K. S. E. B. v. C. S. Company — 1996 DIGILAW 326 (KER)

Judgment :- J.B. KoShy, J. The plaintiff, Kerala State Electricity Board, in O.S. No. 345 of 1987 before the Sub Court, Trivandrum is the revision petitioner. The original suit was filed for settlement of accounts and for a declaration that the plaintiff is entitled to recover damages from the defendants. Defendants/ Respondents who are a partnership firm and three of its partners took a contract under the plaintiff for the work of Kakkad Hydro Electrion Project Construction of a concrete lined power tunnel. /The work was allotted for a total amount of Rs. 5,57,20,680/- at 88% above the estimated rate. It is contended in the plaint that eventhough plaintiff gave an advance of Rs. 19 lakhs and also agreed to give 90% of the cost of machinery actually purchased by the defendants, defendants were toot able to utilise it. Defendants were short of funds, short of men and materials. Therefore, notice was issued to the defendants calling upon them to show cause why the contract with them should not be terminated. Thereafter, an attempt was made by the defendants to reconstitute the partnership firm by some of the partners. The work did not progress and in the above circumstances, Board terminated the contract. Alter terminating the said contract the work was re-tendered on 14.12.1985, after splitting the work in three parts and the total amount of the three contracts was Rs. 8,99.71 lakhs. Therefore, suit was filed. 2. Defendents filed written statement stating that eventhough allegations are denied the suit itself is not maintainable. It was contended that suit for settlement of accounts is not maintainable against a contractor. Therefore, the suit itself is not maintainable. The above was taken as a preliminary issue. Trial court held that the suit is prima facie maintainable. This court in C.R.P.No.1581 of 1990 held that the issue of maintainability of the suit can be considered along with other issues after adducing evidence in the suit. Meanwhile, defendants filed an indigent O.P. before the Sub Court, Trivandrum for damages claiming an amount of Rs. 7.50 crores alleging illegal termination of the contract. These two cross-suits between the same parties are being jointly tried. While so, in February 1995, plaintiff/revision petitioner moved I.A.No. 2235 of 1995 seeking amendment of the plaint. The main amendment sought for is to introduce a new paragraph as 8 A claiming Rs. 7.50 crores alleging illegal termination of the contract. These two cross-suits between the same parties are being jointly tried. While so, in February 1995, plaintiff/revision petitioner moved I.A.No. 2235 of 1995 seeking amendment of the plaint. The main amendment sought for is to introduce a new paragraph as 8 A claiming Rs. 4.51 crores as damages, this being the difference between the contract amount with the defendants and the contract amount as per the re-tender. In the relief portion, the relief of settlement of accounts was sought to be deleted and in its place a prayer for recovery of an amount of Rs. 450 lakhs with 18.5% interest from the date of suit was substituted. Defendants opposed the prayer on the ground that it will materially alter the nature of the suit and a suit for settlement of accounts cannot under law be permitted to convert into a suit for recovery of a specific amount. It was further contended that if the suit is amended, their case that the suit is not maintainable cannot be contended. Therefore, one of their main defence will be lost and it cannot be compensated by cost. It was also contended that the claim had already become barred by limitation and hence the amendment if allowed, would result in revival of a haired claim. The Court below accepted the above contention and amendment was rejected. It is admitted that if new suit was filed, on the date of amendment, claim for damages for Rs. 4.51 crores could have been time barred. It is the contention of the revision petitioner that the amendment should have been allowed. There was already a prayer for declaration that plaintiff is entitled to damages. In the amendment application damages has only been quantified and there is no change in the nature of the claim and therefore, amendment ought, to have been allowed. 3. Both sides argued first regarding the maintainability of the suit without amendment. It was argued that a Full Bench of the Jammu and Kashmir High Court in Triloki Nath Dhar v. Dharmarth Counsel, Srinagar (AIR 1975 Jammu and Kashmir 76) held mat no suit for rendition of accounts can be maintained between promisor and promisee or between two contracting parties. Both sides argued first regarding the maintainability of the suit without amendment. It was argued that a Full Bench of the Jammu and Kashmir High Court in Triloki Nath Dhar v. Dharmarth Counsel, Srinagar (AIR 1975 Jammu and Kashmir 76) held mat no suit for rendition of accounts can be maintained between promisor and promisee or between two contracting parties. The scope of suit for account is limited to a certain number of cases for instance between one partner against another, between the beneficiary against the executor or administrator, between mortgagor against the mortgage, between cestuique trust against a trustee, between principal against an agent etc. There is no legal obligation to render the accounts between two contracting parties, as there is no confusionary relationship. 4. In Dalmia Cement (Bharat) Ltd, v. T.V. Oommen (1987 (1) KLT 534) also it was held that a works contract is not a contract of agency and an independent contractor is not entitled to the relief of settlement of accounts with the other contracting party. A Division Bench of this Court in C.S. Nair v. Travancore Devaswom board (1987 KLJ 838) held that a contractor to whom amounts are due from the contracting party for breach of contract is bound to sue for damages. There is no obligation on the part of the contracting party to render accounts to the contractor. The plaintiff s remedy was to file a suit for realisation of a definite sum of money by way 6f damages and not for settlement of accounts. 5. It is contended by the Board that a Division Bench of this Court in Kerala State Electricity Board v. Marshall Sons & Co. (India) Ltd., Madras (1985 KLT 930) held that during the passage of time, the old notion had to yield to considerations in which equity was assigned a dominant role. Exceptional circumstances of a case could justifiably bring about a situation in which equity would justify the framing of a suit for settlement of accounts. Further it is contended by the Board that it was decided by this Court in C.R.P.No.1581 of 1990 that maintainability of the suit can be considered after adducing evidence in the suit. According to me, in view of the above order, the question whether the suit is maintainable or not is not a question to be considered now. Further it is contended by the Board that it was decided by this Court in C.R.P.No.1581 of 1990 that maintainability of the suit can be considered after adducing evidence in the suit. According to me, in view of the above order, the question whether the suit is maintainable or not is not a question to be considered now. The sole question is whether amendment as prayed for can be allowed. The prayer for amendment shows that the prayer in the suit for settlement of accounts should be deleted and in its place a prayer for recovery of Rs. 450 lakhs with interest should be substituted. There was already a prayer for declaration that plaintiff is entitled to damages. In view of this position, it was ordered that maintainability should be considered along with the other issues at the time of final disposal of the case. The right of the defendants to contend that the suit is barred will he taken away if the amendment is allowed. 6. It is contended by the revision petitioner that lower court has refused the amendment mainly because the relief claimed will amount to revival of a barred claim as the claim has already become barred by limitation. It is contended by the revision petitioner that the nature of the suit will not change. Already there is a prayer for declaration of damages. Now the damage is quantified. Therefore, in view of the various decisions of the Supreme Court, it cannot be stated that the amendment cannot he allowed because a time barred claim for a definite sum of money is incorporated in the plaint by way of amendment. The first decision cited is the decision in Mathew Alexander v. Bhaskaran Filial Sreedharan Filial and others (AIR 1990 Kerala 96). Therein a claim petition under the Motor Vehicles Act was sought to be amended stating that in the original claim there was a typing mistake. It was held by the Court that the mere fact that the claim was barred on the date of the application for amendment is no ground for rejecting the same if there is no change of cause of action or if no new facts are sought to be incorporated. It was held by the Court that the mere fact that the claim was barred on the date of the application for amendment is no ground for rejecting the same if there is no change of cause of action or if no new facts are sought to be incorporated. But, this court allowed the amendment because the Motor Accidents Claims Tribunal at that time has got power to condone the delay in filing the application for compensation like an ordinary Civil Court, The principle that an amendment shall not ordinarily be allowed if the claim is barred cannot be extended to a proceeding before the M.A.C.T. as specific power is conferred for condoning the delay. The Court allowed the amendment application only because of the power of the M.A.C.T. to condone the delay and that decision cannot be used to a revision petition. 7. The second decision relied on by the revision petitioner is Vineet Kumar v. Mangal Sain Wadhera (AIR 1985 SC 817) wherein it was held that normally amendment is not allowed if it changes the cause of action. But, Supreme Court held that it is well recognised that where the amendment does not constitute an addition of a new cause of action or raise a new case, but amounts to no more than adding to the facts already on record, the amendment would be allowed even after the statutory period of limitation. 8. In M/s. Ganesh Trading Co, v. Moji Ram (AIR 1978 SC 483) it is held that if the plaintiff seeks to alter the cause of action itself and to introduce indirectly, through an amendment of his pleadings, an entirely new or inconsistent cause of action, amounting virtually to the substitution of a new plaint or new cause of action in place of what was originally there, the Court will refuse to permit it if it amounts to depriving the party against which a suit is pending of any right which may have accrued in its favour due to lapse of time. But the Court held that mere failure to set out even an essential fact does not by itself constitute a new cause of action. In paragraph 5 of the judgment the Court held as follows: "Defective pleadings are generally curable if the cause of action sought to be brought out was not ab initio completely absent. But the Court held that mere failure to set out even an essential fact does not by itself constitute a new cause of action. In paragraph 5 of the judgment the Court held as follows: "Defective pleadings are generally curable if the cause of action sought to be brought out was not ab initio completely absent. Even very defective pleadings may be permitted to be cured, so as to consti to to a cause of action where there was none, provided necessary conditions, such as payment of either any additional court fees, which may be payable, or of costs of the other side are complied with. It is only if lapse of time has barred the remedy on the newly constituted cause of action that the Court should, ordinarily, refuse prayers for amendment of pleadings". In the above case, the suit was instituted for recovery of money due under a promissory note by a firm through a partner. The amendment application was filed on the ground that partnership firm already stood dissolved on the date of filing the suit. The suit was instituted by one of the partners of the firm. Supreme Court found that if did not alter the cause of action or the character of the suit nor did it change the identity of the plaintiff who remained the same. It only brought out correctly the capacity of the plaintiff suing. Therefore, no new case is set up and amendment is allowable. 9. Revision Petitioner relies on the decision of the Supreme Court in A.K. Gupta and Sons Ltd. v. Damodar Valley Corporation (AIR 1967 SC 96) where it was held that in the matter of allowing amendment of pleading the general rule is that a party is not allowed by amendment to set up a new case or a new cause of action particularly when a suit on the new cause of action is barred. Where, however, - ilie amendment does not constitute the addition of a new cause of action or raise a different case, but amounts merely to a different or additional approach to the same facts the amendment is to be allowed even after expiry of the statutory period of limitation. In that case, the suit was on the contract seeking only the interpretation of the clause for a decision of rights of the parties under it and for no other purpose. In that case, the suit was on the contract seeking only the interpretation of the clause for a decision of rights of the parties under it and for no other purpose. The contractor's interpretation of the clause was challenged. 'The suit was decreed but in appeal it was held to be not maintainable in its form, in view of S.42 of the Specific Relief Act. The appellant sought the leave of the High Court to amend the paint by adding an extra relief for a decree for the contract money or such other amount as was to be found due on proper amount being taken. Eventhough the High Court refused amendment Supreme Court allowed it, as no new case or facts are set out. In Paragraph. 8 of the judgment, the Court held as follows: "The principal reasons that have led to the rule last mentioned are, first, that the object of courts and rules of procedure is to decide the rights of the parties and not to punish them for their mistakes. (Cropper v. Smith (1884) 26ChD700 (710-711) and secondly that a party is strictly not entitled to rely on the statute of limitation when what is sought to be brought in by the amendment can be said in substance to be already in the pleading sought to be amended (Kisandas Rupchand v. Rachappa Vithoba, (1909) MR 33 Bom. 644 at P. 651, approved in Pirgonda Hongonda Patil v.KalgondaShidgonda,1957 SCR 595 (603): (AIR 1957 SC 363 at P. 366))" 10. In Kunheedu v. Marakkar & Others (1989 (1) KLJ 92) it was held that though it is the general rule that the amendment for incorporating new cause of action or a new relief, if it would be barred by limitation on the filing of a fresh suit, does not merit acceptance, court can still permit the amendment if itis necessary in the interest of justice of to decide the real controversy between the parties. 11. In L.J. Leach and Co. Ltd., and another v. M/s. Nardine Skinner and Co. (AIR 1957 SC 357) it was held that Courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application. 11. In L.J. Leach and Co. Ltd., and another v. M/s. Nardine Skinner and Co. (AIR 1957 SC 357) it was held that Courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application. But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice. In that case, the Apex Court found that in the interest of justice, amendment should be granted and amendment was allowed at the appeal stage. In P. H. Patil v. K.S. Patil (AIR 1957 SC 363) it was held that when amendment is not really introducing a new case and defendant did not have to meet a new claim set up for the first time after the expiry of the period of limitation, the amendment can be allowed. 12. Respondents relied on the decision of the Supreme Court in Gojabai, v. Vangabai Ramachandra Pawar ((1980) 2 SCC 329) wherein, it was held that when a new and inconsistent case is put forward to get over bar of limitation amendment need not be allowed. There was a compromise decree in the partition suit conferring right of pre-emption on all parties to the suit. Second respondent, one of the parties, sold her share and delivered possession to a third person. Suit was filed by another party to the compromise, claiming right of pre-emption after one year of the delivery of possession. Suit was decreed. During the pending of the appeal against the decree, an amendment of the plaint was granted to the appellant which introduced a new claim for performance of an agreement of sale said to be existing in her favour in respect of the suit property. It was held that such an amendment create a new and inconsistent case and it was put forward only to get over bar of limitation. The facts of this case are entirely different. In this case, in the original suit itself there was a prayer for declaration for damages. In the plaint itself there was a narration that in view of the breach of contract Electricity Board has suffered huge damages. The facts of this case are entirely different. In this case, in the original suit itself there was a prayer for declaration for damages. In the plaint itself there was a narration that in view of the breach of contract Electricity Board has suffered huge damages. A Cross-suit was also filed and both arc tried together. In the written statement filed in that case by the plaintiff also the damages were explained. Therefore, the nature of the suit is not changed. All allegations for claiming damages were mentioned. Only the amount was fixed and claimed by way of amendment. The nature of the suit is not being changed. The defendants are not put to any surprise as prayer for declaration of damages was already there in the suit. 13. The counter petitioner then relied on the decision of this Court in Ratnakaran v. Venganoor Panchayat (1988 (2) KLT 864). There this Court held that the requirements insisted upon to sustain a suit for settlement of accounts are different from the requirements that should be alleged to maintain a suit for damages for breach of contract. That means a suit for settlement of accounts shall not be permitted to be amended and converted into a suit for damages or vice versa. This court also distinguished the decision in AIR 1967 SC 96 in that case. The facts of this case are entirely different. In the decision in 1988 (2) KLT 864 suit was only for settlement of accounts, which is different from a suit for damages. In this case, apart from suit for declaration there was a clear averment that plaintiff has suffered damages and the second prayer was for declaration that plaintiff is entitled to damages. By amendment only quantified the damages claimed. Therefore, the present case in hand is similar to the facts of the case reported in AIR 1967 SC 96 already referred to. The suit originally filed was not merely for settlement of accounts but also for declaration of damages. All the facts necessary were also mentioned there for claiming damages. Only the damages were estimated later and that claim is mentioned and claimed by way of amendment. The nature of the suit and character of the suit are not changed. The defendants are not taken by any surprise. All the facts necessary were also mentioned there for claiming damages. Only the damages were estimated later and that claim is mentioned and claimed by way of amendment. The nature of the suit and character of the suit are not changed. The defendants are not taken by any surprise. Further, it is alleged in the plaint that defendants have committed breach of contract and because of their breach of contract Board has suffered damages. The defendants were not taken by surprise as claim for damages was not set up for the first time after the expiry of the period of limitation. Only the amount is quantified later. 14. Except in exceptional cases leave to amend under 0. 6, R.17 of the Code will ordinarily he refused when the effect of the amendment would be to take away from a party a legal right which had accrued to him by lapse of time. But this rule can apply only when either fresh allegations are added or fresh reliefs sought by way of amendment. Where, for instance, an amendment is sought which merely clarifies an existing pleading and does not in substance add to or alter it, it has never been held that the question of a bar of limitation is one of the questions to be considered in allowing such clarification of a matter already contained in the original pleading. In the present case, contents of the plaint already set out claim for damages. By amendment the amount of damages is only quantified. Therefore, for the purpose of effective determination of real questions involved in the suit amendment should have been granted. Considering the counter suit as well as the written statement I am of the opinion that defendants are not at all taken by surprise by the amendment. On the facts of this case, interest of justice requires that amendment should be carried out. The amendment is necessary for the purpose of determining the real question in controversy between the parties. 15. When amendment is to be allowed the question regarding payment of court fee also has to be reconsidered. Since the amendment goes back to the date of the suit, court fee has to be calculated and paid according to the rate relevant on the date of institution of the original suit. Court fee has been calculated in the amendment as per the amended Court Fees Act. Since the amendment goes back to the date of the suit, court fee has to be calculated and paid according to the rate relevant on the date of institution of the original suit. Court fee has been calculated in the amendment as per the amended Court Fees Act. As the suit is filed in 1987, computation of court fee should be on the basis of the then existing Court fees Act and revision petitioner will not be entitled to the benefit of the amended provision which came into force only in 1991. Therefore, while carrying out the amendment calculation of court fee should be made on the basis of the Court Fees Act as was existing on the date of institution of the suit in 1987. 16. It is contended that the amendment application was delayed. The suit was filed in 1987. Application for amendment was filed in 1995. Therefore, it is contended mat because of I he delay the amendment should be refused. It is settled law that amendment can be allowed even at the second appeal stage as at any stage of the proceedings amendment can be allowed. It is pointed out that the respondents filed the suit as an indigent person and petition was filed by the defendants for that purpose and for trying both the suits together, the defendants' suit should have been numbered. It took long time and evidence is not started and because of the delay no prejudice is caused to the other side. Apart from that if there is delay the amendment can be allowed in terms of cost. Considering the fact that there was delay in filing the amendment application, I am of the opinion that amendment should be allowed on payment of cost of Rs. 3,000/- to the other side. After the amendment defendants have to file additional written statement and contest the case. By payment of cost any inconvenience caused by the delay in filing the amendment application to the defendants can be compensated.' In view of what is stated above, the revision petition is allowed. There will be no order as to costs.