2018 (9) TMI 1005 - HC - Companies Law

Failure of the share purchase agreement - plaint filed claiming return of aforesaid ₹ 1.05 Crores paid by plaintiff towards 60% shares in the Consultancy and Agrotech companies together with interest on the same - Prayer for carrying out certain amendments in the plaint - specific performance seeked - limited scope of the instant amendment application it is argued that plaintiff who has rescinded the share purchase agreement qua consultancy company is now attempting to enforce the same - Held that - The plaint consists of two limbs. The second limb of prayer as alluded to supra is for damages of ₹ 2 Crores which is with regard to both companies, i.e., consultancy company and Agrotech company as alluded to supra. Vide instant amendment application, plaintiff is not seeking any amendment in the prayer or in other words, plaintiff continues to persists and pursue the prayer for damages qua consultancy company also. Therefore, if this prayer in the amendment is acceded to, it will have the effect of plaintiff pursuing remedy of enforcement in the share purchase agreement in NCLT and also seeking damages by rescinding the same on the ground of non performance by defendant. There is no dispute or disagreement that the suit prayer is also for damages for a sum of ₹ 2 Crores pertaining to both companies, i..e, consultancy company and Agrotech company. If the prayer in the amendment application is acceded to, it would tantamount to permitting the plaintiff to seek for specific performance of share purchase agreement dated 14.6.2010 qua consultancy company after rescinding the alleged breach and seeking damages for the same. Further to be noted, the plaintiff is continuing to seek damages qua Consultancy company. In effect, acceding to the prayer in the instant application would tantamount to allowing the plaintiff to do what they are prohibited from doing in the light of the principle laid down by Supreme Court in Jawahar Lal Wadhwa case 1988 (10) TMI 282 - SUPREME COURT wherein held once there is alleged breach and a prayer for damages has been sought for by a party, then that party cannot pray for specific performance of the same contract. Amendment application fails and the same is dismissed.

Issues Involved:
1. Amendment of the plaint under Order VI Rule 17 of the Code of Civil Procedure, 1908.
2. Whether the amendment changes the nature and character of the suit.
3. Prejudice to the defendant due to the amendment.
4. The application being time-barred.
5. The application as disguised under sub-rule (3) of Rule 1 of Order XXIII of CPC.

Detailed Analysis:

1. Amendment of the plaint under Order VI Rule 17 of the Code of Civil Procedure, 1908:
The plaintiff sought to amend the plaint to give up the claim for ?58,80,000/- paid for 60% shares in the consultancy company, thereby reducing the total claim from ?2,70,38,238/- to ?1,66,60,038/-. The plaintiff also maintained the claim for ?2 Crores towards damages for mental agony caused by the defendant.

2. Whether the amendment changes the nature and character of the suit:
The court considered whether the amendment would alter the nature of the suit. The court referenced the Supreme Court judgment in Mount Mary Enterprises Vs. Jivratna Medi Treat Private Limited, which states that an amendment should generally be granted unless it changes the nature of the suit or causes prejudice to the defendant. The court found that the amendment would change the nature of the lis between the parties, as it would shift from rescission to enforcement of the share purchase agreement.

3. Prejudice to the defendant due to the amendment:
The defendant argued that the amendment would cause prejudice as it would allow the plaintiff to pursue the company petition in NCLT, which was effectively seeking specific performance of the share purchase agreement after rescinding it. The court agreed, noting that the plaintiff's actions would result in pursuing contradictory remedies in different forums, thereby prejudicing the defendant.

4. The application being time-barred:
The court examined the timeline of events and found that the plaintiff filed the amendment application only after the NCLT orders dated 08.12.2017 and 12.02.2018. The court noted that the plaintiff did not file the amendment application immediately after the defendant's counter on 07.11.2016 or the subsequent application for rejection of the company petition on 15.05.2017. This delay indicated that the amendment was sought only to comply with the NCLT orders, making it time-barred.

5. The application as disguised under sub-rule (3) of Rule 1 of Order XXIII of CPC:
The defendant contended that the amendment application was essentially an application under sub-rule (3) of Rule 1 of Order XXIII of CPC in disguise, seeking to withdraw a part of the claim to institute fresh proceedings. The court agreed, noting that the plaintiff did not abandon the suit claim under sub-rule (1) of Rule 1 of Order XXIII CPC and continued to seek damages for both companies, indicating that the amendment was intended to pursue the company petition in NCLT.

Conclusion:
The court concluded that the amendment application would change the nature of the suit, cause prejudice to the defendant, and was filed solely to comply with the NCLT orders. Therefore, the amendment application was dismissed, and the parties were left to bear their respective costs.

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