Calcutta High Court
Vck Share And Stock Broking Services Ltd vs Bank Of Rajasthan Ltd on 26 April, 2018
Equivalent citations: AIRONLINE 2018 CAL 664
Author: I.P. Mukerji
Bench: Md. Mumtaz Khan, I.P. Mukerji
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
Present :- Hon'ble Mr. Justice I.P.Mukerji
Hon'ble Mr. Justice Md. Mumtaz Khan
APO 298 of 2014
GA 3115 of2011
CS 129 of 1999
OCO 03 of 2017
VCK Share and Stock Broking Services Ltd.
Vs.
Bank of Rajasthan Ltd.
For the Appellant :- A. K. Mitra, Sr. Adv
Nirmal Bhattacharya,
Asif Ali
Brajesh Jha
Saurav Kr. Mukherjee
For the Respondent :- T. K. Bose, Sr. Adv
S. Deb Propa Ganguly Judgement On :- 26.04.2018 I.P. MUKERJI, J.:-
Some 12 years after institution of the suit, the appellant plaintiff took out an application (GA 3115 of 2011) to effect some amendments to the plaint. By this passage of time the respondent Bank of Rajasthan Ltd. became ICICI Bank. The substitution of the name of the respondent ICICI bank was also sought and readily granted by the court. Reference to the respondent bank include the Bank of Rajasthan and ICICI bank, as applicable to the context.
There were other controversial amendments proposed by the plaintiff/appellant which were opposed by the respondent. The application was heard before Justice Patherya and finally judgment was delivered on 11th July, 2014 partly allowing the application. Both the parties, are aggrieved by this judgement and order. The appellant/ plaintiff appeals to this court. The respondent has filed a cross-objection, challenging it.
The question which arises in this case is whether the appellant/plaintiff could claim the accruals from the pledged shares like bonus shares, dividend etc, twelve years after institution of the suit by amending the claim. Undoubtedly a suspicion will occur in the mind of any reasonable person regarding the maintainability of the claim, because, if a suit is filed now, claiming the amounts or the shares, limitation may come in the way.
Before taking a decision as to whether to allow the amendments prayed for, a look at the law is necessary.
If by the amendments the entire dispute between the parties is brought within the domain of a single proceeding, the amendment should be allowed. This is so because the law discourages multiplicity of proceedings and encourages quick and effective resolution of the entire disputes between the parties by a single decree or order. Amendments have also been allowed to perfect the cause of action pleaded (see Seth Nanak Chand Shadiram v. Amin Chand Pyarilal reported in AIR 1970 Calcutta 8).
Amendments are allowed to bring on record relevant subsequent events with the objective of shortening litigation. (see Lekh Raj v. Muni Lal reported in (2001) 2 SCC 762, Om Prakash Gupta v. Ranbir B. Goyal reported in (2002) 2 SCC 256 and Kedar Nath Agrawal (Dead) and another v. Dhanraji Devi (dead) by Lrs. And another reported in (2004) 8 SCC 76). Amendments are also allowed to bring to the forefront the real controversy between the parties (see Usha Devi v. Rijwan Ahmed and Ors. reported in AIR 2008 SC 1147, Pankaja and another v. Yellappa (ded) by Lrs. And another reported in (2004) 6 SCC 415 and South Konkan Distilleries & Anr. Vs. Prabhakar Gajanan Naik & Ors. reported in (2008) 14 SCC 632).
In those circumstances, events subsequent to filing of the suit and which are relevant for the purpose of its trial should be brought on record by amendment, instead of asking the plaintiff to institute a fresh suit. But sometimes, a valuable right accrues in favour of the defendant and allowing the plaintiff to amend the plaint would defeat such a right. In such a case the amendment should not be allowed. For example, suppose, the plaintiff has omitted to include a claim in his original claim. By the time he realises it, the claim has become barred by the laws of limitation. A separate suit would not lie. Thus a valuable right has accrued to the defendant. The amendment to include this barred claim should normally not be allowed. However, only when a proposed claim sought to be introduced by amendment, is patently barred by the laws of limitation should the court refuse to allow it. If the issue is triable, the court should not get into the controversy of limitation at the stage of hearing of the amendment application and leave it for adjudication at the trial of the suit. (see Ragu Thilak D. John Vs. S. Rayappan and Ors. reported in AIR 2001 Sc 699) If the court finds that by the amendment the plaintiff is introducing an additional cause of action or a new cause of action the amendment should not be allowed especially if the claim is patently barred by limitation (see A.K. Gupta and Sons Ltd. V. Damodar Valley Corporation reported in AIR 1967 SC 96).
The amendment should be refused, if the plaintiff by that process is trying to enlarge the scope of the suit. We all know that Order 2 Rule 2 of the Code of Civil Procedure provides that the plaint has to include the whole claim in respect of the cause of action. If it is not included it would be deemed to be abandoned. Hence if the entire claim is not included in the plaint it becomes dead. It cannot be introduced in a subsequent suit. The court will discourage an effort to introduce the claim through the backdoor of amendment, unless there has been a serious accidental omission on the part of the learned lawyer for the plaintiff and the court thinks that for this error the litigant who has been acting bona fide should not suffer.
Any accretion to the property pawned becomes the property of the pawnor (see Standard Chartered Bank and Anr. Vs. Custodian and Anr. reported in AIR 2000 SC 1488, M.R. Dhawan v. Madan Mohan and Others reported in AIR 1969 Delhi 313). These two decisions cited by Mr. Mitra make it plain that and any addition to the pledged shares by way of bonus shares, any income generated out of them like dividend are to be taken as part of that property as its accretion. It follows that if anybody lays a claim over a pledged property as the owner he would automatically become the owner of the accretion and the dividend income. So, once a suit has been filed claiming the pledged property, further action need not be instituted to claim the usufructs thereof like bonus shares, dividend etc. The power of the Court to amend pleadings contained in Order VI Rule 17 of the Code of Civil Procedure should be necessarily read with Order VI Rule 16 which vests the Court with the power to strike out, inter alia, unnecessary pleadings and those which if retained would tantamount to an abuse of the process of Court.
If, by the passage of time there are developments in the case which have the effect of narrowing down the scope of the suit or reducing the issues involved or eliminating or shortening the disputes or making some claims redundant, unnecessary or inappropriate by conduct of the parties, then the Court has the power to so amend the pleadings and the claims so as to make them consistent with the present case of the parties, to do complete justice between the parties.
This view of this Court finds support in Raicharan Vs. Biswanath reported in AIR 1915 Cal 103 a decision of this Court followed by the Supreme Court in Nair Service Society Ltd., Vs. K. C. Alexander and Ors. reported in AIR 1968 SC 1165, Rabindra Kumar Ghosel Vs. The State of West Bengal reported in AIR 1975 SC 1408 and Shikharchand Jain Vs. Digamber Jain Praband Karini Sabha and Ors. reported in AIR 1974 SC 1178.
Mr. A.K. Mitra, learned senior Advocate for the appellant plaintiff overcame the difficulty of limitation, theoretically, by citing the following passage from the judgement of Mr. Justice Kirpal, in Standard Chartered Bank and another v. Custodian and another reported in AIR 2000 SC 1488:
"50. From the aforesaid it would follow that what Section 163 of the Contract Act really means is that accretions in respect of the goods bailed cannot be a property of the bailee but must be returned when the goods themselves bailed are returned. A necessary corollary to this would be that as the pledge extends to such accretions then when the pledged goods are retuned these accretions must also be given back. But if the pledge extends to such natural increase of the pledged goods it must follow that the pledgee would not only have the right to retain the said accretions but also have the right to sell the same along with original shares pledged for the purposes of realising amounts due to it and in respect of which the shares were pledged as a security. Not only will this be in line with the aforesaid observations of this Court in T.B. Ruia's case but in arriving at this conclusion we find support from the Halsbury's Laws of England Vol .2 para 1524, where dealing with the bailee's duty to account it was observed that "When the return of the bailed chattel constitutes part of the bailee's obligation, he must restore not only. the chattel itself, but also all increments, profits and earnings immediately derived from it." It would follow from the aforesaid that the accretions to the pledged property would continue to be retained by the pawnee and, in the case of a notified party, like in the present case, the accretions to the pledged property would also be regarded as attached property to be dealt with in the manner in which the pledged shares have to be dealt with.
51. It is not possible to accept the contention of the custodian that as and when any accretion takes place the pawnee is under Section163 liable to hand over the accretion to the pawnor. U is true that the words "upon redemption" as used in Sections 63 and 64 of the Transfer of Property Act are not included in Section 163 of Contract Act but it is to be seen that if the accretion is to be regarded as forming part of the bailed property then such accretion must remain with the pawnee and be dealt with by him in the same manner as the pledged shares. In other words the accretions form an integral part of the attached shares as on the date of attachment, as held in T.B. Ruia's case, and it follows that it would also be an integral part of the shares when they were pledged and would, therefore, constitute a part of the pledged security. The appellant bank would, therefore, be entitled to retain the same and deal with them as pledged stocks. The decision of the Special Court that the bonus shares, dividend and interest which had accrued on the pledged shares were not themselves the subject matter of the pledge and must, therefore, be handed over by the appellant bank to the custodian cannot be sustained."
In Ragu Thilak D. John v. S. Rayappan and others reported in AIR 2001 SC 699 Mr. Justice Sethi delivering the judgement of the court suggested a liberal approach to be taken in the matter of grant of amendments. It opined that the court should not be too hyper technical. In fact it should see that the observance of technicalities does not defeat the purposes of justice. If necessary, where the question of limitation is raised the amendment is to be allowed subject to that point to be decided in the suit.
Now, some facts need to be stated in some detail.
The suit arose out of a loan and advance agreement dated 19th September, 1995 between the parties under which upto Rs. 5 crores could be advanced by the respondent to the appellant/plaintiff. A substantial sum of money was lent and advanced by the respondent bank in furtherance of this agreement. As security the appellant/plaintiff pledged various shares held by it in diverse companies with the respondent. Details of the shares are annexed to the plaint as annexure- D. The respondent issued a notice dated 1st July 1997 to the appellant/plaintiff that they wanted to sell the shares. The appellant/plaintiff challenges this notice on various grounds. They say that it was a general intention to sell and not a specific notice to sell. According to the respondent bank they could not sell the shares as there was not a sufficient number of transfer deeds.
At any rate the respondent bank appears to have sold the shares in February-March 1998.
In paragraph 13 of the plaint the appellant/plaintiff denies that the shares were sold at all.
In paragraph 14 of the plaint the appellant/plaintiff pleads that even if the sale had taken place it was void for the following reasons:
(a) After commencement of the proceedings before the debts recovery tribunal the respondent could not sell the shares as pledge;
(b) The notice dated 1st July, 1997 was bad in law;
(c) When the respondent bank sold the shares at a much later point of time than issuance of the notice, they should have issued a fresh notice.
On 11th February, 1999, the appellant/plaintiff by letter sought to redeem the pledged shares. According to the respondent the appellant plaintiff`s outstanding towards the respondent bank as on 11th February was Rs.8,62,41,973.37/-. The appellant plaintiff wanted the shares on 17th February, 1999.
In paragraph 18 of the plaint the appellant/plaintiff say that the respondent was unable to return the shares to them. Their market value was Rs.48,95,08,757.45/- on 17th February, 1999. Hence the appellant/ plaintiff is entitled to their value less the sum credited to their account on sale of the pledged shares and compensation for loss of a part of it. Then in paragraph 19B of the plaint it is said that the respondent sold the pledged shares for Rs.5.90 crores. The Debts Recovery Tribunal by its order dated 19th may 2003 directed credit of this amount to the account of the appellant plaintiff which was done.
Again in paragraph 19C of the plaint the appellant plaintiff avers that the receiver appointed by this court sold the shares described in annexure D to the plaint for Rs.2,05,30,051.52/- on 17th January, 2004 and the proceeds handed were over to the appellant/plaintiff. It is further said in the above paragraph that the bank compensated the appellant plaintiff for Rs.74,22,000/- for not being able to produce some portion of annexure D shares.
In2004, the appellant/plaintiff instituted a suit against the respondent bank in this Court.
The cause of action and the reliefs sought in the 2004 suit (C.S No.266 of 2004) were as follows:
A) Further to the loan facility granted by the respondent bank in September 1995, the appellant/plaintiff on 6th March, 1997admitted that their shares in 38 companies as enumerated in a list together with executed transfer deeds were pledged with the bank to secure the facility.
B) The respondent as pledgee and banker had a duty to collect the dividend in respect of the shares.
C) They did not submit any separate account for the collection of dividend for the pledged shares, to the appellant/plaintiff. D) On 21st November, 1997, the respondent made an application against the appellant/plaintiff before the Debts Recovery Tribunal, I-Kolkata, claiming a sum of Rs.8,62,41,973.36/- against the above loan facility. E) The appellant/plaintiff filed a suit in this Court (CS 77 of 1998) against the respondent bank accompanied by an interim application GA 856 of 1998 for sale of the pledged shares. The bank stated in the said proceedings that the pledged shares or a substantial part of them had been sold for a price, the details of which were contained in a list. F) The appellant/plaintiff claimed dividend for the period 1994-95 to 2002-03, as per the details in annexure H to the plaint for a sum of Rs.23,18,658.58/-.
Subsequent events not only have the effect of widening the range of disputes between the parties within the broad scope of the suit, but also often, as appears to be the case here, has the effect of narrowing down its scope.
It appears that at the time of filing of the suit the appellant/plaintiff had no idea whatsoever about the location of their shares. In paragraph 12 of the plaint it was pleaded that the pledged shares had been sold at or for the price of Rs.16,15,467.50/-.
Then came the alternative case. The notice of sale dated 1st July, 1997 was inadequate and illegal. The notice was deemed to be withdrawn or waived or not acted upon by the respondent bank. Since the shares were sold in February and March, 1998 a fresh notice was required. In the absence of a fresh notice the sale of shares was void. The appellant/plaintiff asked for return of the shares on 17th February, 1999. The respondent bank could not do so saying that the shares had been sold. The appellant/plaintiff alleged that the shares had been detained and hence they were entitled to the value of the shares which was Rs.48,95,08,757/- on 17th February, 1999.
Now, the case sought to be run by proposing to amend the plaint is very important.
The value of the shares sold by the bank was Rs.5.90 crores. The receiver appointed by the Debts Recovery Tribunal sold a further quantity of pledged shares for Rs.2,05,30,051/- on 17th January, 2004. The respondent bank could not account for the rest of the shares for which they paid compensation of Rs.74,22,000 to the appellant/plaintiff. These are stated in paragraphs 19B and 19C of the application for amendment. It has also been specifically pleaded therein that the value of these sold shares and the compensation have been credited to the account of the appellant/plaintiff.
Therefore, on a perusal of the proposed amendments to the plaint the scope of the suit is narrowed down to this:
The price of the shares sold has been received by the appellant/plaintiff. Compensation has been received for the shares pleadged with the bank but which could not be produced by them.
Now, if all the shares have been sold or compensated for and the price of the shares and compensation appropriated by the appellant/plaintiff there is no longer a case for adjudging the sale as void. The appellant/plaintiff has not even in a sentence said that if the sale was adjudged void they would surrender the benefit they have received by credit of the sale proceeds of the pledged shares and the compensation amount. This sum has been adjusted against their outstanding with the respondent bank.
For the above reasons, in our opinion, the appellant/plaintiff at this point of time cannot maintain a case claiming accretions to the shares like dividend and bonus shares from the date of the said sale, after receiving adjustment of the sum received on account of sale and compensation. But, it is entitled to claim the bonus shares and dividend in the hands of the bank on the date of the said sale, provided the bonus shares were not sold with the original shares.
If the scope of this application had permitted us to come to the above findings conclusively, we would have had no hesitation in narrowing down the scope of this suit by declaring finally that the appellant/ plaintiff could no longer run the case claiming voidness of the share sale transaction and for return of all the shares from the respondent and claiming dividend and bonus shares for the period post sale of the subject shares. We clarify that the findings in this regard are tentative, subject to the result of the suit.
In the absence of final findings, we have not been able to locate any power given to us, to delete same major original claims in the suit. No prayer has been made in this behalf.
The dividend claim for this period is covered by the 2004 suit in our opinion.
We dispose of the amendment application, the appeal and the cross objection by ordering as follows;
(a) The amendments in the body of the plaint are allowed, just for the purpose of bringing on record subsequent events, subject to the observations in this judgment.
(b) Claim b(i) be deleted and replaced by the relief. "A decree for the value of dividends and bonus shares upto the respective dates of sale of the shares."
(c) The proposed amendment/ to prayer (b) is allowed with the modification that after "as amended" the following phrase will be added "upto the respective dates of the sale of the shares".
(d) "with reference to such other date as the court may seem fit and proper"
be deleted and replaced by " on the date of sale of the shares" in claim
(b).
(e) The proposed deletions of claims c and d of the plaint are approved.
(f) The amendment of claim (f) by introduction of claim (f)(i) is approved.
The impugned judgment and order dated 11th July 2014 is partly set aside.
On the basis of this judgment and order the parties are at liberty to take such steps in the suit so as to limit the issues involved and the suit is decreed as early as possible.
Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
I Agree.
(Md. MUMTAZ KHAN, J.) (I.P. MUKERJI, J.) LATER:
Judgment in the above appeal was made ready a little before the recent cease work called by the lawyers of this Court. It was not placed for judgment because of the cease work. The lawyer aggrieved by the judgment might not have been able to be present to ask for stay of operation thereof. The application for a certified copy of the order may not have been submitted in time.
However, as the cease work continued without any prospect of the Court resuming its normal functions in the foreseeable future, on and from 5th April, 2018 these matters were placed in the list "For Judgment". Nevertheless, judgment was not delivered, hoping that the cease work would end.
This Court is of the opinion that it is high time to deliver the judgment in the interest of the parties and in the interest of justice. A judgment in the above appeal has been delivered today (26.04.2018). Certified photocopy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.) (Md. MUMTAZ KHAN, J.)