by the plaintiff. But in both the cases, the existence of consideration is the necessary postulate.
24. This being the position in my opinion, the suit is not being filed on the basis of the letter dated September 7, 1983 as a fresh cause of action. The cause of action is the same; it is only sought to be proved with the help of the letter; dated September 7, 1983. The cause of action in the present suit originally was the Bills of Exchange. Now, an added cause of action, which was the concurrent cause of action and intertwined cause of action, is sought to be pleaded, viz. the original consideration. In my opinion, it can be safely said that the original consideration and the Bills of Exchange are the two sides of the same transaction. The Bills of Exchange cannot exist without consideration. It may be that a suit on original consideration cannot be filed as a summary suit if the original consideration is denied or disputed. But the position today is that now the suit is not a summary suit at all. The moment the defendant is allowed to defend the suit un-conditionally, it ceases to partake the character of a summary suit.
25. The plea that the suit would be barred by limitation if it is based on the letter dated September 7, 1983 is, therefore, a misconceived plea.
26. Certain authorities have been sought to be relied upon in connection with this. 1 propose to deal with those authorities, after I examine the 2nd contention raised by Mr. Vajifdar.
27. The 2nd contention is that the amendment changes the very nature and character of the suit. The plea of Mr. Vajifdar in this behalf is as follows:-
28. The original suit was based upon the Bills of Exchange, not upon the consideration; the amendment seeks to make the original consideration as a cause of action. These are two different causes of action. The suit for one would be of one particular nature and character. The suit on the basis of the other would be of a different nature and different character.
29. The answer to this plea is already given above while discussing the 1st objection raised by Mr. Vajifdar. It may be true that the original consideration constitutes one cause of action and when a Hundi or a Bill of Exchange is given on account of the original consideration, the instrument would itself constitute another cause of action. But something which cannot be lost sight of is that these two causes of action are different only in form and not in substance. There cannot exist a Bill of Exchange without consideration and hence when a suit is filed on a Bill of Exchange, it is in fact filed also on the receipt of the original consideration. It is not filed for something in the air. The 1st defence to the suit filed on a Bill of Exchange, which is executed without any consideration, would be that a Bill of Exchange was devoid of consideration. No doubt the onus to prove this particular factum of absence of original consideration would be upon the contesting defendants. But that would not change the position that the suit would be for recovery of consideration indirectly, though not directly. This is the reason why I have stated that these two causes of action are different ones only in form, not in substance and that they are inextricably intertwined with each other. In substance, every suit on Hundi is also for recovery of consideration.
30. Once this position is accepted, then the plea that the nature of the suit would be changed if the amendment is allowed loses its force.
31. Let me now turn to the authorities cited across the bar. It would be better referring to the judgment relied upon by Mr. Zaiwalla, which, in my opinion, really speaking, clinches the issue.
32. A mere statement of facts would be enough to show that the question involved in that case was almost identical as the one presented by the present application for amendment. In fact the facts of that case were even grosser. The negotiable instrument in that case was a promissory note, not a bill of exchange. But it cannot be disputed that distinction is of no relevance. The plaintiffs Dena Bank filed a summary suit in 1975 on a promissory note executed by the defendants on January 31, 1973. The plea of the defendants in reply to the summons for judgment was that some of the defendants were only guarantors and the real principal debtor was a limited Company, to which the plaintiffs had given the pro-note. The defendants' firm plea" was that the suit which was sought to be filed as a summary suit could not lie because along with the promissory notes a Deed of Guarantee and a Deed of Hypothecation were also executed. According to the defendants, a Promissory Note, a Deed of Guarantee, and a Deed of Hypothecation have got to be considered.
33. What follows is very much important.
34. In their Affidavit-in-Rejoinder, the Plaintiffs/Bank contended that the plaintiffs' suit was based only on the negotiable instrument and not upon the guarantee. This means that the Bank's claim against the particular defendants, based upon the guarantee, was not sought to be vindicated by the plaintiffs. Thereafter, a Written Statement was filed by those particular defendants and even in the Written Statement the same plea about the suit, requiring consideration of the Deed of Guarantee, Deed of Hypothecation and the Promissory Note, was raised. It was thereafter that on September 3, 1982 almost 10 years after the original cause of action dated January 31, 1973, that an amendment application was made by the plaintiffs to base the claim also upon the letters of guarantee and letters of continuity executed by the defendants on the selfsame date, January 31, 1973. The relevant chamber summons was rejected by the learned Single Judge on the ground that the plaintiffs have sought to introduce thereby a different cause of action and, (further, the same was sought to be done at a very late stage.
35. In Appeal, the Division Bench held that in 1982 a suit based on letters of guarantee against the defendants as guarantor would perhaps be barred by the law of limitation. According to the Bench, two points required consideration. The two points were:-
(i) whether the case made out by the plaintiffs is a totally new case based on a new set of idea;
(ii) whether the defendants would be prejudiced in their defence if these additional facts are allowed to be pleaded, in the sense that the necessary evidence would not be available.
36. In the context of the answers to these questions, this Court observed that principally what the plainiffs have claimed in the plaint, as it stands, is the money decree against the defendants; that that prayer is not sought to be altered, but that what is sought is to give support to the prayer for money decree by additional document and additional facts. The Court did see that those new facts were fully within the knowledge of the plaintiffs from the very beginning and the plaintiffs had deliberately, on the legal advice, chosen not to mention the same in the plaint. But according to the Court, this made no difference. In substance, the Court found that this mistake was the result not only of "in effectiveness or incompetence" on the part of the pleader, "which has got to be forgiven", but was also the result of "obduracy and obstinacy" of the pleader, which according to the Court, stood on the same par. The Court did see that this was a border line case. But according to the Court, interest of justice did require that the amendment should be allowed since that was not a case where the defendants could not be compensated in terms of money. It was further observed that to insist that they must be protected by the law of limitation against the claim as now made on a proper basis would be to make a fetish of holding procedural technicalities at the cost of substantial justice.
37. With very great respect, apart from the fact that as a judgment of the Division Bench, it is very much binding upon me, I am in full agreement with the letter and spirit of the law declared by the statute. In my opinion, the cause of justice should not be allowed to be smothered by legal technicalities and by virtue of the lethargy or incompetence or indifference on the part of the legal community.
38. In my opinion, the other authority sought to be relied upon by Mr. Zaiwalla, viz. the judgment of the Supreme Court in Pirgonda's is equally apposite so far as the principle involved in this case is concerned.
39. In that case the plaintiff obtained a decree for possession against 'B' but was obstructed by 'B' in the execution proceedings. The decree-holder's application under Order 21, Rule 97 was dismissed on April 12, 1947 and hence, he instituted the suit under Order 21 Rule 103 against the original judgment-debtor as also against the obstructionist. In the suit he, however, did not mention any other fact, excepting obtaining of the decree by him. No particular averments were made in the plaint as to the facts or ground on which the plaintiff based his title in the suit property as against 'B the obstructionist. It was only on March 29, 1950 that the plaintiff made an application for permission to give further and better particulars of the claim made in the plaint. The application was rejected by the trial Court. But the Appeal by the plaintiff was allowed by the High Court. In Appeal, in the Supreme Court, it was contended that the High Court should not have exercised its power of, amendment because:-
(i) the period of limitation for the suit based upon the further and better particulars had already expired before the date on which the application for amendment was made;
(ii) this application for amendment was not made at the earliest even when the plaintiffs' attention was drawn to the defects in the original plaint, which defects were sought to be removed by the application for amendment.
40. In answer to this, the Supreme Court held:-
that the power exercised was undoubtedly one within the discretion of the High Court and the discretion was not exercised on a wrong principle. The amendment did not really introduce a new case, and the application filed by B himself showed that he Was not taken by surprise; nor did he have to meet a new claim set up for the first time after the expiry of the period of limitation : 33 Bom 644, Applied; AIR 1921 P. C 50, Rel. on.
41. In my opinion, the law declared by the Supreme Court, as above, is a complete answer to the defendants' pleas set out above.
42. My attention is also invited to the fact that identical view has been taken by another learned Single Judge of this Court (B.A. Masodkar J.) in Raja-ramka Pulp and Paper Mill Ltd., Tumsar v. Central Bank of India, Nagpur [1974] Mh. L.J. 985. In that case, the suit was filed on a promissory note and amendment was subsequently sought for introducing averments in the plaint to base the cause of action also upon the original consideration. This Court observed that mere title to the plaint does not indicate the real nature of the pleadings of the parties. The learned Judge found that the defendant had fully understood the pleadings of the plaintiffs.
43. I may mention here that the present is the identical case where the defendants have fully understood the nature of the plaintiffs case. This letter dated September 7, 1983 was produced at the time of the rejoinder. It is the letter written by the defendants themselves. They are, therefore, fully aware of the existence as well as meaning of the said letter and the reason why the plaintiffs have been relying upon the same.
44. This Court has further observed in the above case that only because a negotiable instrument is initially pleaded, it would not affect the nature of the claim of the plaintiffs to have a money decree. The claim on the basis of original defence would at the most change the burden of proof and not the nature of the claim itself.
45. The learned Judge has further observed that the nature of the claim is not changed merely because the claim in the original suit filed on the basis of the Bills of Exchange was sought to be based also upon the original consideration.
46. At the end of Para 7 of the Judgment, it is observed by the learned Judge that a suit on promissory note can validly contain, nay can always assimilate a plea based on the original payment of loan. The learned Judge observed that the original consideration did not cease to exist merely because it has merged in and has been given in the form of a negotiable instrument. It was held that the pleadings in support of both are supplementary or at the most alternative; they are not inconsistent.
47. After examining the entire judgment, I am satisfied that the learned Judge has arrived at the identical legal conclusion, as has been arrived at by me in the above paras of this judgment.
48. But there is another reason why it is useful relying upon this authority.
49. As mentioned above, Mr. Vajifdar has come out with a two-fold reply to the application for amendment. His plea is that, in the first place, the plaintiffs are now trying to make out an entirely new or inconsistent case, which changes the nature or character of the suit, in that the original suit on Bills of Exchange is sought to be converted into one on original consideration. Secondly, he contends that by allowing the amendment the Court will be depriving the defendants of a valuable right that has accrued to them by the lapse of limitation. In support of those pleas, he has relied upon the judgment of a Single Judge, in Burjorji Jivanji Todywalla v. Hormusji Nowroji Davar [1932] A.I.R. Bom. 394 : (1931) 34 35 Bom. L.R. 643 as also upon a Division Bench Judgment of this Court in Sitaram Krishna Padhye v. Chimandas Fatehchand .
50. I may mention here that both these Judgments are considered by Masodkar J., who has observed that Burjorji Jivanji Todywalla v. Hormusji Nowroji (supra) no longer good law in view of the judgment of the Division Bench in Sarafalli MahomedalH v. Mahasukhbhai Jechandbha [1933] A.I.R. Bom. 476 : ; (1933). Bom. L.R. 965.
51. I do not wish to go into the question whether Sarafalli MahomedalH''s case (supra) over-rules Burjorji Jivanji's case (supra) on this particular question. The fact remains that the law laid down by the Division Bench of this Court in Dena Bank v. Gautam Pawlal Shah (supra) as also the law laid down by the Supreme Court in Pirgonda Hongonda Patil's case (supra) results in the legal position that the law laid down in the two Judgments, mentioned above, Burjorji Jivanji Todiwalla v. Hormusji (supra) and Sitaram Krishna Padhye v. Chimandas Fatehchand (supra) is no longer a good law.
52. Both on authorities as well as on first principle, therefore, I find it difficult to agree with the exposition of law in the above mentioned authorities. I am fairly of the opinion that this is a case where there exists no impediment in the way of the Court to allow the amendment. This is in addition to the legal position that justice of the case does require the opportunity to the plaintiff to amend the plaint as prayed for.
53. The result is that the application for amendments is allowed. The leave to amend is granted. Mr. Vajifdar is given two weeks' time to file an appeal against this order if his clients are so advised to do. If no appeal is filed and if stay is not obtained from the Division Bench on or before December 22, 1988, the amendments shall be carried out by the Attorneys for the plaintiffs on or before January 19, 1989.
54. The defendants will be entitled to the costs of these proceedings according to Rules.
55. It is not disputed that the other companion Suits Nos. (7) 178 of 1984, (2) 196 of 1984, (3) 294 of 1984, (4) 295 of 1984, (5) 402 of 1984, (6) 443 of 1984, (7) 475 of 1984 and (8) 513 of 1984, give rise to identical question and similar amendments shall have to be allowed in the plaints in all the suits. Since, however, Mr. Vajifdar wants to consider whether Appeal should be filed against this order, no order as regards similar amendments in those suits is being passed at present. However, Mr. Vajifdar does make a statement before the Court that in case he does not file any Appeal to the larger Bench or, after filing the Appeal, if he does not succeed in getting this order set aside, he will immediately consent to the plaints in the said other suits being similarly amend.
56. There shall be no order as to costs so far as amendments in the plaints in those suits are concerned.