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2006 DIGILAW 173 (DEL)

A. F. INVESTMENT LTD v. RAJA RAM BHASIN AND CO

2006-01-24

A.K.SIKRI

body2006
A. K. SIKRI, J. ( 1 ) PLAINTIFF has filed this suit for recovery of money against the defendants. The averments made in the plaint are that the plaintiff and its associated companies on or about May, 1985 purchased 60,000 equity shares of DCM Limited-12,000 shares @ rs. 100/- per share and 48,000 shares @ rs. 80/- per share from the defendants and made a total payment of Rs. 40/- lacs leaving a balance of Rs. 70,000/- only which was on account of stamp duty etc. as given in para 4 of the plaint. The shares when sent for transfer to DCM Limited were received back untransferred. The defendants had repurchased the aforesaid untransferred shares of DCM Limited @ Rs. 115/- per share and made payment of Rs. 20 lacs on account of the plaintiff and its associate companies. It is further alleged that out of the balance, rs. 16 lacs was agreed to be adjusted towards the sale price of shares of M/s. Metal Box purchased by some members of the said group of companies. The plaintiff and the associate companies were entitled to recover rs. 20,84,000/- after adjustment of the amounts paid by the defendants and deduction of the balance price of DCM shares and also the adjustment of the sale price of metal Box shares and each suit has been filed for the recovery of the proportionate amount that became recoverable plus interest calculated at the rate of 24% per annum. By virtue of the sale affected by the plaintiff to the defendant the shares in question were delivered to the defendants-for the balance consideration. The suit has been filed for realization of sale amount ( 2 ) DEFENDANTS have contested the suit by taking varied nature of defences. It is, inter alia, denied that the defendants agreed to purchase the shares and make payment thereof. Plea of the plaintiff regarding the transaction purportedly between the plaintiff and the defendants for re-sale of shares of dcm Limited have been denied. Defendants have also pleaded that the plaintiff and its associate companies purchased equity shares of DCM Limited of the total value of rs. 40,40,000/- and paid a sum of Rs. 40 lacs by post-dated cheques. Upon receipt of the delivery of the said shares, the plaintiff and its associate companies requested the defendants to lodge the shares with DCM limited for transfer. 40,40,000/- and paid a sum of Rs. 40 lacs by post-dated cheques. Upon receipt of the delivery of the said shares, the plaintiff and its associate companies requested the defendants to lodge the shares with DCM limited for transfer. The defendants affixed transfer stamps worth Rs. 30,000/- on behalf of the plaintiff and its associate companies. The balance, thus, recoverable from the plaintiff and its associate companies works out to Rs. 70,000/- till 30. 6. 1985. DCM Limited, however, on 6. 8. 1985 refused to register the transfer in the name of the plaintiff and other companies and the share scripts were returned with the invalid transfer deeds by DCM Limited to the plaintiff and its associate companies on or after 8. 8. 1985. The shares were delivered by the defendants to the plaintiff on 7. 6. 1985 and thereafter were lodged for transfer on or after 30. 6. 85 and the question of any negotiation having taken place far repurchase of shares in the month of May 1985 could not and did not arise. The story of repurchase of shares at the rate of Rs. 115/- per share in the month of June 1985 also could not and did not arise as the shares were not available with the plaintiff or its sister concern till 8. 8. 1985. Neither the plaintiff was in a position to deliver the shares nor anyone could agree to purchase the shares and make its payment without receipt of the delivery of shares. The theory of adjustment of the price of shares of Metal Box Ltd. from the repurchase price of DCM Ltd. has also been denied. ( 3 ) THOUGH the plaintiff has denied the averments made by the defendants in the written statement, the plaintiff now wants an alternative prayer to be added and with this end in view, this application under Order VI rule 17 of the Code of Civil Procedure has been filed. ( 3 ) THOUGH the plaintiff has denied the averments made by the defendants in the written statement, the plaintiff now wants an alternative prayer to be added and with this end in view, this application under Order VI rule 17 of the Code of Civil Procedure has been filed. The prayer sought to be added is that in case this court comes to the conclusion that DCM shares were not purchased by the defendant as pleaded in the plaint, in that even this Court may be pleased to pass decree for declaration that any alleged transfer of shares as pleaded in the written statement by the defendant was absolutely illegal and fraudulent and declaration be passed directing the defendants to deliver back the shares, in dispute, to the plaintiff. It is averred that since the alternate relief was not sought nor it could be pleaded at the time of filing the suit, in the changed circumstances, it became necessary in order to decide the matter, in issue, between the parties finally and efficaciously. ( 4 ) THIS application is resisted by the defendants as mala fide. It is, inter alia, contended that the shares were lodged for transfer in the name of the plaintiff with DCM limited but the said company refused to register the transfer in the name of the plaintiff and returned the share scripts along with invalid transfer deeds to the plaintiff on or about 8th August, 1985. It is also stated that the plea taken by the defendants in the written statement has not given rise to the necessity of amending the plaint as the claimed by the plaintiff. The application besides being groundless is highly belated and not maintainable. The alternative plea sought to be added now has also become barred by limitation and is, therefore, abuse of the process of the court. ( 5 ) THE issue essentially is, which needs determination, as to whether with the lapse of time the alternate prayer has become time-barred and any right has accrued in favour of the defendant which disentitles the plaintiff to seek amendment at this stage. ( 5 ) THE issue essentially is, which needs determination, as to whether with the lapse of time the alternate prayer has become time-barred and any right has accrued in favour of the defendant which disentitles the plaintiff to seek amendment at this stage. Learned counsel for the plaintiff submitted that this court would not go into the merits of the proposed amendment at this stage and the only question to be considered is as to whether it is necessary in the interest of justice to allow the plaintiff to amend the plaint nor decide the issues involved finally and efficaciously. It was submitted that the plaintiff was not seeking any change in the cause of action and/or in the pleas already taken in the plaint. It is only an alternate relief based on the same facts/cause of action which was sought to be added and the amendment has been arisen to pray an alternate relief in the nature of consequence in the event this Court comes to the conclusion that the defendant were not unpaid sellers and that they were holding the shares in trust on behalf of the plaintiff, in case it is held that there was no repurchase of shares by the defendant, as alleged in the written statement. The nature of proposed amendment is consequential arising out of the pleas raised by the defendant. The Supreme Court as well as this Court has held that amendment can be allowed to include alternate relief, which may arise out of the same pleas. Reference is made to the following judgments:- 1. Mal Khan Chand Vs. Gurbachan singh, 1971 RLR 117. 2. C. Rishi Vs. S. L. Saluja and Ors. , (1987) Vol. 31 DLT 132. 3. Bank Vs. Poly Fab Ind. Ltd. , 1990 RLR 529 . 4. Law Journal Co. Vs. Skyways constructions Ltd. , AIR 1992 (Delhi) 9. 5. Ram Vs. Moti Lal, 1993 (25) DRJ 174 . ( 6 ) IT was also submitted that the alternate relief claimed by way of amendment was not available when the suit was filed and the same only arose when the defendant denied having purchased the equity shares. Law Journal Co. Vs. Skyways constructions Ltd. , AIR 1992 (Delhi) 9. 5. Ram Vs. Moti Lal, 1993 (25) DRJ 174 . ( 6 ) IT was also submitted that the alternate relief claimed by way of amendment was not available when the suit was filed and the same only arose when the defendant denied having purchased the equity shares. The alternate relief prayed for by way of the amendment in the plaint is also not time barred as in case it is held that there is no sale transaction between the plaintiff and the defendant, in that event, the defendant will be holding the shares as trustee for and on behalf of the plaintiff and is bound to return the same to the plaintiff. If the defendant has pleaded that he was holding the shares as unpaid seller and has disposed of the same, he was not holding the shares as unpaid seller but as a bailee or trustee on behalf of the plaintiff then question of limitation would not arise. The cause of action for the return of the shares would only arise in case it is held that there was no sale and/or in the alternative it is held that he was holding as unpaid seller. Relying upon another judgment of this Court in Suresh Kumar Gupta Vs. H. L. Sehgal, 19986 (2) Current Civil Cases 239 (Delhi) it is stated that amendment was allowed to make the prayer for return of the machinery in a suit which was earlier filed on account of breach of contract. The facts of this case are more or less similar to that of the present case. Suit in the present was filed on 1st december 1987. As noted above, allegation is in respect of transaction of purchase of dcm Limited Shares on or about May, 1985. Written statement was filed on 19th december 1988 taking the aforesaid plea. Even, if it is presumed that only from the written statement the plaintiff came to know that DCM refused to register the transfer in its name, still the plaintiff did not take any steps thereafter for seeking amendment of the plaint and making this alternate prayer. The application for amendment is filed in the year 1995, i. e. seven years after the filing of the plaint and more than six years after filing of the written statement. The application for amendment is filed in the year 1995, i. e. seven years after the filing of the plaint and more than six years after filing of the written statement. The period of limitation for making this prayer admittedly expired by that time. Learned counsel for defendant is, therefore, right in his submission that as on the date of filing of the application for amendment, the prayer sought to be introduced now had become time-barred. Valuable right has thus accrued in favour of the defendant. When the suit was filed, the defendant was put to notice that it is only a money claim put forward by the plaintiff. By the amendment the plaintiff is seeking a direction to the defendant to deliver back the shares in dispute to the plaintiff. When this relief was not made originally, and seven years passed even after the filing of the suit, the defendant could not be expected to retain those shares and, therefore, a valuable right has accrued in favour of the defendant [see indian Bank Vs. Punjab National Bank and anr. , 2001 III AD (DELHI) 793 and Indian oil Corporation Ltd. Vs. International building and Company (Pvt.) Ltd. , 2001 VI ad (DELHI) 683. ] ( 7 ) SUCH a prayer which has become time-barred, therefore, cannot be allowed by way of amendment. It has been held by our High court in the case of Jawaharlal Mamtani vs. Bhagchand Motumal Mamtani and Anr. , ilr (1981) 1 Delhi 1 that power to allow amendment cannot be restricted to mere power to awarding cost in appropriate cases which can be effected from a particular date. Thus, in the present case even if it allowed from the date of filing the application, it would serve no purpose as by that time it becomes time-barred and defeats the legal right accrued in favour of the defendant. (Also see Kanailal das and Ahr. Vs. Jiban Kanai Das and anr. , AIR 1977 Cal. 189 ). In the given circumstances, therefore, the defendant may be right in contending that the proposed amendment inttoduces new claims and may change the nature and character of the suit. In the plaint the plaintiff has alleged that the defendant had agreed to repurchase the DCM shares. Vs. Jiban Kanai Das and anr. , AIR 1977 Cal. 189 ). In the given circumstances, therefore, the defendant may be right in contending that the proposed amendment inttoduces new claims and may change the nature and character of the suit. In the plaint the plaintiff has alleged that the defendant had agreed to repurchase the DCM shares. By introduction of the alternative prayer the effect would be to withdraw this plea and introduce a place that the sale of equity shares by the defendant for recovery of dues was without consent, authority or knowledge of the plaintiff and that the defendant had no right whatsoever to sell, transfer or convey the same to any other person. The defendant has further categorically averred that the shares in question have already been sold in the open market and, therefore, amendment would be of no avail as such a relief cannot be granted as it has already become infructuous inasmuch as shares are not in possession of the defendant. For the aforesaid reasons, I am not inclined to allow this application for amendment, which is accordingly dismissed. .