9911796707
TMI Blog2022 (4) TMI 1553X X X X Extracts X X X X X X X X Extracts X X X X ..... rcising any right in respect of the pledged securities. 2. The substance of the claim is that defendant no. 2-Bank had extended certain financial facilities to defendant nos. 4 to 9 and two other entities (borrowers). The borrowers executed eight Security Trustee Agreement with defendant no. 1-Security Trustee. The plaintiff provided security in respect of the financial facility advanced by defendant no. 2 to the borrowers. Ten Unattested Deeds were got executed by defendant no. 1 from the plaintiff and the borrowers. Pledge was created in favour of defendant no. 1 of 44,00,54,852 shares held by the plaintiff in defendant no. 3 Company ("suit shares"). 3. Defendant no. 1 issued notices of sale of the pledged security under Section 176 of the Indian Contract Act, 1872. Eventually, defendant no. 1 transferred the suit shares to itself. Later on, defendant no. 1 instead of selling the suit shares and recovering the debt for defendant no. 2 Bank, transferred the suit shares to defendant no. 2 Bank in violation of Section 172 of the Contract Act as well as the Security Trustee Agreement. Though the plaintiff continues to be the owner of the suit shares till the time the suit shares we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord the Pledge Deeds but also asserted a positive case that the plaintiff was not relying on the Pledge Deeds for its claim and reliefs in the suit. Taking a somersault, the plaintiff now proposes to rely on the very same Pledge Deeds and seeks declaratory relief in respect of those Pledge Deeds. The proposed amendment thus substantially alters the cause of action as it proposes to introduce a new, unconnected and distinct cause of action from the one specifically pleaded in the plaint. Defendant no. 2 has also assailed the claim of the plaintiff that in or around February, 2022, the plaintiff learned that the consideration for the pledge of suit shares was fraudulent. In fact, the plaintiff had known all along, even before the institution of the suit, about the complaint filed by Mr. Subhash Chandra. Defendant no. 2 contends that the plaintiff cannot be permitted to plead and take contrary and inconsistent pleas, lest defendant no. 2 would suffer grave prejudice. 7. In the light of the aforesaid pleadings, I have heard Mr. Seervai, the learned Senior Counsel for the plaintiff, Mr. Khambata, the learned Senior Counsel for defendant no. 2 and Mr. Chinoy, the learned Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be permitted to now turn around and assail the very underlying transaction of pledge, urged Mr. Khambata. An endeavour was also made by Mr. Khambata to demonstrate that the claim of the plaintiff that it became aware of the alleged fraudulent transaction in the month of February, 2022 is belied by the assertions of the plaintiff and material on record. 10. I have considered the rival submissions. Evidently, amendment is sought at a pre-trial stage. It does not appear that the defendants have been called upon to file written statement post service of the writ of summons. The interdict contained in the proviso to Rule 17 of Order VI does not come into play. 11. The principles which govern the amendment of pleadings are crystallized. The Court is empowered, at any stage of the proceedings, to allow either party to amend the pleadings in such a manner and upon such terms as may be found just. Nay, all such amendments shall be allowed to be made as may be necessary for the purpose of determining the real question in controversy between the parties. The determinative factor is whether the proposed amendment is necessary for determining the real question in controversy between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, so that full powers of amendment must be enjoyed and should always be liberally exercised, but nonetheless no power has yet been given to enable one distinct cause of action to be substituted for another, nor to change, by means of amendment, the subject-matter of the suit." (emphasis supplied) 13. In the case of Sampath Kumar (supra) the Supreme Court enunciated the nature of the jurisdiction to allow amendment in the pleadings. The observations in paragraph 9 are material and hence extracted below: "9. Order 6 Rule 17 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 are allowed more liberally than those which are sought to be made after the commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the consideration of limited nature of property over the pledged shares or absolute transfer thereof in favour of defendant no. 2 may not arise. For, fraud vitiates all acts. In contrast, even if the plaintiff does not succeed in establishing the fraud, the plaintiff can legitimately question the extent of the right of defendant nos. 1 and 2 over the pledged shares. From this standpoint, the submission on behalf of the defendant that since the plaintiff initially did not rely upon Pledge Deeds and now proposes to assail the very creation of the pledge and, therefore, it alters the nature of the suit, does not merit acceptance. 17. The second limb of the challenge on behalf of the defendant that the plaintiff was aware of the complaint lodged by Mr. Subhash Chandra and, therefore, the claim that the plaintiff learnt about the fraudulent nature of the transaction in the month of February, 2022 is unworthy of credence, does not advance the cause of the defendants. Firstly, the lodging of the complaint by defendant no. 2 does not seem to be in serious contest. Secondly, the fact remains that amendment is sought at the nascent stage of the trial. Neither the element of delay nor want ..... X X X X Extracts X X X X X X X X Extracts X X X X
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