1966 (8) TMI 74 - HC - Indian Laws

Summary

Issues Involved:

1. Recovery of debt by the State Bank of India.
2. Responsibility of defendants for the debt.
3. Application for amendment of written statement by defendant No. 2.
4. Claim of set-off by defendant No. 2.
5. Legal and equitable set-off.
6. Delay in filing the amendment application.
7. Prejudice to the plaintiff-Bank due to the amendment.
8. Principles governing amendment of pleadings.

Detailed Analysis:

1. Recovery of Debt by the State Bank of India:
The State Bank of India filed a suit to recover Rs. 1,60,076-4-11 with interest pendente lite and future from the defendants. The plaintiff-Bank's case was based on a cash credit account arrangement where the defendants pledged goods as security against advances and agreed to discharge the loan gradually. The suit was instituted solely on the contract of loan, not on the contract of pledge or any other agreement related to the cash credit account.

2. Responsibility of Defendants for the Debt:
The defendants, in their respective written statements, denied the plaintiff's claim and blamed each other. Defendant No. 2 specifically claimed he was not responsible for defendant No. 1's alleged fraudulent acts. The trial court decreed the plaintiff's claim against defendants 1, 2, and 4, declaring the Bank had the first charge on Rs. 33,959-2-3 in the State Treasury as sale proceeds of pledged goods from a criminal action against the defendants.

3. Application for Amendment of Written Statement by Defendant No. 2:
Defendant No. 2 sought to amend his written statement to include a set-off claim of Rs. 91,561. The application was filed late, and the counsel argued that the foundation for the set-off was in the original written statement, although not explicitly prayed for. The delay in making this prayer was argued to be not the sole criterion for deciding its justifiability.

4. Claim of Set-Off by Defendant No. 2:
The counsel for defendant No. 2 contended that the claim was an equitable set-off, not a legal set-off. However, the court found it to be a legal set-off as it involved valuing and adjusting the pledged goods against the Bank's money claim. The set-off should have been claimed at the first hearing of the suit, and the defendant failed to do so, requiring the court's leave for a later stage claim.

5. Legal and Equitable Set-Off:
The court noted that legal set-off is governed by Order 8, Rule 6 of the Code of Civil Procedure, which allows combining different causes of action in one suit to avoid multiple suits. Equitable set-off, not confined by these provisions, was claimed by the defendant, but the court did not classify it as such.

6. Delay in Filing the Amendment Application:
The suit was instituted in 1952, and the first hearing was in 1959. The defendant's delay of several years in filing the amendment application was not sufficiently explained. The court emphasized that delay and potential prejudice to the other party must be considered before allowing such a belated amendment.

7. Prejudice to the Plaintiff-Bank Due to the Amendment:
Allowing the amendment at this late stage would prejudice the plaintiff-Bank, as it would introduce a new cause of action based on the contract of pledge, distinct from the original loan contract. The court found that the amendment would cause unnecessary prejudice and inconvenience to the plaintiff.

8. Principles Governing Amendment of Pleadings:
The court reiterated that amendments should be allowed if they can be made without injustice to the other side and if they do not introduce a new cause of action. The amendment sought by defendant No. 2 was found to introduce a new case based on different facts and a new cause of action, which is not permissible under Order 6, Rule 17 of the Code of Civil Procedure.

Conclusion:
The application for amendment of the written statement by defendant No. 2 was rejected, and the appeal was dismissed. The court emphasized that the amendment would introduce a new cause of action and prejudice the plaintiff-Bank. The principles of allowing amendments were discussed, highlighting that they should not create injustice or introduce entirely new claims.