1 ssp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELATE JURISDICTION WRIT PETITION NO.1376 OF 2010 M/s.Kirloskar Ferrous Industries Ltd ...Petitioner vs. Mr.A.V.Deodhar ...Respondent Mr.G.S.Godbole i/b Mr.S.R.Ronghe and Karan Thorat for the petitioner Ms Saudamini Joshi a/w Mr.S.P.Joshi for the respondent CORAM :A.S.OKA,J. DATE : APRIL 8, 2010 P.C.: 1 I have heard the submissions of the learned counsel for the parties on the earlier date. Notice for final disposal was issued on 8 th march 2010. The petitioner is the defendant and the respondent is the plaintiff. The respondent filed a suit seeking a decree against the petitioner that the pension scheme dated 12 th March 1998 be implemented with its true spirit and the letter, and that new pension scheme dated 1 st September 2001 be cancelled with respect to the plaintiff. The second prayer is for decree for permitting the respondent- plaintiff to receive the arrears retrospectively with interest thereon if the pension scheme dated 12 th March 1998 is to be implemented. 2 According to the case of the respondent he was employed with the petitioner from February 1993 till October 2001 and he was employed as a Senior Vice- President. The case of the respondent in the plaint appears to be that he was allegedly pressurised by the management of the petitioner to proceed on leave in July 2001 and therefore he was ultimately compelled to tender resignation in November 2001. According to the case of the respondent, he was due to retire on superannuation 2 in the year 2007. The case made out by the respondent- plaintiff is that he was entitled to receive pensionery benefit as per the pension scheme dated 12 th march 1998. The suit is being contested by the petitioner by raising various contentions. 3 By the impugned order in this writ petition under Article 227 of the Constitution of India, an application made by the petitioner for amendment of the written statement has been rejected. The amendment is sought to be made to the written statement for adding factual contention that the respondent-plaintiff, after tendering resignation from the employment of the petitioner, he was working with Encore Foundries Limited (hereinafter referred to as the said company) from the year 2002 to October 25 th 2004 as executive director. It is alleged that the said company is a competitor of the petitioners. Another factual contention sought to be added is that the respondent- plaintiff had never any intention to work with the petitioner-company till the age of superannuation as he has already made up his mind to work with the said company. Another amendment was proposed for placing reliance on the clause 5(e) of the pension scheme dated 12 th March 1998. It was sought to be contended that during the pendency of the suit, the petitioner became aware that the respondent was working with one of its competitors from the year 2002 to 25 th October 2004 as an Executive Director. The factual assertions were sought to be incorporated for alleging that the said company is also manufacturing the same product of ferrous castings which is being manufactured by the petitioner. It was sought to be contended that in view of clause 5(e) of the pension scheme dated 12 th March 1998, the respondent- plaintiff has lost his right to get the pension. It is 3 sought to be contended that the fact that the respondent had taken up employment with the said company ought to have been disclosed in the plaint. Lastly, it was sought to be added to the written statement that the pension scheme is designed for those senior officers who show their loyalty even after resigning or superannuating from the employment of the petitioner-company and as the respondent has taken up the employment with the said company, he has disqualified himself to obtain relief under the said scheme. In the application for amendment, it was contended that after cross examination of the respondent, in September 2009, an attempt was made to find out the financial status of its competitor when it was realised that the respondent was working with the said company. 4 The application was opposed by the respondent by raising various contentions. By the impugned order, the said application has been rejected. 5 The learned counsel for the petitioner submitted that paragraph 3 of the application discloses that only after cross examination of the respondent was made in September 2009, the petitioner became aware of the fact that the respondent had taken up employment with the said company from the year 2002 to October 25, 2004. He submitted that this was sufficient explanation to bring the case within the purview of proviso to Rule 17 of Order VI of the said Code. The learned counsel for the petitioner has placed reliance on various decisions of this Court and Apex Court in support of his contentions. He submitted that the contention sought to be raised by way of amendment to the written statement goes to the root of the matter and that the amendment is necessary to bring on record the suppression of material facts. 4 6 The learned counsel for the respondent submitted that even according to the case of the petitioner, the said company is one of the competitors of the petitioner- company and obviously the petitioner was at all the relevant times aware of the annual reports of the said company which are public documents. The learned counsel for the respondent submitted that the document on the basis of which the amendment is based is a public document of which the petitioner shall be deemed to have knowledge at all material times and therefore, with exercise of due diligence, the petitioner could have always obtained the information which is sought to be added by way of the amendment. The learned counsel for the respondent relied upon various decisions of the Apex Court and this Court and submitted that the jurisdiction of the Court to allow the application for amendment is taken away unless the condition precedent provided under the proviso to rule 17 of Order VI of the said Code is satisfied. She submitted that unless the Court records a specific finding that notwithstanding the exercise due diligence, the petitioner could not have raised contention sought to be raised by amendment before the commencement of the hearing of the suit, the Court is powerless to allow the amendment. In the circumstances, the learned counsel submitted that the learned trial Judge was justified in not granting amendment as he had no jurisdiction to grant the amendment in as much as a condition precedent provided under Rule 17 of Order VI of the said Code was not satisfied. 7 I have given careful consideration to the submissions. By filing a suit, the respondent wants to claim benefit as per the pension scheme dated 12th March 1998. In the plaint it is asserted that the respondent 5 was employed as a Senior Vice President of the petitioner-company from 1 st October 1997 to October 2001. It is alleged in the plaint that the management pressurised the respondent to proceed on leave in July 2001. It is alleged that due to constant mental torture, the respondent was compelled to tender his resignation which he did in November 2001. According to the case of the respondent, but for his resignation, he would have superannuated in the year 2007. It is alleged that the pension scheme dated 12 th March 1998 was available to the respondent as a result of good work done by him and under the scheme the respondent was entitled to receive pension at the certain rate. It is alleged from the letters dated 14 th October 2001 and 15 th December 2001 sent by the petitioner it become apparent that the petitioner was not desirous of extending the benefits of the said scheme to the respondent. 8 By the proposed amendment, it was sought to be contended that after tendering resignation from the employment of the petitioner, the respondent had undertaken employment with the said company from the year 2002 to October 2004. Reliance was sought to be placed on clause 5(e) of the said scheme which according to the petitioner provides that a senior officer enjoying pension under the said scheme shall forgo his right to get the pension if he takes up employment with competitors of the petitioner-company. Reliance is sought to be placed on the Preamble of the scheme that the scheme is designed only for those senior officers who show their loyalty even after resigning or superannuating from the service of the petitioner. In fact, in paragraph 18 of the plaint, the respondent has referred to the said portion of the scheme which records that the scheme is made with a view to retain the loyalty and continuity in 6 service of the senior officers and to provide them with sufficient means even after retirement to maintain their particular standard of living. Thus, by amendment what is sought to be brought on record was that after the respondent ceased to be in the employment of the petitioner, he had taken up employment with the said company which was a competitor of the petitioner and as a result of the said action on the part of the respondent, now he is disentitled to benefit of the said pension scheme in view of clause 5(e) of the pension scheme and in view of the fact that the scheme was designed for those senior officers who show their loyalty even after their employment comes to an end. It is pertinent to note that in the reply to the application for amendment the fact that the respondent had taken up employment with the said company for the aforesaid period has not been disputed. The respondent has come out with a case that the scheme has been incorporated with a view to retain the loyalty of the senior officers. Therefore, the fact that after the respondent ceased to be in the employment of the petitioner, the respondent had taken up an employment with the said company ought to have been disclosed in the plaint. 9 Paragraph 3 of the application for amendment read thus : 3 The defendant states that after the cross- examination of the plaintiff on or about in the month of September when the Defendant was finding out the financial status of its competitors viz. Ennore Foundries Ltd., it was realised that the plaintiff was working with Ennore Foundries Ltd. For the period from the year 2002 to October 25, 2004 as Executive Director. The said Ennore Foundries Ltd 7 also manufactures ferrous castings like those of the Defendant. The defendant states that as per Clause 5(e) of the scheme dated 12 th March 1998, a senior officer enjoying pension under the scheme shall lose his right to get pension if he takes up employment with a competing organisation without the approval of the Managing Director of Kirloskar Ferrous Industries Ltd. No prior approval by the defendant- company was taken by the plaintiff from the Managing Director of the Defendant company. In these circumstances, the plaintiff loses his right of availing of pension under the Company s pension scheme dated 12 th March 1998. 10 Perusal of the reply shows that the averments made in paragraph 3 of the Application for amendment have not been specifically dealt with. It is not stated in the reply that the petitioner always had knowledge of the contents of the annual report of the said company. 11 At this stage, it will be necessary to consider the decision of the Apex Court in case of Chander Kanta Bansal Vs. Rajendrasingh Anand [2008 (5) SCC 117). The Apex Court was dealing with the proviso to Rule 17 of Order VI of the said Code which provides that no application for amendment shall be allowed after trial is commenced unless the Court comes to the conclusion that in spite of due diligence, the party could not raise the matter before commencement of the trial. The Apex Court interpreted the words due diligence . In paragraph 16, the Apex Court has held thus : 16 The words due diligence have not been defined in the Code. According to Oxford Dictionary (Edn.2006), the word diligence 8 means careful and persistent application or effort. Diligent means careful and stead in application to one s work and duties, showing care and effort. As per Black s Law Dictionary (18 th Edn.), diligence means a continual effort to accomplish something, care; caution; the attention and care require from a person in a given situation. Due diligence means the diligence reasonably expected from, and ordinarily exercised by a person who seeks to satisfy a legal requirement or to discharge an obligation. According to Words and Phrases by Drain-Dyspnea (Permanent Edn.13-A) due diligence , in law means doing everything reasonable, not everything possible. Due diligence means reasonable diligence; it means such diligence as a prudent man would exercise in the conduct of his own affairs. The Apex Court held that due diligence must be a reasonable diligence and it does not mean doing of everything possible. In the case of Rajesh Kumar Aggarwal and others Vs. K.K.Modi and others [(2006) 4 SCC 385] the Apex Court dealt with the object of Rule 17 of Order VI of the said Code wherein it was held that the Court always gives leave to amend the pleadings to a party unless it is satisfied that the party applying was acting malafide. The learned counsel for the respondent has relied upon the decision of the Apex Court in case of Rajkumar Gurawara Vs. M/s.S.K.Sarwagi and Co.Pvt. Ltd (AIR 2008 Supreme Court 2303). The submission is that pretrial amendments can be allowed liberally than those amendments which are sought to be made after commencement of the trial. Reliance is placed on another decision of the Apex court in case of 9 Ajendraprasadji Pande Vs. Swami Keshavprakeshdasji (AIR 2007 Supreme Court 806) wherein the Apex Court held that the trial commences when the issues are settled. Reliance is placed on the decision of this Court in case of Chhabubai Badakh Vs. S.H.Khaatod [2009 (5) Bombay Cases Reporter 311] wherein it was held that unless party satisfies the Court that amendment could not have been brought on record prior to trial in spite of exercise of due diligence, the Court has no jurisdiction to grant the amendment. Lastly reliance is placed on the decision of the learned Single Judge of this Court in case of Anil s/o Vishwanath Jadhav vs. Pankaj s/o Indrajeet Bassi (2010 (1) All M.R 394). Reliance is placed on following observations made by this Court after considering the decision of the Apex Court in case of Vidyabai and others Vs. Padmalatha [2009 (1) All M.R. 471] : 6...The Apex Court in paragraph 7 has observed that the proviso to Order 6 rule 17 of C.P.C is coached in mandatory form. The Courts jurisdiction to allow such an application for amendment is taken away unless condition precedent thereof for are satisfied i.e it must come to conclusion that in spite of due diligence the parties could not have raised matter before commencement of trial... 12 Thus, the condition precedent for permitting the amendment after commencement of the trial is the satisfaction of the Court that in spite of the due diligence, the amendment could not have been made earlier. Factual statement made in the application for amendment is that after evidence of the respondent was recorded, when an attempt was made to find out the financial status of the said company which is stated to 10 be a competitor company of the petitioner, it was realised that the respondent was working with the said company from the year 2002 to October 2004. Thus, what is contended is that after recording of evidence of the respondent-plaintiff, the petitioner became aware of the fact that the respondent had taken up employment with the said company. The question is what is the scope of adjudication at the stage of deciding an application for amendment when the Court is required to to consider whether exercise of due diligence is established or not. The contention of the respondent is that the annual report of the said company is a public document and therefore, the petitioner is deemed to have notice of all public documents. That is not the test to applied for determining the existence of due diligence within the meaning of the proviso of Rule 17 of Order VI of the said Code. In case of Chander Kanta Bansal (supra) the Apex Court has precisely dealt with the said aspect. Relevant portion of what is held by the Apex Court is already quoted above. What is held is that due diligence means doing everything reasonable,and not everything possible. The party seeking amendment of the pleading after commencement of the trial is not expected to establish that he had done everything possible. What is required to be shown is that everything reasonable which a prudent man would have done has been done. The contention of the respondent is that as the annual reports of the competitor companies are public documents, the petitioner was expected to go through each and every report of all the competitors to find out whether any of their officers had taken up employment with the such companies. Accepting this submission will amount to mean that the due diligence means doing everything possible. It will be contrary to the decision of the Apex Court in case of Chander Kanta Bansal (supra). It must be noted 11 here that while coming to the conclusion that there was due diligence on the part of a party, the Court is not expected to hold mini trial, otherwise the very object of introducing the proviso will be defeated and the ultimate result will be further delay in the proceeding of the trial. As stated earlier, in the reply filed to the application at Exhibit-72, factual averments in paragraph 3 of the application for amendment have not been dealt with. 13 Turning to the impugned order, the learned Judge has observed that, There is not a single whisper in the application as to what exactly and when exercised was the diligence of the defendant that resulted in revealing certain facts. Resultantly, it remains miserable as to what had prevented it from exercising such a diligence any time before. It is thus a matter of rather being casual than diligent as is obvious... As stated earlier, in the facts of the case the petitioner is not expected to keep on reading annual reports of all its competitors to find out whether any of its senior officer has taken up employment. What is stated by the petitioner is that during the course of trial when financial status of the said company was sought to be ascertained, it was revealed that the respondent had taken up employment with the said company. In fact, going by the averments made in the plaint and in particular paragraph 18 thereof, it was the duty of the respondent to disclose the said fact in the plaint itself. The said fact alleged by the petitioner has a 12 direct bearing on the entitlement of the respondent to take benefit of the pension scheme. Rule 17 of Order VI of the said Code is not the only provision under which amendment to the plaint can be permitted but section 153 of the said Code also confers the power to the Court to allow the amendment to the pleadings. Considering the scope of the term due diligence , taking the averments made in the application and reply as it is, this was a case where exercise of due diligence contemplated under the proviso to Rule 17 of Order VI of the said Code was established by the petitioner which was sufficient for the Court to record a finding that the condition precedent of the proviso was satisfied. 14 Hence, the impugned order will have to be quashed and set aside being illegal. Hence, I pass the following order : (i) Impugned order is quashed and set aside and application at Exhibit-72 is hereby allowed. Amendment shall be carried out within a period of two weeks from the date on which writ of this order is received by the trial Court. (ii) It is clarified here that the observations made in this Judgment are only for limited purpose of considering the prayer for amendment and the same shall not be construed to mean that any adjudication has been made by this Court on merits of the suit. (iii)Writ petition is allowed in above terms. JUDGE 13