Bombay High Court High Court

New Delhi 110 003. vs Companies Act on 30 July, 2009

Bombay High Court
New Delhi 110 003. vs Companies Act on 30 July, 2009
Bench: A.M. Khanwilkar
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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                 
                ORDINARY ORIGINAL CIVIL JURISDICTION




                                         
                     APPEAL NO.229 OF 2009
                             IN
              CHAMBER SUMMONS NO. 218 OF 2009
                             IN




                                        
                    SUIT NO. 95 OF 2006


     NTPC Limited                              )
     (Formerly National Thermal Power          )




                              
      Corporation Limited) a Company           )
     incorporated under the Companies Act, 1956)
                 
     and having its Registered                 )
     office at NTPC Bhawan, Scope Complex, 7, )
     Institutional Area, Lodhi Road            )
                
     New Delhi 110 003.                        ).. APPELLANT

          VERSUS
      

     Reliance Industries Limited                       )
     a Company incorporated under the                  )
   



     Companies Act, 1956 and having its                )
     Registered Office at 3rd Floor, Maker             )
     Chambers IV, 222, Nariman Point                   )
     Mumbai 400 021.                                   ).. RESPONDENT





     Mr. D.D. Madan with Mr. V.R. Dhond and Mr. S.V. Doijode and
     Ms. Meenakshi Iyer i/b Doijode Associates for the Appellant.

     Mr. Milind Sathe a/w Mr. C.S. Balsara i/b M/s. Junnarkar &





     Associates for the Respondent.



                CORAM : SWATANTER KUMAR, C.J. And
                        A.M. KHANWILKAR, J.


          JUDGMENT RESERVED   ON : 22ND JULY 2009
          JUDGMENT PRONOUNCED ON : 30TH JULY 2009




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     JUDGMENT (Per Swatanter Kumar, C.J.)

The National Thermal Power Corporation Limited

(for short “NTPC”) claims that it is the largest thermal

electricity generating company of India and it intends to

enhance the capacity of its existing combined cycle power

stations in the State of Gujarat. Thus it invited International

competitive bids for supplying natural gas to its Power Plants.

As per the terms inviting the tender, the NTPC issued RFP

documents to the qualifying bidders and after financial

evolution of techno-commercially acceptable bids, the NTPC

was to issue Letter of Intent (for short “LOI”) to the preferred

bidder. Reliance Industries Limited (for short “RIL”) was also

one of the bidders. The terms were amended vide letter

dated 15th March 2004. According to the NTPC, RIL confirmed

unconditional acceptance of all provisions of RFP documents

read together with amendments. As the Letter of Intent was

issued and as required RIL vide its letter dated 17th June 2004

acknowledged receipt of the LOI dated 16th June 2004 and

sent the duplicate copy thereof duly signed. The Co-

ordinating Committee of the NTPC along with representatives

of RIL was constituted. A meeting was held on 20th October

2004 where it was proposed that a master network of various

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activities to be undertaken by the parties be drawn and key

milestone dates be identified to be used as the basis for

monitoring the progress. Vide letter dated 6th May 2005,

certain changes were suggested by RIL. Though NTPC was

not required to even consider the same but certain

amendments were made as suggested in letters dated 19th

May 2005 and 17th June 2005 as RIL further wanted some

changes in the project. This was carried on and according to

NTPC, RIL’s action and conduct clearly spelt out their

intention not to perform their contract and it constituted an

anticipatory breach/ repudiation of the contract. In addition

to this, there were certain disputes on quantum pricing and

finalisation of GSPA. This compelled the NTPC to file a Suit

on the Original Side of this Court for declaration and specific

performance. The prayers made in the Suit were as under :-

“(a) That this Hon’ble Court be pleased to
declare that a valid, concluded and binding
contract exists between the parties for supply of

Natural Gas of 132 Trillion btu annually for a
period of 17 years between the Plaintiff and the
Defendant having regard to the documents
Exhibits D, E, F and G hereto and the Letter of
Intent duly issued by the Plaintiff and signed and
returned by the Defendant.

(b) That this Hon’ble Court be pleased to pass a
decree of specific performance of the valid,
concluded and binding contract set out in prayer

(a) above including directing the Defendant to

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rectify the document sent by them and sign the
same in conformity and accordance with agreed

terms and for that purpose if necessary to direct
the Defendant to initial corrections made by the
Plaintiff in the document sent by the Defendant to

the Plaintiff which would be in accordance with
the Agreement.

(c) That pending the hearing and final disposal

of this Suit the Defendant, its servants and agents
be restrained by an order of injunction of this
Hon’ble Court from supplying and entering into
any contract or arrangement or making any
commitment for any part of the 132 trillion Btu of

Natural Gas to be supplied to the Plaintiff annually
for a period of 17 years from its Gas Field situated

at KG Basin (Block KG-DWN-98-3) in the State of
Andhra Pradesh.

(d) For interim and ad interim relief in terms of
prayer (c) above.

(e) For costs of the Suit.

(f) For such further and other reliefs as may be

required by the nature and circumstances of the
case.”

2. Written Statement had been filed on behalf of RIL.

Various objections were taken including that the Plaint does

not disclose cause of action, there was suppression of

material facts, Natural Gas is a traded commodity and a Suit

for specific performance for sale thereof is not maintainable

in law. On merits, the stand taken is that correct facts have

not been stated. According to the Defendant, as per case

made out by Plaintiff there were discussions between the

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parties and in furtherance thereto letters dated 12th August

2004 and 15th July 2004 were issued and accordingly 30 days

time to sign the GSPA from the date of acceptance of LOI was

reckoned. According to the Defendant, case made out by the

Plaintiff is inconsistent as Plaintiff alleges several different

dates and events by which concluded and binding contract

came into existence. Whereas Defendant specifically denied

that there was complete, and concluded contract between

the Plaintiff and the Defendant. Defendant denied that it had

attempted to renegotiate the terms. The Defendant denied

that all terms of draft GSPA had been agreed upon or were

finalized. According to Defendant, no LOI was accepted

resulting into concluded contract. The Defendant specifically

denied that in May 2004 it had made an offer which was

accepted by the Plaintiff and communicated the acceptance

by letter dated 16th June 2004. Defendant denies having

made any offer capable of being accepted. Defendant

denies that any act on its part amounts to anticipated

breach/repudiation of any contract. Defendant has

specifically denied that Plaintiff is entitled to specific

performance of any contract pertaining to supply of natural

gas as there is no valid and subsisting agreement.

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3. As is evident from the pleadings of the Defendant

that it had taken a plea of there being no concluded contract

between the parties and thus prayed that the Suit of the

Plaintiff be dismissed. During pendency of the Suit, RIL filed

Chamber Summons No.218 of 2009 under Order VI Rule 17 of

the Code of Civil Procedure seeking to amend its written

statement. In the affidavit in support of the said Chamber

Summons, it was averred that the amendments prayed for

were material and necessary for appropriate adjudication of

the suit. The main ground for seeking amendment was that

certain events which had transpired after filing of the written

statement, which was filed on 31st October, 2007, and the

submission as an alternative to the plea already taken was

that there was no valid, subsisting, binding and concluded

agreement between the parties. The Defendant wanted to

take up the plea that even if there was an agreement, it had

been frustrated or had become incapable of performance in

view of the subsequent events. These subsequent events

included declaration of New Exploration and Licensing Policy

of 1999. The Government of India had constituted an

Empowered Group of Ministers (EGOM) to take decisions in

relation to NELP Contract. On 12th September, 2007, the said

EGOM had taken a decision in regard to commercial

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utilization and pricing of gas under NELP and had approved

the formula for valuation and sale of natural gas under the

Production Sharing Contract. The Defendant had submitted

the formula under which the price discovered by the

Defendant was US$ 4.32 per MMBTU. However, the EGOM

modified the same by which the said price had been reduced

and fixed at US$ 4.20 per MMBTU. This decision had been

communicated to the Plaintiff by the letter dated 10th

October, 2007. Another ground taken was that, on 28th May,

2008 and 27th October, 2008, NGOP took decisions in regard

to commercial utilization of natural gas under NELP and

framed the guidelines for sale of natural gas by NELP

contractors which are to be binding and the same relates to

the allocation of gas. A reference is also made to the

affidavit filed by the Union of India during the course of

hearing of the appeal in a company matter where it intended

to improve on certain facts which have bearing on the

contract in question were disclosed in those affidavits and

they were not known to the Defendants earlier. This affidavit

was filed on 13th January, 2009 and it also stated the decision

which had been taken in regard to the commercial utilization

of gas. With particular reference to Article 21.6.2(b) of these

decisions, the matter with regard to the scope and

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interpretation for Production Sharing Contract which is

subject matter of the present suit was also covered and

referred to by these different decisions. The Applicants pray

that the price to be determined under Article 21.6.2(b) is not

different from the price fixed pursuant to Article 21.6.2(c).

Thus, the entire matter is interconnected.

4. This application of the RIL was opposed by the

NTPC on various grounds including undue delay, that the

evidence of the Plaintiff in the suit had already started as

they had filed their affidavits by way of evidence and the

matter was fixed for cross examination. While relying upon

the judgment of the Supreme Court in Vidyabai & Ors. v.

Padmalatha & Anr., JT 2009 (1) SC 302, where the issues

were framed and trial had commenced, the Plaintiff prayed

that the amendment should not be permitted. The learned

Single Judge noticed that the amendment application has to

be dealt with while keeping in mind the facts and

circumstances of a given case and relying on the judgment

of Supreme Court in Shikharchand Jain v. Digambar Jain

Praband Karini Sabha & Ors., (1974) 1 SCC 675 referred to

the subsequent events and certain facts which ought to be

brought to the notice of the Court for proper and full

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adjudication to give complete justice to the parties. Learned

Single Judge allowed the Chamber Summons and

consequently granted the amendments prayed for. Relevant

part of the order reads as under:-

“21. These EgoMs, though referred and observed
specifically to exclude the dispute/suit from its
decision or recommendation yet just cannot be

overlooked by the Court while considering the
case of the plaintiffs as averred. As noted, the
documents and the averments as raised/made by

the plaintiffs itself, based upon and revolve
around terms and conditions of GSPA and all
other necessary and connected aspects. The say

of Government and such policies always play
important role. In my view, all these issues are
interlinked and interconnected and depends upon
the declared policy and the scheme of such

agreement to apply of natural gas.

22. I am not accepting the submission that if
chamber summons is allowed, it would cause
grave harm and irreparable loss and injury to the
plaintiffs. In view of the events and material on

record, I am of the view the amendment is bona
fide and filed within the reasonable time. The
affidavit of Government dated 13.01.2009 play an
important role in a matter of this nature
specifically when it deals with the natural
resource and in the present case the supply of

gas. Those averments/affidavit and the respective
stand and the submission of the Government in
other matter is within the knowledge of the
defendant, who is concerned defendant in the
present case also. Therefore, moved this
application to bring of those material on record
for adjudication of the Suit in question, where the
plaintiff is also claiming the respective quantity of
gas from the defendants again based upon the
relevant terms and conditions of GSPA, in my
view such amendment and the material are

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necessary for proper adjudication of the
controversy involved in the present suit also.

Therefore, this chamber summons filed on
6.2.2009, just cannot bar or attract the proviso of
Order 6, Rule 17 of CPC as contended by the

learned sr. counsel for the plaintiffs.

23. Once the conditions are fulfilled and the
Court comes to a conclusion that it is necessary

to determine the controversy between the
parties, based upon the facts and circumstances
of the case, it is primary duty of the court to pass
an appropriate order to give full opportunity to
both the parties. This proviso, no way restricts

the power of the court to grant amendment, if
case is made out.”

5. With development of law the provisions of Order

VI Rule 17 of the Code of Civil Procedure have received

liberal construction. Despite its liberal construction, the

principles dealing with the application for amendment during

the pendency of a suit are well settled. In fact, the

provisions of the Code were amended by the Amending Act

of 2002 with effect from 1st July, 2002 wherein proviso to

Order VI Rule 17 was introduced. In terms of this proviso,

there was a kind of restriction placed upon the Court to allow

application for amendment after trial had commenced unless

the Court came to the conclusion that: (a) in spite of due

diligence, the party could not have raised the matter before

the commencement of trial. This proviso has to be read and

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construed keeping in view the language of the principle

provision which opens with the words “the Court may at any

stage of the proceedings allow either party to alter or amend

its pleadings in such manner and on such terms as may be

just.” The Court has also to keep in mind that the

amendments to be made are necessary for the purpose of

determining the real question in controversy between the

parties. Thus, it is evident that wide judicial discretion is

vested in the Court while dealing with application for

amendment of the pleadings. The Court is expected to be

more careful while dealing with application for amendment in

cases where trial has commenced but there is no absolute

bar in law in allowing application for amendment in cases

where trial has even begin. The legislature in its wisdom has

not created an absolute bar thus this bar in absolute terms

cannot be created by the judge made law. In fact, it would

depend on the facts and circumstances of a given case and it

is not possible to state a strait-jacket formula which can

universally be applied to all cases.

6. In the case of Salem Advocate Bar Association,

T.N. v. Union of India, (2005) 6 SCC 344, a three Judge

Bench of the Supreme Court examined the validity of the

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amended provisions of Order VI Rule 17 of the Code of Civil

Procedure and held as under :-

“26. Order 6 Rule 17 of the Code deals with
amendment of pleadings. By Amendment Act 46
of 1999, this provision was deleted. It has again

been restored by Amendment Act 22 of 2002 but
with an added proviso to prevent application for
amendment being allowed after the trial has
commenced, unless the court comes to the
conclusion that in spite of due diligence, the party

could not have raised the matter before the
commencement of trial. The proviso, to some

extent, curtails absolute discretion to allow
amendment at any stage. Now, if application is
filed after commencement of trial, it has to be

shown that in spite of due diligence, such
amendment could not have been sought earlier.
The object is to prevent frivolous applications
which are filed to delay the trial. There is no

illegality in the provision.”

7. In the case of Sampath Kumar v. Ayyakannu and

Anr., JT 2002(7) SC 182, the Supreme Court held as under:-

“9. Order 6 rule 17 of the CPC confers
jurisdiction on the court to allow either party to

alter or amend his pleadings at any stage of the
proceedings and on such terms as may be just.
Such amendments as are directed towards
putting-forth and seeking determination of the
real questions in controversy between the parties
shall be permitted to be made. The question of
delay in moving an application for amendment
should be decided not by calculating the period
from the date of institution of the suit alone but
by reference to the stage to which the hearing in
the suit has proceeded. Pre-trial amendments

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are allowed more liberally than those which are
sought to be made after the commencement of

the trial or after conclusion thereof. In former
case generally it can be assumed that the
defendant is not prejudiced because he will have

full opportunity of meeting the case of the
plaintiff as amended. In the latter cases the
question of prejudice to the opposite party may
arise and that shall have to be answered by

reference to the facts and circumstances of each
individual case. No strait-jacket formula can be
laid down. The fact remains that a mere delay
cannot be a ground for refusing a prayer for
amendment.”

8. The principles in relation to amendment of pleadings

have remained quite consistent over a considerable period of time but

amendments which are necessary to provide a solution to the real

controversy between the parties without really altering, especially, the

cause of action can be allowed and a hyper-technical approach need

not be encouraged in relation to such law. Prejudice is one of the

factors that may be considered by the Court but it is not the sole

criteria for accepting or rejecting an application for amendment.

Another important facet of the law of amendment is that the proposed

amendment should not result in injustice to the other side and should

not lead to unexplained withdrawal of an admission which had

provided other party with the benefit of such an admission. These

principles were referred with approval by the Supreme Court in the

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case of B.K. Narayana Pillai v Parameshwaran Pillai and another,

(2000) 1 SCC 712, where the Court held as under :-

“3. The purpose and object of Order 6 Rule 17 CPC is
to allow either party to alter or amend his pleadings in
such manner and on such terms as may be just. The

power to allow the amendment is wide and can be
exercised at any stage of the proceedings in the interests
of justice on the basis of guidelines laid down by various
High Courts and this Court. It is true that the

amendment cannot be claimed as a matter of right and
under all circumstances. But it is equally true that the

courts while deciding such prayers should not adopt a
hypertechnical approach. Liberal approach should be the
general rule particularly in cases where the other side

can be compensated with the costs. Technicalities of law
should not be permitted to hamper the courts in the
administration of justice between the parties.
Amendments are allowed in the pleadings to avoid

uncalled-for multiplicity of litigation.”

This principle was stated by the Supreme Court as back as in 1957 in

the case of Pirgonda Hongonda Patil v Kalgonda Shidgonda Patil and

others, AIR 1957 SC 363 and was again reiterated in the case of

North Eastern Railway Administration, Gorakhpur v Bhagwan Das

(Dead) by LRs, (2008) 8 SCC 511, where the Supreme Court held as

under :-

“16. Insofar as the principles which govern the question
of granting or disallowing amendments under Order 6
Rule 17 CPC (as it stood at the relevant time) are
concerned, these are also well settled. Order 6 Rule 17

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CPC postulates amendment of pleadings at any stage of
the proceedings. In Pirgonda Hongonda Patil v Kalgonda

Shidgonda Patil, AIR 1957 SC 363 which still holds the
field, it was held that all amendments ought to be
allowed which satisfy the two conditions : (a) of not

working injustice to the other side; and (b) of being
necessary for the purpose determining the real questions
in controversy between the parties. Amendments should
be refused only where the other party cannot be placed

in the same position as if the pleading had been
originally correct, but the amendment would cause him
an injury which could not be compensated in costs.
(Also see Gajanan Jaikishan Joshi v Prabhakar Mohanlal

Kalwar, (1990) 1 SCC 166″.

9. In the case of Usha Balasaheb Swami and others v Kiran

Appaso Swami and others, (2007) 5 SCC 602, the Supreme Court

noticed that the provisions of Order 6 Rule 17 of the Code of Civil

Procedure clearly confer the Courts with the power to allow, at any

stage of the proceedings, alterations and amendments of the

pleadings and also explained the restriction placed in the proviso.

The Court while specifying the distinction in law between amendment

of a plaint and a written statement, indicated that the Courts would

be more liberal while dealing with the application for amendment of

written statement and held as under :-

“19. It is equally well-settled principle that a prayer for
amendment of the plaint and a prayer for amendment of
the written statement stand on different footings. The
general principle that amendment of pleadings cannot be
allowed so as to alter materially or substitute cause of

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action or the nature of claim applies to amendments to
plaint. It has no counterpart in the principles relating to

amendment of the written statement. Therefore,
addition of a new ground of defence or substituting or
altering a defence or taking inconsistent pleas in the

written statement would not be objectionable while
adding, altering or substituting a new cause of action in
the plaint may be objectionable.

20. Such being the settled law, we must hold that in
the case of amendment of a written statement, the courts
are more liberal in allowing an amendment than that of
a plaint as the question of prejudice would be far less in

the former than in the latter case (see B.K. Narayana
Pillai v Parameswaran Pillai (2000) 1 SCC 712 and

Baldev Singh v Manohar Singh, (2006) 6 SCC 498).
Even the decision relied on by the plaintiff in Modi Spg.
(1976) 4 SCC 320, clearly recognises that inconsistent

pleas can be taken in the pleadings. In this context, we
may also refer to the decision of this Court in Basavan
Jaggu Dhobi v Sukhnandan Ramdas Chaudhary, 1995
Supp (3) SCC 179. In that case, the defendant had
initially taken up the stand that he was a joint tenant

along with others. Subsequently, he submitted that he

was a licensee for monetary consideration who was
deemed to be a tenant as per the provisions of Section
15-A of the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947. This Court held that the

defendant could have validly taken such an inconsistent
defence. While allowing the amendment of the written
statement, this Court observed in Basavan Jaggu Dhobi
case as follows : (SCC p. 180, para 3)

” 3. As regards the first contention, we are afraid
that the courts below have gone wrong in holding that it
is not open to the defendant to amend his written
statement under Order 6 Rule 17 CPC by taking a
contrary stand than what was stated originally in the
written statement. This is opposed to the settled law. It
is open to a defendant to take even contrary stands or
contradictory stands, thereby the cause of action is not in
any manner affected. That will apply only to a case of
the plaint being amended so as to introduce a new cause
of action.””

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10. Another purpose of taking a liberal approach while

dealing with amendment application is to ensure that there is no

multiplicity of litigation and furthermore the rights of the parties are

not jeopardize to an extent that the real controversy between the

parties becomes incapable of solution. The purpose before the Court

keeping in view the scheme of the Code is to frame issues on all

factual matters which the parties are at dispute and then to record

finding on each issue while giving the parties chance to lead evidence

in support of their respective claims. The purpose is to ensure

complete adjudication of the real dispute and controversy between

the parties. The amendments which are necessary for determination

of real controversy in the suit can be allowed and it will take within

its ambit inconsistent pleas particularly when they are taken as

alternative pleas. Much greater care is needed to be taken by the

Court where there are inconsistent/destructive pleas which would

vary the cause of action and cause great prejudice or loss of an

accrued right to the other side. In such cases the Court would be

justified in rejecting an application for amendment. It is well settled

law that though the rights of the parties have normally to be decided

as on the date of the suit, but in the interest of justice subsequent

events normally would form a sufficient ground for favourably

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considering the application for amendment of the written statement.

It may be more so where the amendments are being claimed on the

basis of some benefits without altering the cause of action and

primarily founded on subsequent events. Alternative pleas which are

not destructive of each other can be considered by the Court

particularly when the application moved is not intended to delay the

suit unnecessarily. (See Mehar v Yash Pal, 1999 (1) PLR 403).

Another settled principle is that amendments prayed for as a result of

subsequent events, the Court is not concerned with the merits of the

amendments i.e. it is not for a Court to examine whether on the

amended facts the Petitioner will succeed or fail. It is a matter to be

gone into during the trial of the suit and is not a relevant

consideration for considering an application for amendment unless

the amendment otherwise was impermissible in law. (See Baldev Raj

v Municipal Committee Palwal and another, 1993 (3) PLR 573).

11. Reverting back to the facts of the present case, it is clear

that the written statement on behalf of the present Respondent had

been filed on 31st October, 2007. All the decisions of the authorities

concerned including the Government of India which are sought to be

introduced by way of amendment are of subsequent period. The

affidavit which was filed by the Union of India discloses certain

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material facts and its policy decision taken on 13th January, 2009.

The details of all these facts have been given by the

Respondent/Applicant in the affidavit-in-support of the Chamber

Summons in paragraphs 4(i) to 4(ix). The Government decisions

that have been stated therein relate to the dates of 28th May, 2008

and 23rd October, 2008; and 9th January, 2009, respectively. It has

been averred that despite their due diligence, the Applicant could not

have brought these facts on record because relevancy of these facts

have been pleaded as, according to the Applicant, Empowered Group

of Ministers’ decisions have a bearing on the concept of gas

utilization policy which in turn is a general and specific policy in

regard to the utilization as well as pricing of the natural gas. An

ancillary but an important question that has to be further considered

by us is the relevancy of these amendments for complete, proper and

just adjudication of the dispute between the parties. We have

already noticed in some details at the opening of this judgment the

facts pleaded by the parties in their respective pleadings. After

denying various averments made in the plaint, the Respondent had

taken the stand that there was no concluded subsisting agreement

between the parties and as such the suit for specific performance

would not lie. By way of amendment, the Respondent wants to add

an alternative plea on the basis of the same cause of action within the

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ambit and scope of the existing suit and by referring the subsequent

events that even if there was a contract it stands frustrated as it is

incapable of being performed because of these subsequent events.

Thus, it is difficult for the Court to hold that the subsequent events

are not relevant. They have a specific bearing upon the factual

matrix of the case. The dispute between the parties as well as the

issues would require determination of the Court to completely and

finally dispose of the suit in accordance with law. The relevancy is

the construction of limited scope and the merits of the amended

pleading is not of much consequence. It is nobody’s case that the

amendment sought to be made by the present Respondents are

barred by any law, per se.

12. It is well settled principle of law that it is open to the

parties to raise even mutually inconsistent pleas and if the relief

could be founded on the alternative plea, it could be granted. ( Ref :

Arundhati Mishra (Smt.) v. Sri Ram Charitra Pandey, (1994)2 SCC

29.)

13. A very serious objection has been raised on behalf of the

NTPC on the ground that the trial in the present case has already

commenced and therefore, the application for amendment would be

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liable to be rejected in face of the proviso to Order VI Rule 17 of the

Code of Civil Procedure. This argument at a first glance is attractive

but when examined in some depth with reference to the facts and

circumstances of the case, we hardly find any merit in the

submissions. The principal provision of Order VI Rule 17 of the Code

is the Court to permit the amendment of the pleadings at any stage of

the suit. Of course, this jurisdiction and discretion of the Court is to

be exercised cautiously and in accordance with well settled cannons

of civil jurisprudence. The proviso while imposes a limitation of

exercise of power of the Court to allow amendment there it clearly

states that the amendment can be allowed even after commencement

of a trial where despite due diligence, an Applicant was not able to

bring the facts on record. Thus, the test is exercise of due diligence

and bonafide of the applicant. In the case of Usha Devi v. Rijwan

Ahamd & Ors., (2008)3 SCC 717, the Supreme Court noticed as

under: –

“12. He lastly submitted that the prayer for amendment

was made after the commencement of the trial and the
trial court had, therefore, rightly rejected the prayer. He
maintained that the trial of the suit would commence
with the settlement of the issues. In support of the
submission that the framing of the issues marked the
commencement of trial of the suit, Mr. Sharma, relied
upon the decision of this Court in Ajendraprasadji N.
Pandey v. Swami Keshavprakeshdasji N., (2006)12 SCC

1. In para 57 of the decision, it was observed as follows:

(SCC p.18)

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“57. It is submitted that the date of settlement of issues
is the date of commencement of trial. (Kailash v.

Nankhu, (2005)4 SCC 480). Either treating the date of
settlement of affidavit which is treated as examination-
in-chief as date of commencement of trial, the matter

will fall under proviso to Order 6 Rule 17 CPC. The
defendant has, therefore, to prove that in spite of due
diligence, he could not have raised the matter before the
commencement of trial. We have already referred to the

dates and events very elaborately mentioned in the
counter-affidavit which proves lack of due diligence on
the part of Defendants 1 and 2 (the
appellants )” (emphasis supplied)

From the above quoted passage, it appears that the

decision did not hold that settlement of issues marks the
commencement of trial. Earlier in the decision, the
Court exhaustively examined the proceedings from date

to date and on that basis came to hold and find that the
prayer for amendment was made after the
commencement of trial.”

“15. In view of the decision in Sajjar Kumar (2005) 13

SCC 89 we are of the view that this appeal too deserves

to be allowed. We may clarify here that in this order we
do not venture to make any pronouncement on the
larger issue as to the stage that would mark the
commencement of trial of a suit but we simply find that

the appeal in hand is closer on facts to the decision in
Sajjan Kumar and following that decision the prayer for
amendment in the present appeal should also be
allowed.

xxxx xxxxx xxxxx

18. This appeal is accordingly allowed. The orders of
the trial court and the High Court are set aside and it is
directed that the appellant may be allowed to make the
proposed amendment in the plaint subject to payment of
Rs.10,000 as cost to the respondent-defendants. The
amendment will be allowed in case the amount of cost is
paid within two months from today.”

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14. In the present case certain issues were framed and

evidence by way of affidavit had been filed. If we assume this as

commencement of the trial even then we are of the considered view

that there is sufficient ground that the Applicant could not bring the

facts on record despite exercise of due diligence inasmuch as

practically all the events occurred subsequent to the filing of the

written statement. The Applicants have acted with due diligence and

bonafidely. There is no occasion for the Court to disturb the order

passed by the learned Single Judge. Furthermore, the learned Single

Judge has exercised its judicial discretion and we find no error in the

impugned order as a result of which any interference of this Court is

called for.

15. Learned counsel appearing for the Respondents had

raised an objection with regard to the maintainability of the present

appeal, as, according to him, in view of the judgment in the case of

Shah Babulal Khimji v. Jayaben D. Kania & Anr., (1981)4 SCC 8, and

Full Bench Judgment of this Court in the case of Mohd. Riyazur

Rehman Siddiqui v. Deputy Director of Health Services, 2008 (6)

Mh.L.J. 941, the present appeal is not maintainable as by allowing

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the application, no rights of the parties have been decided. There is

no determination finally or otherwise of any of the issues that are

subject matter of the suit and as such the appeal would not be

maintainable. On the other hand, learned counsel appearing for the

Appellant while relying upon some part of the same judgments

contended that the same appeal would be maintainable.

16.

In Paragraph 120 of Shah Babulal Khimji’s case (supra),

the Supreme Court had spelled out certain illustrations of

interlocutory orders which may be judgment and therefore

appealable. Sn order granting leave to amend the plaint by

introducing a new cause of action which completely alters the nature

of the suit and takes away a vested right of limitation or any other

valuable right accrued to the defendant, the order would be

appealable. Furthermore, this is an order which to an extent

certainly decide the right of the parties. To the extent and in the

sense that earlier RIL could not have pleaded frustration of contract

and its case was restricted only to there being no binding and

subsisting contract. Allowing this alternative plea and to some extent

inconsistent has given a cause to the NPTC to raise grievance in the

appeal as the order passed by the learned Single Judge would in the

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facts and circumstances of the case be a judgment within the

meaning of Clause 15 of the Letters Patent Act. But for such

amendment, the appellant could not have pleaded and the

Respondents were not required to meet the case of frustration of

contract. Thus, to that extent, the rights of the parties stand affected.

Even in the case of Jugal Kishore Paliwal v. S. Sat Jit Singh & Anr.,

(1984)1 SCC 358, the Supreme Court had held that an order refusing

amendment of written statement at the time of framing of issues

would certainly not be a purely interlocutory order against which no

Letters Patent Appeal would lie and following the view taken in Shah

Babulal Khimji’s case (supra), the order was held to be appealable.

17. Even the Full Bench of this Court in the case of Mohd.

Riyazur Rehman Siddiqui (supra), while discussing Clause 15 of the

Letters Patent, had explained the word “judgment” appearing in the

clause, and observed that the word “judgment” has undoubtedly a

concept of finality in a broader and not a narrower sense.

18. The nature of the right affected is also a relevant

consideration. The right in strict sense is duty which is something

owed by one to another. Correspondingly the latter has a right

against the former. Every legal right has distinguishable

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characteristics, like it is vested in a person, it is available against a

person and such right is enforceable in accordance with the

provisions of law. Right to appeal is a statutory right. It is neither

natural nor fundamental right. Such rights are capable of being

determined by judgment of the Court of law. The judgment therefore

could be order which is determinative of some substantial

controversy between the parties and is prejudicially affecting their

rights in the trial. It is said that effect of an order, whatever its form

may be, would depend on the nature of the application on which it is

made if it puts an end to the suit or proceedings so far the Court

before which the suit or proceedings is pending is concerned and it is

something more than a mere formal expression of adjudication.

19. Applying these tests to the present case, we have already

noticed that the order passed by the Court substantially affects the

rights of the parties as the nature and scope of the suit itself would be

on a different footing for such an amendment. Therefore, we are of

the considered view that the present appeal is maintainable and the

objections raised by the Respondents is without merit. Hence, we

decline to reject the argument as to the maintainability of the present

appeal.

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20. For the reasons afore-stated, we find no merit in the

contentions raised by the Appellant but would modify the order of

the learned Single Judge only to the extent that the Respondent shall

be liable to pay costs of Rs.25,000/- (Rupees Twenty Five thousand

only) for seeking amendment in question.

                         ig                                  CHIEF JUSTICE
                       
                                                          A.M. KHANWILKAR, J.
      
   






     uday/judgments09/appeal229-09




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