SCA/433420/2008 1/9 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 4334 of 2008 With CIVIL APPLICATION No. 9009 of 2008 In SPECIAL CIVIL APPLICATION No. 4334 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= NIRMA CHEMICAL WORKS LTD - Petitioner(s) Versus GUJARAT POWER CORPORATION LTD & 1 - Respondent(s) ========================================================= Appearance : MR SANJAY A MEHTA for Petitioner(s) : 1, MS LILU K BHAYA for Respondent(s) : 1, RULE SERVED BY DS for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 09/09/2008 ORAL JUDGMENT Petitioner herein has challenged an order dated SCA/433420/2008 2/9 JUDGMENT dated 20th February 2008 passed by the learned Judge of the City Civil Court, Ahmedabad below application Ex.45 filed by the petitioner by which amendment application of the petitioner came to be dismissed. 2. Briefly stated, facts in the present case are as follows: The petitioner has instituted Civil Suit No.1936/06 against the present respondents. Respondents are the defendants in the suit. In the said suit, the plaintiff had prayed for declaration that the action of the first defendant in invoking the bank guarantee No.48/06 dated 11.2.04 to the tune of Rs.2 crores is unlawful. The plaintiff also prayed that defendant No.1 be restrained from invoking or encashing the said bank guarantee. The plaintiff also prayed for a declaration that defendant No.2 Bank is not under an obligation to make payment of the bank guarantee. Along with the suit, the plaintiff also filed interim injunction application and prayed that pending hearing and final disposal of the suit, the Court may restrain respondent No.1 from invoking and/or encashing the bank guarantee. At one stage, against the order passed by the Civil Court, at an interim stage, respondent No.1 herein, original defendant No.1 approached this Court by filing Appeal From Order No.281/06 in which while SCA/433420/2008 3/9 JUDGMENT disposing of the appeal by order dated 9.1.2006, recorded the contention of the present respondent No.1 that by the time the Civil Court passed orders on 5th and 6th October 2006, bank guarantee was already encashed and the amount was already deposited in the bank account of defendant No.1 and that therefore, there was no further question of staying its encashment. In view of this, learned Judge set aside the order of the City Civil Court dated 5.10.06. However, since notice of motion was still pending, the learned Judge recorded the statement of the counsel for present respondent No.1 that while deciding the notice of motion, in case the Trial Court comes to the conclusion that there is prima facie in favour of the plaintiff and defendants are required to be restrained from encashing bank guarantee, defendant No.1 shall redeposit the entire amount of Rs.2 crores in the bank guarantee within 48 hours of passing of the order. With this modality, the Trial Court was permitted to pass final order on Ex.5 application. The issue once again came up before this Court in Appeal From Order No.360/08 in which the present petitioner was the appellant challenging the order passed by the Trial Court rejecting Ex.5 application. In the said order, the learned Judge though did not interfere with the interim order, desired that the suit be disposed of expeditiously. It was observed that as bank guarantee has already been encashed, the suit be expedited. SCA/433420/2008 4/9 JUDGMENT Since the suit was instituted with the prayer for preventing the defendants from encashing the bank guarantee and since before the plaintiff could obtain any order, the Bank guarantee was already encashed, the plaintiff found it appropriate to bring an amendment primarily seeking recovery of the amount already received by defendant No.1 upon encashment of the bank guarantee. For the said purpose, the petitioner filed application Ex.45. In this application, the petitioner prayed for addition of certain paragraphs through which the petitioner wanted to bring on record certain additional facts and consequently, the petitioner prayed for addition of prayer clause 18(aa) in following terms: “18(aa) During the pendency of this suit the defendant No.1 encashed the Bank Guarantee dated 11.02.2004 and defendant No.2 has made the payment of Rs.2 crores to defendant No.1. Therefore, in the facts and circumstances stated above, a decree for an amount of Rs.2,25,77,534/- Rs.2 crores being the amount of Bank Guarantee and Rs.25,77,534/- being the interest amount @ 12% per annum from 05.10.2006 to 31.10.2007, with running interest @ 12% on the principal amount of Rs.2 crores from 01.11.2007 till the date of realization, be passed in favour of the plaintiff and against defendant No.1.” SCA/433420/2008 5/9 JUDGMENT It can thus be seen that essentially, in addition to bringing additional averments on record, through the amendment application, the plaintiff wanted to add prayer clause 18(aa) seeking recovery of an amount of Rs.2 crores with interest which amount defendant No.1 had already recovered by encashment of bank guarantee in the circumstances narrated herein-above. It is this application that respondent No.1 opposed and it is this application that the learned Judge dismissed by the impugned order. 3. Having heard the learned advocates appearing for the parties at considerable length, I find that the learned Judge committed a serious error in not allowing the amendment of the original plaintiff. As noted, the suit was instituted at the time when the bank guarantee was yet to be encashed by defendant No.1 with the assistance of defendant No.2. Though there is some dispute about the exact point of time when the bank guarantee was encashed, there is nothing on record to suggest that the plaintiff knew about the encashment of bank guarantee before the suit was filed. This aspect has been examined by the learned Judge of this Court in the order dated 9.10.2006 in Appeal From Order No.281 of 2006 threadbare. For the purpose of this petition, I need not go further into this aspect. Suffice it to say, the petitioner-plaintiff approached the civil court seeking protection against encashment of bank guarantee on the premise that the bank guarantee was yet to be encashed. Interim injunction application SCA/433420/2008 6/9 JUDGMENT of the petitioner though initially entertained by the civil court, this Court by an order dated 9.10.2006 at an interim stage reversed the order of the civil court on the premise that by the time the civil court granted interim protection, the bank guarantee was already encashed. Later on the civil court dismissed application Ex.5 of the petitioner which order was confirmed while disposing of Appeal From Order No.360 of 2006 by this Court on 16.8.07. 4. At this stage, the plaintiff found it necessary that the suit be amended so as to recover the amount already encashed by defendant No.1 under the bank guarantee. To my mind, such amendment did not change the nature of the suit. The plaintiff has been contending that it is not open for defendant No.1 to recover a sum of Rs.2 crores from the plaintiff. The plaintiff wanted protection against encashment of bank guarantee. But when such attempt failed and the amount was already recovered, the plaintiff wished to amend the suit by adding prayer clause that the amount already recovered be returned to the plaintiff. The entire cause of action, basis and the material averments remained unchanged. Whether the plaintiff is likely to succeed or not is not a question which this Court needs to be decided at this stage. It is a question which is of no relevance now when the Court is deciding whether amendment can be granted or not. 5. It is not in dispute that the amendment was SCA/433420/2008 7/9 JUDGMENT prayed at a stage when the trial had not commenced and issues were not framed. It is by now well settled that such amendments are to be liberally granted unless of course there is some legal impediment in granting such amendments such as on account of the amendment, the entire nature of the suit gets changed, which in my opinion, is not the case in the present situation. 6. Learned advocate for respondent No.1, however, submitted that the plaintiff wants to pursue the suit without paying full court fees. At the outset, I notice that the suit itself was valued at Rs.2 crores even without amendment. In any case, as observed by the learned Judge in the impugned order, by virtue of the amendment, if granted, the suit would be a money suit and the plaintiff is bound to pay appropriate ad valorem court fees thereon if not already paid while instituting the suit. 7. Counsel for respondent No.1 further submitted that nature of the suit would materially alter to which contention I am unable to agree in view of the discussion I have already made. 8. It was contended that the plaintiff wanted to add new facts and add additional prayers which should not be allowed. Reliance in this regard was placed on the decision of the Apex Court in the case of Jagan Nath v. Chander Bhan, (1988) 3 SCC 57. It was, however, a case wherein the Apex Court SCA/433420/2008 8/9 JUDGMENT disallowed the application for amendment in the written statement finding that in the written statement already filed, there was an admission from which the deponent cannot be wriggled out. Reliance was also placed on a decision of the Apex Court in the case of Vijendra Kumar Goel v. Kusum Bhuwania, (1997) 11 SC 457 wherein amendment was disallowed on the ground that after filing the suit for declaration and injunction, through an amendment the same was sought to be converted into a suit for specific performance after the period of limitation and had become time barred. Reliance was also placed in the case of Bharat Coking Coal Ltd. v. Raj Kishore Singh, (2000) 9 SCC 174 wherein the Apex Court observed that amendment application changing the nature of the dispute drastically cannot be allowed. Reliance was also placed on the decision of the Apex Court in the case of P.H.Patil v. K.S.Patil, 1957 SC 363, wherein it is held that amendment taking away right accrued to a party by lapse of time should not be granted. Reliance was also placed on a decision of the Apex Court in the case of Bharat Karsondas Thakkar v. Kiran Construction Co., 2008(2) Supreme 919 wherein finding that the amendment completely changed the nature of the suit, it was disallowed, SCA/433420/2008 9/9 JUDGMENT 9. In the present case, however, I find that none of the grounds on which amendment can be disallowed are present. Amendment was brought at a stage where issues had not been framed. Trial had, therefore, not begun. Not allowing the amendment, in the facts of the case, would leave the plaintiff remedyless and/or multiplicity of proceedings which would in fact prompt me to granting the amendment rather than refusing it. 10. In the result, the impugned order dated 20.2.2008 is set aside. Subject to the clarification that if full ad valorem court fee is not already paid by the petitioner, the same shall be paid before the suit can proceed further, the amendment as prayed for is granted. Accordingly, application Ex.45 is allowed. Rule is made absolute accordingly with no order as to costs. In view of the order passed in the main matter, Civil Application does not survive and the same is disposed of accordingly. (Akil Kureshi, J.) (vjn)