2018 (4) TMI 1047 - HC - Companies Law

Non disclosure of cause of action for filing the suit and that the suit was also barred by limitation - Held that - The cause of action was already pleaded when the suit was filed and that the trial Court has not relied upon averments in amended paragraph 21A, ratio of the decision in Patasibai and ors. (1990 (1) TMI 321 - SUPREME COURT) cannot be applied to the facts of the present case. The question whether the amendment could have been allowed especially when application for rejection of the plaint was pending is not required to be adjudicated in the present case especially when it is found that even the trial Court has not relied upon the amended plaint for rejecting the application under provisions of Order VII Rule 11 of the Code. In view of aforesaid I do not find any jurisdictional error committed by the trial Court while passing the impugned order

Summary

Issues:
1. Application for rejection of plaint under Order VII Rule 11 of the Code of Civil Procedure.
2. Application for amendment of the plaint.
3. Jurisdictional error in allowing the amendment before deciding the application for rejection of the plaint.

Analysis:
1. The respondent-plaintiff, a Company registered under the Companies Act, 1956, filed a suit against the petitioner-defendant for recovery of outstanding dues amounting to ?31,05,518 along with interest. The defendant filed an application under Order VII Rule 11 of the Code seeking rejection of the plaint, alleging non-disclosure of cause of action and limitation since the last delivery of goods was in February 2013, and the suit was filed in October 2016. The plaintiff contended that the cause of action was adequately pleaded in the plaint and the suit was within the limitation period.

2. While the application for rejection of the plaint was pending, the plaintiff filed an application for amendment to add a paragraph regarding a Company Petition that was withdrawn. The defendant opposed the amendment, claiming it would prejudice their case. The trial Court allowed the amendment and rejected the application for rejection of the plaint. The defendant challenged both orders, arguing that the application under Order VII Rule 11 should have been decided first. The defendant relied on legal precedents to support their contention that the amendment should not have been allowed if it affected their accrued rights.

3. The High Court analyzed the averments in the plaint and found that the cause of action was adequately pleaded, as the plaintiff detailed the outstanding amount and interest from the last payment received in October 2013. The Court noted that the unamended plaint did not indicate a limitation bar, considering the suit was filed in October 2016. Regarding the amendment adding paragraph 21A, which referred to the withdrawn Company Petition, the Court found that since the cause of action was present in the original plaint, allowing the amendment did not prejudice the defendant's rights. The Court held that no jurisdictional error was committed by the trial Court in allowing the amendment before deciding on the rejection of the plaint application.

In conclusion, the High Court dismissed the Writ Petition, clarifying that if the defendant raises a limitation plea in the written statement, the trial Court should consider it while framing issues.