Research › Search › Judgment

Calcutta High Court · body

2010 DIGILAW 919 (CAL)

Paramanand Agarwal v. Parmeshwar Das Agarwal

2010-08-03

SANJIB BANERJEE

body2010
JUDGMENT Sanjib Banerjee 1. THE dispute begins with even the description of the form of the action. THE plaintiffs and the third defendant claim it to be a partition suit; the first defendant insists that it is not. 2. THE reliefs claimed in the suit are as follows: "(a) Declaration that the family settlement dated 24th April, 2007 as recorded in the 3 memoranda of understanding all dated 24th April, 2007 being Annexure "C" hereto stands revoked and/or cancelled and is not valid and binding on the parties thereto; (b) Declaration that all acts done or steps taken by the defendant Nos. 1, 2 and 3 in reliance upon or pursuance of the family settlement be invalid and be adjudged void and cancelled; (c) Declaration that the defendant Nos. 5, 6, 7 and 8 are joint family companies/firms of Agarwal family and three branches of three sons of Bishan Swarup Agarwal are entitled to equal 173rd share thereof; (d) Partition of the assets of the Agarwal family as set out in Annexure "D" hereto and allotment of 1/3rd share to the name plaintiff No. 1; (e) THE defendant Nos. 1 and 9 be directed to transfer back 2,75,000 shares in the defendant No. 7 in favour of the plaintiff No. 1 and/or nominee family members; (f) Decree for declaration that 3,30,000 new shares in the defendant No. 7 caused to be issued by defendant No.1 mentioned in the plaint are illegal and void and allotment of all the said shares be adjudged void and be cancelled; (g) Declaration that the plaintiff No.1 is entitled to hold and is a holder of 1/3rd issued share capital of defendant No.7; (h) Mandatory injunction directing the defendants to take steps so that plaintiffs 1/3rd shareholding in defendant No.7 is restored; (i) Decree for administration and management of defendant Nos. 5, 6, 7 and 8 in such manner as this Hon'ble Court may deem fit and proper; (j) Transfer deeds, share scripts and all other documents in connection with issuance of 3,30,000 shares of the defendant No.7 between the period 2004 to 2007 be adjudged null and void, delivered up and cancelled; (k) Mandatory injunction upon the defendants directing as follows: i. THE defendant No.1 do return/retransfer 2,75,000 shares of the respondent No.7 to the petitioner and the respondent No.7 is liable to record such return. ii. THE respondent Nos. ii. THE respondent Nos. 1 to 4 to make the plaintiff No. 1 and his nominees, Directors of the defendant No.7 and the defendant No. 7 should accept the same. iii. THE defendant Nos. 1 to 4 do immediately cause the defendant No.7 to return/replenish the corporate guarantees given in favour of the defendant No.7 ING Vysya Bank. iv. THE defendant Nos. 1 and 3 do immediately return/replenish the guarantees given in favour of the defendant No.8 in favour of ING Vysya Bank. (1) An enquiry be held into loss and damage suffered by the plaintiffs as pleaded in paragraph 55 hereof and a decree be made for such sums as be found fit and proper; (m) Receiver; (n) Injunction; (o) Attachment; (p) Costs; (q) Such further and/or other reliefs." The first plaintiff, the first defendant and the third defendant are the three sons of Bishan Swarup Agarwal who has left a sizeable legacy, not of the least of them being the present and other likely legal actions. The plaintiff's have described the patriarch of the Agarwal family as being a man of modest means when he started off his business. The plaintiff's say that the corpus burgeoned into an impressive empire which the first defendant, as the eldest male member of the next generation, came to control. Between Bishan Swarup's death in 1983 and a family settlement about a quarter of a century later, the business had prospered and had grown out from two partnership firms to several other firms and companies. The family's interest diversified, its members grew and, finally, the time came to split the pie. The narration of the family's prosperity continues through the first 25 paragraphs of the plaint and the plaintiffs' principal interlocutory application. The good things that happened to the family, according to the plaintiffs, went awry in or after the year 2005. The plaintiffs claim that by then the seventh defendant had become the flagship business entity of the family and the first defendant apparently conferred undue benefits unto himself and other members of his branch both in the shareholding composition of such company and in the matter of enjoying the profits therefrom. The early disputes are recounted over paragraphs 26 to 29 of the plaintiffs' first petition. The early disputes are recounted over paragraphs 26 to 29 of the plaintiffs' first petition. Paragraph 30 describes the initial confrontation when the first plaintiff apparently charged the first defendant of inequitable conduct and demanded that a measure of parity be restored in the command and control of the family business between the three branches. At paragraph 34 of the petition, the plaintiffs claim that three sons of Bishan Swarup and their respective wives "agreed to enter into a conciliation process for the purpose of affecting (sic, effecting) partition of the assets and all the family businesses of (the) Agarwal family." Three conciliators were initially appointed. From the summer of 2006 to the spring of 2007, the conciliation continued, till on April. 24, 2007, "a composite family settlement between the (plaintiffs) and the (defendant) Nos. 1 to 4 was achieved." The plaintiffs suggest that the first defendant insisted that the "entire settlement" be recorded in three several memoranda of understanding, one covering the fifth and sixth defendant partnership firms and the two others providing for the seventh and eighth defendant companies. It is the plaintiffs' avowed case that the "said three memoranda of understanding (of April 24, 2007) read together constitute the family settlement of the Agarwal family and cannot be read in isolation." Paragraph 38 of the petition goes on to say that the settlement was based on the fundamental premise that the net share of each of the three branches would be a third of the total value of the assets of the Agarwal family. 3. AFTER describing the principal contents of the memoranda, the plaintiffs have detailed the steps taken by the plaintiffs in pursuance thereof at paragraph 41 of the petition. Roughly, the first defendant was to get the seventh defendant flagship company less its Jharsuguda unit and a share in the two premier partnership firms of the family; the first plaintiff was to get the eighth defendant company free from all its liabilities and a share in the two main partnership firms; and, the third defendant was to get the Jharsuguda unit of the seventh defendant company and a share in the said partnership firms. In addition to the three memoranda there was a chart indicating owelty money and balancing of the immovable properties of the family irrespective of the ostensible ownership therein. In addition to the three memoranda there was a chart indicating owelty money and balancing of the immovable properties of the family irrespective of the ostensible ownership therein. One of the key steps for implementing the settlement was to have the Jharsuguda unit demerged from the seventh defendant company. 4. WHAT emerges from the plaint case and its reflection in the plaintiffs' petition is that there was a complete settlement of family businesses and properties to make a three-way division for the three branches. The plaintiffs do not indicate much grievance in some of the businesses and properties relating thereto remaining joint since the extent of the entitlement of the three groups was spelt out in the memoranda and the attendant papers. The charge in the plaint and the plaintiffs' petition is that the first defendant (there is an insinuation of the third defendant playing along with the first defendant) did not take steps subsequent to the execution of the memoranda to effectuate the settlement and family partnership. The plaintiffs say that the plaintiffs have complied with their side of the bargain but the first defendant has not. The particulars of the breach have been detailed at paragraph 43 of the petition. The underlying sentiment of the petition is that the first defendant (and, may be, the third defendant) did not really intend to give the first plaintiff his due but had induced the plaintiffs into believing that the settlement would be implemented with the ulterior motive of relieving the seventh defendant company, which was primarily to come to the first defendant, of the first plaintiffs uncomfortable presence. Into the forty-fifth paragraph of the petition the plaintiffs assert that in the first and third defendants having committed breach of the essential terms of the family settlement, they had repudiated the settlement recorded in the three memoranda of understanding. Into the forty-fifth paragraph of the petition the plaintiffs assert that in the first and third defendants having committed breach of the essential terms of the family settlement, they had repudiated the settlement recorded in the three memoranda of understanding. The plaintiffs maintain that they have "accepted the repudiation and by a formal letter dated 28th January, 2008 have recorded cancellation of the family settlement." In such letter, addressed by the first plaintiff to both the first and third defendants, the first plaintiff offered to restore the benefits received by him from the joint family funds and requested his two brothers "to undertake valuation of all the family owned, promoted businesses, properties and other valuables and to divide all such assets equally amongst all three brothers." Having thus given the basis for getting the three memoranda of understanding out of the way, so to say, the plaintiffs have launched into an attack on the first defendant's role in the disproportionate issuance of shares in the seventh defendant flagship company. Such allotment of shares was long prior to the execution of the three memoranda and may have been the flashpoint that triggered the division. The plaintiffs suggest that the first defendant had "tricked" the first plaintiff to sign the memoranda only to acquire the plaintiffs' shareholding in the seventh defendant at a nominal price and have the plaintiffs resign as directors of such company. The plaintiffs contend that once the transaction relating to the seventh defendant was completed by the plaintiffs, the first defendant was not interested in implementing the settlement any further. The plaintiffs complain that the third defendant was in league with the first defendant in such unholy exercise. 5. ON such facts, the plaintiffs claim immediate orders to restrain the defendants from giving any further effect to the memoranda of understanding; to stop the transfer of "any of the sponge iron plants" of the seventh defendant; for a receiver to take control of the shares in the seventh defendant transferred by the plaintiffs; for restraining augmentation of the share capital of the seventh defendant, restraining the transfer of its shares, appointing an administrator to take control of its books and records; and, injunction restraining the "family assets" from being dealt with. 6. GA No. 1009 of 2008 is the plaintiffs' principal interlocutory application. 6. GA No. 1009 of 2008 is the plaintiffs' principal interlocutory application. GA No. 2423 of 2009 has been filed by the plaintiffs following the alleged discovery by the income-tax authorities of business and assets of the family that had apparently been concealed by the first defendant. GA No. 407 of 2010 is the plaintiffs' third application for amendment of the plaint consequent upon the plaintiffs' discovery of other family assets and business that had allegedly not been revealed by the first defendant earlier. The first and the third defendants had initially filed a joint affidavit. These two brothers now appear to have fallen out. The first and third defendants had, at the outset, recognised the present action to be one to scuttle the demerger of the Jharsuguda unit of the seventh defendant company. A scheme of arrangement for reconstruction of the seventh defendant company consequent upon the proposed demerger is pending before the Company Court here. The first plaintiff has objected to such scheme. The original stand of the first and third defendants was that the sole purpose of the present action was to cloud the memoranda of understanding in controversy to either obtain an order that would have arrested the application for sanction of the scheme of arrangement or cite the present suit to obstruct the demerger. The third defendant has now used an independent affidavit where he has attempted to retract most of the statements made in the joint affidavit with the first defendant. The third defendant claims that upon it coming to light following the income-tax investigation that the first defendant had concealed the extent of the family assets, the third defendant could no longer support the first defendant. 7. THE third defendant also laments that whether or not the first plaintiff has got his rightful share of the family assets, it is undeniable that the plaintiff controls an independent business entity in the eighth defendant and the first defendant controls the seventh defendant, with the third defendant alone being left in the lurch since he is only in de facto control of the Jharsuguda unit which remains tied to the seventh defendant company. THE third defendant joins the plaintiffs in urging that the memoranda of understanding have failed or are otherwise unconscionable and all present assets of the family should be divided equally between the three branches. 8. THE third defendant joins the plaintiffs in urging that the memoranda of understanding have failed or are otherwise unconscionable and all present assets of the family should be divided equally between the three branches. 8. THE first defendant contends that this is no partition suit. According to this eldest Agarwal brother, the memoranda of understanding of April 24, 2007 have first to be cancelled before the assets can be regarded to be joint assets and capable of partition. THE first defendant says that it is undeniable that there has been a severance, not only of status but also of business, at least in the year 2007. THE first defendant suggests that the three branches did not share a common residence or mess or place of worship for a considerable period prior to the execution of memoranda of understanding. THE first defendant refers to the admitted position that the first plaintiff is an exclusive control of the eighth defendant company, the first defendant is completely in charge of the seventh defendant company and the third defendant has independent command of the Jharsuguda unit. THE first defendant submits that he has duly caused the seventh defendant company to apply to Court for the reconstruction of such company upon the demerger of the Jharsuguda unit, but it is the first plaintiff who has obstructed the sanction of the scheme. THE first defendant asserts that it is one thing to suggest that the memoranda of understanding require to be fully implemented; but quite another to claim that upon all that was required to be done under the memoranda not having been completed, the memoranda are liable to be cancelled. The plaintiffs' application for amendment of the plaint has been heard separately. It is the plaintiffs' principal interlocutory application that is first taken up for assessment. 9. THE first memorandum of understanding (at page 63 of the petition in GA No. 1009 of 2008) deals with the fifth and sixth defendant partnership firm and also covers "all group companies" except the seventh and eighth defendant companies. All three brothers are parties to this first memorandum. There is a two-page summary that deals with adjustment of the monies in the various businesses. Annexure "A" to the first memorandum lists eight companies of which four companies were allotted to the first plaintiff and two each to the first and third defendants. All three brothers are parties to this first memorandum. There is a two-page summary that deals with adjustment of the monies in the various businesses. Annexure "A" to the first memorandum lists eight companies of which four companies were allotted to the first plaintiff and two each to the first and third defendants. Annexure "B" to the first memorandum is a list of properties to be held by the first defendant. Annexure "C" is the list of properties to be held by the first plaintiff. Annexure "D" is the list of properties to be held by the third defendant. Annexure "E" is the list of properties to be jointly held by the three brothers. THE second memorandum (at page 72 of the petition in GA No. 1009 of 2008) is executed by the first and third defendants. It envisages the demerger of the Jharsuguda unit of the seventh defendant and a separate company to be formed therewith. THE only annexure to the second memorandum provides for a net payment of Rs.175 lakh by the first defendant to the third defendant. 10. THE third memorandum (at page 74 of the petition relating to GA No.1009 of 2008) records that the seventh defendant company along with its Raigarh manufacturing unit would belong exclusively to the first defendant; the Jharsuguda unit of the seventh defendant company would come to the third defendant; and, the eighth defendant company would be controller exclusively by the first plaintiff. This memorandum details the obligations of the three branches and records that upon fulfilment of the obligations of the three groups as recorded therein, "all claims and counter claim between the three groups shall stand fully and finally settled." There is a further untitled, undated document which is appended to the third memorandum that contemplates coal block and iron mines, if allotted to the seventh defendant company, to be shared by the three branches "on actual cost basis to be mutually agreed." This solitary sheet of paper also refers to the approach to the manufacturing unit of the eighth defendant company and the possible use of the railway siding of the seventh defendant by the eighth defendant. There is no doubt, as the plaintiffs also suggest in the plaint and their principal petition, that the memoranda contemplated a complete family settlement. There is no doubt, as the plaintiffs also suggest in the plaint and their principal petition, that the memoranda contemplated a complete family settlement. The first defendant argues that the memoranda were concerned with only such of the matters that had been referred to therein, but it appears to be undeniable that the family was joint in business till or about the year 2007 and, under the settlement embodied in the three memoranda, the businesses and assets were divided between the three branches. 11. THE case made out in the plaint and the plaintiffs' principal petition is not that the family settlement was vitiated by fraud. That is a case which has been attempted to be introduced by way of the amendment application. It is true that the plaintiffs have averred that they had been "tricked" into accepting the settlement in April, 2007 and that they had bona fide relied on the eldest brother, but the grievance is not so much as to the unfairness of the settlement as to the perceived lack of interest of the first defendant to implement the terms thereof. Again, the plaintiffs have averred that the first defendant had never intended to effectuate an equitable partition as the subsequent conduct of the first defendant demonstrated that all he wanted was to get rid of the first plaintiff from the flagship company. But that is only half the story. THE first plaintiff has transferred his group's shareholding in the seventh defendant company and the members of his branch have also resigned as Directors of such company, but the plaintiffs' group has been paid the agreed consideration therefor. Further, it is the admitted position that the plaintiffs are in exclusive and uninterrupted control of the eighth defendant company. 12. THE principal bone of contention appears to be in some money due to be paid under the settlement to the plaintiffs not having been paid. THE plaintiffs labour to demonstrate that out of the agreed amount of Rs. 952.46 lakh due to the plaintiffs, only a pittance has been paid. THE first defendant retorts by saying that all but an amount of about Rs. 3 crore has been paid and the sum of Rs. 3 crore has been adjusted against amounts due to the first defendant. There is considerable disagreement between the relevant parties on such aspect which cannot be resolved on affidavit evidence. THE first defendant retorts by saying that all but an amount of about Rs. 3 crore has been paid and the sum of Rs. 3 crore has been adjusted against amounts due to the first defendant. There is considerable disagreement between the relevant parties on such aspect which cannot be resolved on affidavit evidence. The first defendant has first relied on a judgment reported at 2006(12) SCC 233 [Steel Authority of India vs. Union of India]. At paragraph 28 of the report, in the context of a vacillating stand by a trade union, the Supreme Court opined that once a definite stand had been taken a different plea inconsistent with the original would be impermissible. In the present case the first defendant has sought to pre-empt a stand taken by the third defendant which is inconsistent with that made out in the joint affidavit. It is not necessary to consider the present stand of the third defendant. The third defendant has not altogether endorsed the plaintiffs' case but it now seeks to paint the first defendant in the same brush as the plaintiffs have. The third defendant insists that since this is effectively a suit for partition, it matters little that the third defendant is not the plaintiff as the third defendant, as any party to a partition suit, has equal rights as the plaintiff. The third defendant also suggests that till a severance is completed by effective partition, the corpus remains the one and any person entitled to a share therein can claim a part of the accretion to the original nucleus. 13. THE third defendant has relied on a judgment reported at 2007(6) SCC 401 [M. Venkataramana Hebbar vs. M. Rajagopal Hebbar] where the question was whether the co-owners of a joint family property had completed the partition thereof. THE family settlement in that case recorded that the property was small and two of the four parties would receive owelty in lieu of their shares from one of the parties. THE money was not paid. THE Supreme Court held that though there may be a severance in the status of the joint family by a party expressing his unequivocal intention to separate, despite the separation in the joint status parties may continue to possess property jointly until there was a partition by metes and bounds. 14. THE money was not paid. THE Supreme Court held that though there may be a severance in the status of the joint family by a party expressing his unequivocal intention to separate, despite the separation in the joint status parties may continue to possess property jointly until there was a partition by metes and bounds. 14. THE substance of the third defendant's submission in support of the plaintiffs' case is that since it is fairly obvious that the entire family settlement was not worked out, other businesses that may have been started by the branch of the first defendant would be liable to be treated as part of the common hotchpot and available for division. THE third defendant has relied on another judgment reported at 1986(1) SCC 366 [Bhagwant P. Sulakhe vs. Digambak Gopal Sulakh] for the legal proposition expressed therein that the character of any joint family property does not change with the severance of the status of the joint family and a joint family property continues to retain its joint family character as long as it is not partitioned among the co-sharers. This is an involved question that requires consideration at the trial. For the moment, it is evident that there was a family settlement that indicated the manner of distribution of the business and assets. THE primary grievance of both the plaintiffs and the third defendant is that such settlement has not been fully implemented. Yet again, it is the admitted position that the plaintiffs are in exclusive control of the eighth defendant company; the third defendant is in charge of the Jharsuguda unit of the seventh defendant company notwithstanding the demerger not having gone through yet; and, the plaintiff is in control of the Raigarh manufacturing unit of the seventh defendant company and all of such company's other assets save the Jharsuguda unit. Prima facie, each of the three branches has had a chance from the time each came into control of an independent unit to exclusively enjoy the usufructs therefrom and build thereon. The first defendant has referred to two judgments reported at 1994 Supp (3) SCC 548 [Kondiram Bhiku Kirdat vs. Krishna Bhiku Kirdat] and 1972(4) SCC 1 [M.N. Aryamurthi vs. M.L. Subbaraya Setty] for the proposition that after severance from the joint family, assets acquired by former co-sharers in their individual capacity do not form part of joint family assets. The first defendant has referred to two judgments reported at 1994 Supp (3) SCC 548 [Kondiram Bhiku Kirdat vs. Krishna Bhiku Kirdat] and 1972(4) SCC 1 [M.N. Aryamurthi vs. M.L. Subbaraya Setty] for the proposition that after severance from the joint family, assets acquired by former co-sharers in their individual capacity do not form part of joint family assets. In the first case, the appellant before the Supreme Court was engaged in military service and acquired some properties in his name. The Supreme Court found that some of the properties had been acquired by the appellant from his personal income after severance in status and held that such properties could not be clubbed with the joint family assets. In the other case of M.N. Aryamurthi, at paragraph 20 of the report, the Supreme Court held, "20. ... On a partition by severance of the joint status, the members of the family become tenants-in-common of the family property. If one of the members remains in possession of the entire properties of the family, there is no presumption that the property, which is acquired by him after severance of the status, must be regarded as acquired for the family...." 15. THERE was undoubted severance of status and partial implementation of the family settlement of April 24, 2007 in this case. Shareholding in companies changed, Directors resigned, control of some units passed to the branch entitled thereto under the settlement. If the entirety of the settlement has not been implemented, it would be a case of breach and may entitle the party complaining of the breach to seek specific performance or like relief. But to suggest that since a part of a family settlement has not been implemented it stands repudiated or it ought to be annulled, would require a much higher case to be brought than these plaintiffs, even with the late support of the third defendant, have been able to demonstrate. As to what shape the action would take if the amendment petition is allowed is an entirely different matter. 16. THERE is an amount of slightly over Rs.3 crore that the first defendant has actually not paid to the first plaintiff but the first defendant has claimed adjustment of such sum against other alleged undischarged obligations of the first plaintiff. As to what shape the action would take if the amendment petition is allowed is an entirely different matter. 16. THERE is an amount of slightly over Rs.3 crore that the first defendant has actually not paid to the first plaintiff but the first defendant has claimed adjustment of such sum against other alleged undischarged obligations of the first plaintiff. Since the nature of adjustments do not appear to be clear and since it was the first defendant who was in unquestionable control over the substantial part of the family business and assets prior to the settlement, GA No. 1009 of 2008 is disposed of by directing the first defendant to deposit or cause to be deposited a sum of Rs. 4 crore with the Registrar, Original Side, within three weeks from date. Upon such deposit, the Registrar, Original Side, will invest the amount by way of a fixed deposit with a nationalised bank having its branch within the vicinity of this Court. The interim order subsisting will continue till the deposit is made by the first defendant and will stand vacated thereafter. The parties will pay and bear their own costs. The pendency of the suit will neither be an impediment nor may it be used as an excuse to not implement the outstanding obligations under the three memoranda making up the family settlement save the cash payment by the defendant No. 1 to the plaintiff No. 1 or the possible adjustment thereof. It will be open to the parties to proceed with the scheme of demerger of the seventh defendant company without prejudice to their rights herein. 17. GA No. 2423 of 2009 has really worked itself out. The plaintiffs say that they had been given inspection of the documents seized or taken custody of by the income-tax authorities. GA No. 2423 of 2009 is disposed of without any further order and without any order as to costs. 18. THE plaintiffs seek amendment of the plaint upon the discovery of material following the income tax investigation. THE plaintiffs say that it was only in November, 2009 that the plaintiffs discovered other assets and businesses of the family that had apparently not been disclosed by the first defendant to the plaintiffs at or after the family settlement of April 24, 2007. THE plaintiffs say that it was only in November, 2009 that the plaintiffs discovered other assets and businesses of the family that had apparently not been disclosed by the first defendant to the plaintiffs at or after the family settlement of April 24, 2007. THE amendment sought is to incorporate such other family assets and businesses discovered during the pendency of the suit. The first defendant says that the proposed amendment, if allowed, would altogether change the nature and character of the suit. The first defendant argues that the original grievance of the plaintiffs is of alleged non-compliance of the family settlement without there being a whisper of a charge of fraud by concealment of the extent of the family business and assets by the first defendant. He relies on a judgment reported at 2009(10) SCC 84 [Revajeetu Builders and Developers vs. Narayanaswamy and Sons] for the principles recognised at paragraph 63 of the report. The first defendant also submits that since the plaintiffs have taken no steps for the writ of summons to be served on the first defendant, the discretion should be exercised against the plaintiff. 19. THE first aspect that a Court looks into upon receipt of an application for amendment of a plaint is as to the stage when the amendment is sought. THE second question that arises is as to the circumstances in which the amendment is sought. THE Court needs to assess whether the amendment is necessary for the proper and effective adjudication of the lis and needs to weigh the balance between the likely prejudice to the defendants upon the amendment being allowed and the likely suffering of the plaintiff if the amendment sought is rejected. THE factors that weigh with court are as to whether refusal of the amendment would result in injustice or lead to a multiplicity of proceedings. All this assessment is made upon the fundamental premise as to whether the proposed amendment would change the nature and character of the suit or take away from any of the defendants a valuable right that may have accrued in the interregnum. 20. THE amendment application here has been made before any written statement has been filed, though the plaintiffs are to blame for not having taken diligent steps for service of the writs of summons. 20. THE amendment application here has been made before any written statement has been filed, though the plaintiffs are to blame for not having taken diligent steps for service of the writs of summons. THE amendment has been sought at a stage where it is likeliest to be allowed if it does not fundamentally alter the character of the suit or cause serious prejudice to the defendants. THE circumstances in which the amendment has been sought are also favourable. An investigation appears to have been conducted by the income tax authorities and the plaintiffs say that they discovered the additional family businesses and assets thereafter. THE plaintiffs' application is based on subsequent discovery of material. If it, prima facie, appears that the discovery was subsequent, and if it otherwise does not change the basic nature of the suit, the amendment would, more likely than not, be allowed. The suit as framed is for cancellation of the memoranda of understanding and for a partition of all assets and businesses of the Agarwal family. Whether or not the plaintiffs are likely to succeed is not a question that is to be addressed in assessing the application for amendment of the plaint. It is true that there is no direct averment in the original plaint that the family settlement should be annulled since a part of the family assets had been concealed by the first defendant. But if subsequent discovery makes such a ground available to the plaintiffs to challenge the family settlement which is already under siege, without assessing the merits of the new challenge, the amendment ought to be allowed. The fundamental character of the suit would not be changed by the proposed amendment nor has any valuable right accrued to the opposing first defendant which would warrant the rejection of the amendment. 21. ACCORDINGLY, GA No. 407 of 2010 is allowed in terms of prayers (a), (d), (e), (f) and (g) of the notice of motion. The plaintiffs have not seriously pressed prayers (b) and (c) and, in any event, the grounds in the petition do not make out any case for an order to be passed in terms of prayers (b) or (c). The plaintiffs will pay costs assessed at 500 GM to the first defendant. 22. URGENT certified photocopies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.