ASIAN HOTELS NORTH LTD vs YES BANK LTD & ORS.

2024-10-07 Information

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Pronounced on: 7th October, 2024

+ I.A. 10671/2023 (under Order VI Rule 17 of the CPC), I.A. 8068/2023 (under Order VII Rule 11 of the CPC), I.A. 9173/2023 (under Order XXXIX Rule 4 of the CPC) and I.A. 2858/2024 (under Order XXXIX Rule 4 of the CPC) in CS(COMM) 128/2022

ASIAN HOTELS NORTH LTD ….. Plaintiff
Through: Mr. Vikram Nankani, Senior Advocate and with Mr. Sidhant Kumar, Ms. Anushka Shah, Ms. Manyaa Chandok, Mr Akshit Mago, Mr Sarthak Sareen, Dr. Joginder Singh, Ms. Molly Agarwal, Mr. Harshal Kumar, Rajeshwar Singh, Advocates

versus
YES BANK LTD & ORS. ….. Defendants
Through: Mr. Raunak Dhillon, Ms. Madhavi Khanna, Mr. Nihaad Diwan, Ms. Isha Malik and Mr. Jeezan Riyaz, Advocates for D-1 and D-5
Mr. Sudhir Makkar, Sr. Advocate with Mr. Nishant Awana, Ms. Rini Badoni, Ms. Nitya Sharma, Mr. Ratnesh Sharma, Mr. GS Awana and Mr. Mayank Chaudhary, Advocates for D-6
Mr. Rajesh Rattan, Advocate for D-7
Mr. Nishant Awana, Ms. Rini Badoni, Ms. Nitya Sharma, Mr. Ratnesh Sharma, Mr. GS Awana and Mr. Mayank Chaudhary, Advocates for D-8
Mr. Madhur Dhingra, Advocate for D-9 (Through VC)
Mr. Sanyam Khetarpal, Advocate for applicant in I. A. 1378/2024

CORAM:
HONBLE MR. JUSTICE CHANDRA DHARI SINGH

J U D G M E N T

Contents
FACTUAL HISTORY 3
I.A. No. 10671/2023 (seeking amendment of the Plaint under Order VI Rule 17 of the CPC) 21
SUBMISSIONS 21
(On behalf of applicant/Plaintiff) 21
(On behalf of the defendant No. 7/Punjab National Bank) 24
(On behalf of defendant No. 6/Bank of Maharashtra) 25
ANALYSIS AND FINDINGS 29
CONCLUSION 86
I.A. No. 8068/2023 (seeking rejection of the original Plaint under Order VII Rule 11 of the CPC) 87
SUBMISSIONS 87
(On behalf of the applicant/defendant No.7/Punjab National Bank) 87
(On behalf of the non-applicant/Plaintiff) 92
ANALYSIS AND FINDINGS 94
CONCLUSION 202
I.A. 2858/2024 (under Order XXXIX Rule 4 of the CPC by the defendant No. 6/Bank of Maharashtra for recall of order dated 3rd March, 2023)& I. A. 9173/2023 (under Order XXXIX Rule 4 of the CPC by the defendant No. 7/Punjab National Bank for recall of order 3rd March, 2023). 204
SUBMISSIONS 205
SCHEME OF THE ACT 211
Order 1 Rule 10 of the CPC (addition, striking out or substitution of a party) 212
Order XXXIX Rule 4 of the CPC (Order for injunction may be discharged, varied or set aside) 226
ANALYSIS AND FINDINGS 234
CONCLUSION 268

FACTUAL HISTORY
1. The instant suit under which the captioned applications have been filed was instituted by the Plaintiff, i.e. M/s Asian Hotels (North) Ltd. which is engaged in the hospitality business and owns various Hotels in the Country. The defendant No. 1 Bank (Yes Bank hereinafter) had advanced loan and overdraft facilities to the Plaintiff under the loan Agreement dated 11th July, 2015 for a sum of Rs. 55, 00, 00, 000/- (Rs. Fifty-Five Crores), Agreement dated 12th January, 2016 for Rs. 1, 25, 00, 00, 000/- (Rs. One Hundred and Twenty-Five Crores) and had also entered into a Master Facility Agreement dated 9th May, 2016 for issuance of an overdraft facility of Rs. 32, 00, 00, 000/- (Rs. Thirty-Two Crores) in favour of the Plaintiff.
2. In the year 2020, the COVID-19 virus led to the pandemic situation in the entire country when the Reserve Bank of India (RBI hereinafter) issued a circular dated 6th August, 2020 which contained Resolution Framework for the borrowers stressed due to the said pandemic.
3. Pursuant to the invocation of the One-Time Restructuring arrangement (OTR arrangement/scheme hereinafter) under the above RBI Resolution Framework, an Inter-Creditors Agreement (ICA hereinafter) dated 23rd December, 2020 was executed by the consortium of lenders (including Yes Bank) of the Plaintiff and Bank of Maharashtra was appointed as the lead Bank of the said consortium.
4. Thereafter, the Plaintiff and Yes Bank executed the Master Amendment Agreement dated 24th June, 2021, whereby, it was decided that there shall be a moratorium on any instalments due and payable by the Plaintiff to the Yes Bank and other lenders of the consortium of lenders for the period between 1st September, 2020 till 30th March, 2022.
5. In furtherance to the aforementioned OTR arrangement, two additional agreements namely Trust and Retention Account Agreement (TRA agreement hereinafter), and funded Interest Term Loan Agreement (FITL hereinafter) were also executed by the parties i.e. the Plaintiff and the consortium of lenders, whereby, the interest liability on current running term loans during the moratorium period was determined.
6. The said OTR resolution plan of the Plaintiff was approved by the lead bank i.e. Bank of Maharashtra on 7th June, 2021 and all the other lenders of consortium were requested to implement the same.
7. Thereafter, a Joint Lenders Meeting (JLM hereinafter) took place on 24th September, 2021 and it was unequivocally decided that a further extension of 9 months shall be granted to the Plaintiff for the execution of the necessary documents towards the OTR. During the JLM, the Yes Bank also reported that the OTR resolution in respect of the loan facilities extended to the Plaintiff were duly approved and implemented.
8. It is stated that the finalization of security and other documentation did not happen due to failure on part of the Yes Bank to give comments and suggestions for settlement of the document, however, the Yes Bank issued a notice dated 27th October, 2021 under Section 176 of Indian Contracts Act, 1872 (ICA hereinafter) to the Plaintiff, thereby, stating that the Plaintiff had committed certain defaults in payment and therefore, raised a demand of Rs.4, 13, 21, 939.69/-.
9. Thereafter, the Yes Bank sent an e-mail dated 8th November, 2011 to the Plaintiff informing the encashment of the fixed deposits amounting to Rs.50, 00, 00, 000/- and further invoked the Deed of Pledge and acquired a total of 14, 02, 991 equity shares which approximately amounts to 7.21% of the total equity in the Plaintiff company.
10. On 17th February, 2022, the Yes Bank issued a notice for recalling of the entire loan facility on the alleged default in implementation of the documents under the aforementioned Master Amendment Agreement.
11. Aggrieved by the same, the Plaintiff has filed the instant suit seeking the following reliefs:
a. Declaration of the Loan Recall cum Guarantee Invocation Notice dated 17th February, 2022 issued by the defendant No. 1 as illegal and void;
b. Mandatory injunction in favour of the Plaintiff by restraining the defendant No. 1 from acting upon or taking any consequential action arising out of the aforesaid loan recall notice;
c. Mandatory injunction in favour of the Plaintiff, thereby, directing the defendant No. 1 to continue funding the FITL in favour of the Plaintiff in accordance with the terms of the Master Amendment Agreement and FITL executed inter alia between the Plaintiff and the defendant No. 1;
d. Mandatory injunction in favour of the Plaintiff directing defendant No. 1 to finalize the security and other documentation to be executed by or on behalf of the Plaintiff, to ensure implementation of the rc; and
e. Specific performance in favour of the Plaintiff and against the defendant No. 1 directing it perform its obligations under the OTR arrangement plan and ancillary agreements.

12. Pertinent to mention here that an Inter-Creditor Agreement dated 23rdDecember 2021, Master Facilities Amendment Agreement, a Trust and Retention Account Agreement and a Funded Interest Term Loan Agreement were executed between the Plaintiff and the consortium of lenders, and the same are referred to as Agreements hereinafter for the purposes of adjudication.
13. On the first date of hearing, i.e. 24th February, 2022, the Predecessor Bench of this Court issued a notice to the Yes Bank and granted an interim stay on the operation of the notice dated 17th February, 2022 on the basis of contentions advanced by the parties.
14. During the pendency of the instant suit, the lenders conducted the JLM on various occasions to discuss the future course of action. During the said JLMs, the joint lenders acknowledged the stay granted by the Predecessor Bench of this Court vide order dated 24th February, 2022.
15. One such JLM was held on 23rd January, 2023 when the lender Banks decided to take recovery action against the Plaintiff. Aggrieved by the same, the Plaintiff filed an application bearing I.A. No. 4163/2023 under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure, 1908 (CPC hereinafter) on 25th February, 2023, thereby, seeking stay on the decision taken by the joint lenders in the meeting held on 23rd January, 2023.
16. In the meantime, another application bearing I.A. No. 1747/2023 was also filed by the defendant No. 5, namely JC Flowers Assets Construction Ltd., under Order I Rule 10 of the CPC for impleadment due to alleged illegal and erroneous assignment of the Plaintiffs loan facility to them. Pursuant to completion of proceedings, the said application was also listed on 2nd March, 2023.
17. Another application bearing I.A. No.1746/2023 was filed by the defendant No. 9, namely M/s Exclusive Capital Ltd. for impleadment of the Bank of Maharashtra, Axis Bank, Punjab National Bank and itself.
18. On 2nd March, 2023, this Court heard the parties at length and passed the following order/orders:

8. The captioned suit on behalf of the Plaintiff has been filed assailing the Loan Recall cum Guarantee Invocation Notice dated 17th February 2022 issued by the defendant No. 1. The relevant portion of the Notice is reproduced hereunder:-
4. Please note that pursuant to submission of request by the Borrower on September 28, 2020, the Bank had approved One Time Restructuring (“OTR”) under the Resolution Framework for Covid-19 Related Stress (“Resolution Framework”) dated August 6, 2020 subject to Borrower meeting terms and conditions stipulated under the extant RBI guidelines. Under the OTR scheme, Bank also sanctioned fresh FITL limits amounting to ~INR 321 MM for interest servicing till Mar 2022 apart from extending repayment terms, reducing interest rate and other benefits to the Borrower.
5. However, the Borrower deviated from the Resolution Framework and kept compliances under OTR scheme pending, including but not limited to, implementation beyond 180 days of invocation, documents execution not completed within 180 days of invocation, reclassification of asset exposure as commercial real estate, pending revised independent credit evaluation rating, the Bank was constrained to declare OTR as not implemented. In view of the above, the Borrower is bound by the sanction terms of the Facility as captured in the Facility Agreements. Further, in the joint lenders meeting conducted on September 24, 2021, two lenders in the multiple banking arrangement of the Borrower i.e., Indusind Bank Limited and Axis Bank Limited confirmed that in their view OTR have not been implemented/ cannot be considered as implemented.
Pursuant to terms and conditions of the Facility Agreements, the Borrower was required to make the payment(s)/repayment(s) towards the Facility promptly on the due dates, without any delay. However, the Borrower did not honor the terms and conditions of the Facility Agreements and neglected in making payment/repayment(s), despite repeated

reminder(s) by the Bank. Accordingly, the Borrower has been classified as NPA with effect from December 20, 2020. In such circumstances, the Bank has become entitled to and does hereby recall the Facility and declare the Facility as due and payable by the Borrower to the Bank forthwith. Accordingly, we hereby call upon you, the ‘Borrower, and demand of you to pay amount to the Bank at its office at 4th Floor, Max Towers, Sector-16B, Noida, Uttar Pradesh – 201301, within 7 days of the receipt of this notice, the outstanding amount under the Facility together with interest, liquidated damages and other charges of the particulars of which are set out in the Schedule-
II hereto together with further interest and other charges thereon at the contractual rates upon the footing of interest until payment/realization.
9. The Bank hereby recalls the Facility as sanctioned/ disbursed to the Borrower and in case you, the Borrower and the Guarantors fail to make the payments as aforesaid, we shall be constrained to take such steps and measures as may be permissible under law for recovery of all the monies due and payable by you, more particularly mentioned in Schedule – II hereto, at your own risk as to the costs and consequences.
10. In the event the monies due and payable as mentioned above are not paid in full within a period of seven (7) days from the date of receipt of this notice by the Borrower and/ or the Guarantors, we shall be constrained to exercise our rights and remedies against the Borrower, the Guarantors and obligors/ security providers.
9. A perusal of the order passed by the Predecessor Bench on 24th February 2022 shows that after appreciation of the grounds raised on behalf of the Plaintiff while prima facie satisfying this Court to issue summons in the suit, the Predecessor Bench passed the interim order of restraint on the defendant No. 1 with respect to the impugned Notice dated 17th February 2022. The relevant portion of the said order is reproduced hereunder:-
50. As such, given the nature of the dispute and keeping in

mind the order passed by this Court on 6th December, 2021 in IA 16083/2021 in CS (COMM) 626/2021, the Court deems it appropriate to balance the interests by granting a temporary stay of the operation of the impugned letter dated 17th February, 2022 till 7th March, 2022 and fixing IA 3102/2022 for hearing, along with IA 16083/2021 in CS (COMM) 626/2021, on 7th March, 2022.
59. Till the next date of hearing, Defendant 1 shall remain restrained from taking any action against the Plaintiff on the basis of the impugned letter dated 17th February, 2022.
10. At this stage, the instant application has been filed on behalf of the Plaintiff whereby the holding Joint Lenders Meeting and the decision followed by the same has been sought to be stayed. The Minutes of the Meeting dated 23rd January 2023 have been brought on record and produced before this Court. A perusal of the Minutes reveal that the defendant No. 5 as well as other lenders/Banks have sought to make decisions and take actions for the account of M/s Asian Hotel (North) taking note of the fact that an interim order, qua Notice dated 17th February 2022 and any action arising therefrom, is already in operation. The relevant portion of the Minutes of the Meeting is reproduced hereunder:-
2) Discussion on the status of the account, Suit filing, OTS Status and recovery action by individual Bank BOM asked all the Lenders to inform the current status of the account with all Lenders:
· JC Flowers ARC informed that YES Bank has assigned the portfolio to them. YBL has already informed that they have issued LRM and has done pledge invocation. The company has taken stay from high Court on the ground that OTR was implemented and there was no default on the part of Borrower. Next hearing is in the end of Jan-2023.
· BOM informed that they have issued 13 (2) under SARFAESI in the said account. The same has been objected by the company.

BOM further added that they have replied to the objection raised by the company. BOM further informed that they have conveyed OTS sanction on bilateral basis to the borrower which is not accepted by the borrower as on date. BOM further added that they will go for recovery action and will proceed for all option available i.e. PIRP/CIRP/IBC/DRT.
xxxxx
· Axis Bank informed that they recalled the loan and have proceeded for recovery action. They have already invoked personal guarantee (not as per Sec-95 of IBC). Axis Bank further added that they will go ahead with BOM for filling of NCLT. He further added any kind of settlement will be looked only after finalization of forensic audit.
xxxxx
5) Discussion on Progress of Forensic Audit
BOM informed to all the Lenders that the Forensic audit has been initiated and a list of required documents is already shared to all the Lenders and the borrower for onward submission. BOM further added that the Forensic audit is in initial stages only and will go simultaneously with OTS or recovery action….
BOM requested all the lenders to provide the documents as required by the auditor.
Axis bank further added that both recovery action and forensic audit will go hand in hand….
xxxxx
7) Discussion on future course of recovery action- PIRP/CIRP/DRT/NCLT
JC flowers ARC enquired BOM about the recovery action initiated by them. BOM replied that as the company has offered OTS offer to all the Lenders and out Bank has also convey OTS sanction to them, which is not yet accepted by the company. Hence they are looking for all the course of recovery action. BOM will proceed for all the option available i.e. PIRP/CIRP/IBC/DRT. BOM further informed to all the Lenders that nay lender can join them for joint recovery action or otherwise they will go individually.

All the Lenders except DBS an ECL supported BOM and will be jointly go for recovery action.
xxxxx
9) Discussion on the Performance of the Company. Performance of the company was discussed with the Lender. The company officials informed that nine month revenue is Rs.
184.09 crore approx. as compared to previous year 9 month sale Rs. 97.85 crore. Revenue for the quarter is Rs, 70.50 crore. The company also informed that the EBITA as on 31.12.2022 is around 21%.
BOM enquired company officials why there is decline in the cash flows for the Dec-22 and Jan-23 months. The Company officials informed that maximum revenue comes from corporate bookings. But from 15.12.2022 to 15.01.2023, there is minimal corporate bookings as due to New Year Eve and Christmas all over the world. Even the weddings are minimal due to some religious issues. Hence the sale declines. Lenders asked the company officials to inform the estimated revenue for this FY. Company informed that it will be around Rs. 250.00 crore.
11. A conjoint reading of the order dated 24th February 2022 and the aforementioned paragraphs of the Minutes of the Meeting dated 23rd January 2023 reveal that the action that has been taken on behalf of the defendant No. 5 and the other lenders is in the teeth of the interim order passed by this Court. The lenders/Banks have either initiated or have decided to initiate recovery action against the Plaintiff despite clear directions from this Court restraining the defendant No. 1 Bank to take any action in furtherance of Notice dated 17th February 2022. Hence, at this stage, this Court is inclined to issue notice of the application to the defendants.
12. Since learned counsel for the defendants No. 1 and 5 and learned counsel for defendants No. 2, 3 and 4 appear on advance notice, there is no need for issuing a formal notice of the application. The learned counsel

appearing on behalf of the defendants vehemently opposed the instant application and prayed for some time to file reply/objection to the application. Let the same be filed within two weeks.
13. List on 29th March, 2023.
14. Since a prima facie case is made out on behalf of the Plaintiff, all defendants are directed to restrain from taking any action in pursuance of the Minutes of the Meeting dated 23rd January 2023, till the next date of hearing.
I.A. 1754/2023 (u/O-XXXIX R-1 & 2 of CPC)
1. The instant application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 has been filed on behalf of applicant/Plaintiff seeking the following reliefs:-
“a. Stay the operation and effect of the Communication dated 30.12.2022 issued by Defendant No. 1 and any assignment of the loan facility extended to the Plaintiff by the Defendant No. 1; and

b. Restrain Defendant No. 1 from in any manner acting upon or implementing any assignment of the credit facilities extended to the Plaintiff by Defendant No. 1…”
2. Heard.
3. On the last date of hearing, i.e., 30th January 2023, this Court heard the applicant at length on the instant application, upon being prima facie satisfied, issued notice to the non-applicants. At this stage, since JC Flowers has been impleaded as defendant No. 5, it is pertinent to make clear that the order passed by this Court on 24th February 2022 shall be extended to the said party.

4. Learned counsel appearing on behalf of defendants No. 1 to 4 and learned counsel appearing on advance notice for defendant No. 5 pray for and are granted two weeks’ time to file reply/objection to the application.
5. List on 29th March, 2023.
6. All parties are directed to comply with the order dated 24th February, 2022 passed by the Predecessor Bench. Interim Order passed in the said order, to continue, till the next date of hearing.
xxx xxxxxx
I.A. No.1746/2023 (u/O I Rule 10 CPC by proposed defendant ExclusiveCapital Limited) in CS (COMM) 128/2022
Argument heard. Orders reserved

19. Upon perusal of the above reproduced extracts, it is made out that this Court had reserved the judgment in application bearing I.A. No.1746/2023 filed for impleadment of M/S Exclusive Capital Ltd., Bank of Maharashtra, Axis Bank and Punjab National Bank.
20. In the application bearing I.A. No. 1747/2023, vide the judgement dated 2nd March, 2023 this Court had allowed the prayer for impleadment of defendant No. 5 in place of the Yes Bank as the credit facility extended by the Yes Bank was taken over by the defendant No. 5.
21. In other application, i.e. I.A. No. 4163/2023, vide the above said judgement this Court had referred to the order dated 24th February, 2022 passed by the Predecessor Bench and therefore, held that the action as decided in the minutes of meeting dated 23rd January, 2023 was in teeth of the stay granted by the Predecessor Bench and therefore, need to be kept in abeyance as the said action, if taken, would be contrary to the order dated 24th February, 2022 passed by the Predecessor Bench.
22. On 3rd March, 2023, this Court pronounced the judgment on the reserved application, i.e. I.A. No. 1746/2023 and held that the M/S Exclusive Capital Ltd., Bank of Maharashtra, Axis Bank and Punjab National Bank were necessary and proper parties to the suit and therefore, their names as parties to the same needs to be duly impleaded in the suit. Furthermore, vide the said judgment, this Court also extended the stay granted by the Predecessor Bench vide order dated 24th February, 2022.
23. Thereafter, the parties to the suit filed multiple applications and the same are pending for adjudication before this Court.
24. Before delving into the submissions advanced by the respective counsel for the various parties, this Court deems it important to reiterate the position of parties as per the amended memo of parties. The following table depicts the same:
1. ASIAN HOTELS (NORTH) LTD.
THROUGH: AUTHORIZED REPRESENTATIVE
HYATT REGENCY HOTEL
BHIKAJI CAMA PLACE,
M.G. MARG, R.K. PURAM, NEW DELHI – 110066
PH. NO.: 8178211302
EMAIL:law@ahlnorth.com ..PLAINTIFF
VERSUS
1. YES BANK LTD.
48, NYAYA MARG,
CHANAKYAPURI, NEW DELHI 110021
PHONE No.: 30259000
EMAIL: communications@yesbank.in, yestouch@yesbank.in

A/so At
Max Towers
Level 4
Section 16 B, Noida
UP-201301 …DEFENDANT NO. 1

2. ASIAN HOLDING PVT. LTD.
THROUGH: AUTHORIZED REPRESENTATIVE
HYATT REGENCY HOTEL
C/O BHIKAJI CAMA PLACE,
M.G. MARG, R.K. PURAM, NEW DELHI – 110066
PH. NO.: 9810058391
EMAIL: info.asianholding@gmail.com …DEFENDANT NO.2

3. MR. SHIV KUMAR JATIA
DIRECTOR OF ASJAN HOLDING PVT. LTD.
HYATT REGENCY HOTEL
BHIKAJI CAMA PLACE,
M.G. MARG, R.K. PURAM, NEW DELHI -110066
PH. NO.: 9810058391
EMAIL: info.asianholding@gmail.com …DEFENDANT NO.3

4. MR. AMRITESH JATIA
DIRECTOR OF ASIAN HOLDING PVT. LTD.
HYATT REGENCY HOTEL
BHIKAJI CAMA PLACE,
M.G. MARG, R.K. PURAM, NEW DELHI – 110066
PH. NO.; 8178211302
EMAIL: amritesh.jatia@ahlnorth.com …DEFENDANT NO.4

5. J.C. FLOWER ASSET RECONSTRUCTION PRIVATE LIMITED
THROUGH MANAGING DIRECTOR
2nd Floor, Crompton Greaves House,
Dr. Annie Besant Road, Worli,
Mumbai-400030
Email: teamjcfarc@jcfarc.com
Phone: +91 7042944775 … DEFENDANT NO.5

6. BANK OF MAHARASHTRA
THROUGH; AUTHORISED REPRESENTATIVE
‘Lokmangal’, 1501, Shivajinagar,
Rune -411005
Also at:
B-29, Connaught Place,
New Delhi -110001
Email: bom343@mahabank.co.in; brmgr343@mahabank.co.in
Phone: +91 9867978412: +91 9871911138
…DEFENDANT NO. 6

7. PUNJAB NATIONAL BANK
THROUGH: AUTHORISED REPRESENTATIVE
Plot No. 4, Sector-10 Dwarka
New Delhi – 110075
Also at:
Zonal Sastra Centre – Delhi
1ST Floor, 7, BhikajiCama Place
New Delhi – 110066
Email: zs843@pnb.co.in
Phone: +91 8920441410 : +91 8100017032 .DEFENDANT NO. 7

8. AXIS BANK LIMITED
THROUGH: AUTHORISED REPRESENTATIVE
“Trishul”, 3rd Floor, Opp.
Samartheswar Temple, Near Law
Garden, Ellisbridge,
Ahmedabad – 386006
Also at:
Bombay Dyeing Mills Compound,
Pandurang Budhkar Marg Worli,
Mumbai -400025
Also at:
Axis Bank, 4thFloor,
Tower 2, Axis House
.Jaypee Wish Town,
Sector 128, Noida-201304
Uttar Pradesh
Email – subhodip.mukheriee@axisbank.com;
chittaranjan.tripathy@axisbank.com ;
Phone: +91 8130891183 …DEFENDANT NO. 8

9. EXCLUSIVE CAPITAL LIMITED
THROUGH AUTHORISED REPRESENTATIVE
7/17, L.G.F., Near Hauz Khas Metro Station,
SarvpriyaVihar, New Delhi – 110016
Email: bd@exciusivecapital.in
Phone: 9821122312 …DEFENDANT NO. 9

25. In the last few hearings, this Court heard the contentions of the learned counsel for the parties on the respective applications filed by them. Following are the details of the said applications.

S. No.
I.A. No.
Provision of law
Filed by
1.
10671/2023
Order VI Rule 17 of the CPC
Plaintiff
2.
8068/2023
Order VII Rule 11 of the CPC
Defendant No. 7
3.
9173/2023
Order XXXIX Rule 4 of the CPC
Defendant No. 7
4.
2858/2024
Order XXXIXRule 4 of the CPC
Defendant No. 6

26. Pursuant to conclusion of the hearings, this Court reserved the above mentioned applications vide order dated 9th May, 2024.
27. Since the learned senior counsel along with other learned counsel for the respective parties advanced arguments for the individual applications, this Court deems it appropriate to deal with the respective applications chronologically.
28. Mr. Vikram Nankani, learned senior counsel appearing on behalf of the Plaintiff started his submissions and at the outset, he submitted that the application bearing I.A. No. 10671/2023 has been filed for amendment of the Plaint under Order VI Rule 17 of the CPC and the same may be heard before adjudication of the application filed for rejection of the Plaint under Order VII Rule 11 of the CPC.
29. The learned senior counsel submitted that the settled position of law requires the Courts to adjudicate the application filed for amendment of Plaint before adjudication of an application filed for rejection of the Plaint. Reliance has been placed upon the judgment of the Division Bench of this Court in Anita Kumari Gupta v. Late Ved Bhushan.1
30. Pursuant to the above said submission made by the learned senior counsel for the Plaintiff, Mr. Makkar, the learned senior counsel appearing for the defendant No. 6 and Mr. Rattan, learned counsel for the defendant No. 7conceded to the same and therefore, this Court is first adjudicating the application filed by the Plaintiff/applicant under Order VI Rule 17 of the CPC seeking amendment of the Plaint.
I.A. No. 10671/2023 (seeking amendment of the Plaint under Order VI Rule 17 of the CPC)
31. As mentioned in the preceding paragraphs, the aforementioned application has been filed by the applicant/Plaintiff i.e. M/s Asian Hotels (North) Ltd. under Order VI Rule 17 of the CPC seeking amendment of its Plaint.
32. The foregoing discussions already makes it clear that vide order dated 3rd March, 2023, the lender Banks namely M/S Exclusive Capital Ltd., Bank of Maharashtra, Axis Bank and Punjab National Bank were impleaded by this Court as parties to the instant suit upon an application filed by one of the lenders, i.e. the defendant No. 9.
33. As a general rule under the civil procedural law, the Plaintiff is provided the opportunity to amend the Plaint, if the same cause of action extends to the newly impleaded party. Further, since the instant suit is at the pre-trial stage and the written statements have not yet been filed by the defendants, this Court is of the view that no prejudice will be caused to the defendants if the instant application is adjudicated prior to other pending applications.
SUBMISSIONS
(On behalf of applicant/Plaintiff)
34. Mr. Vikram Nankani, learned senior counsel appearing on behalf of the applicant submitted that the Plaintiff/applicant availed loan and other credit facilities from various banks and in order to take benefit of the aforementioned Resolution Framework proposed under the RBI circular dated 6th August, 2020, the lenders of the Plaintiff formed a consortium. Thereafter, in furtherance of the OTR scheme, a Master Amendment Agreement, a TRA agreement and a FITL agreement were also executed between the Plaintiff and the consortium of lenders.
35. It is submitted that all the lenders duly acted upon the OTR scheme and the OTR agreements which included the moratorium period, creating the FITL account and regularly funding it on behalf of the Plaintiff. During the moratorium period, on 17th February, 2022, the defendant No. 1 Yes Bank issued a loan recall notice (YBL Recall Notice hereinafter) on the basis that Agreements executed between the parties had not been implemented due to the defaults allegedly committed on behalf of the Plaintiff, and the defendant No. 1 resiled from its obligations under the OTR agreements.
36. It is submitted that the Plaintiff assailed the said actions of Yes Bank in the captioned suit wherein it seeks inter alia implementation and specific performance of the Agreements amongst the Plaintiff and its lenders, i.e., defendants No. 1, 5 to 9.
37. It is submitted that during the pendency of the captioned suit, the aforesaid defendants also resiled from their admitted position under the Agreements, therefore, disputing the implementation of the same and sought to take coercive legal actions against the Plaintiff, including recovery proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act hereinafter) which was stayed by the Predecessor Bench of this Court vide order dated 24th February, 2022.
38. It is submitted that as evident from the Minutes of the JLM held on 14th March, 2022, 14th November, 2022 and 12th December, 2022, the defendant Banks were aware of the stay and despite the same they decided to take actions including issuance of loan recall notices, declaration of the Plaintiff/s account as non-performing asset (NPA hereinafter) and invocation of securities/guarantees.
39. Learned senior counsel appearing on behalf of the applicant/Plaintiff further submitted that in furtherance of the aforementioned actions taken against the Plaintiff, during the JLM held on 23rd January, 2023, the lenders also resolved to take over the possession of the immovable assets of the Plaintiff.
40. It is submitted that aggrieved by these coercive actions and decisions, the Plaintiff filed an application bearing I.A. No. 4163/2023 praying for stay on the operation of such decisions taken in the JLM by the defendants which was allowed by this Court vide order dated 2nd March, 2023.
41. Therefore, the learned counsel appearing on behalf of the applicant/Plaintiff submitted that in view of the above said subsequent developments qua the Agreements entered into by the parties herein, the amendment in the Plaint has become imperative to determine the real question in controversy between the parties and for proper adjudication of the suit, and since the suit is at the pre-trial stage and the written statements have not yet been filed by the defendants, no prejudice will be caused to them if the instant application is allowed and the amended Plaint is taken on record.
(On behalf of the defendant No. 7/Punjab National Bank)
42. Per Contra, Mr. Rattan, learned counsel appearing on behalf of the defendant No. 7 vehemently opposed the instant application under Order VI Rule 17 of the CPC submitting to the effect that the entire suit is misconceived as the Agreements so executed were not signed by all the parties and same were never implemented.
43. It is submitted that the defendant No. 7 had issued a demand notice dated 26th July, 2022 under Section 13(2) of the SARFAESI Act to the Plaintiff and its guarantors as the loans taken by the Plaintiff were classified as NPA on 2nd May, 2022. It is also submitted that the Plaintiff had duly replied to the above said notice vide letters dated 20th September, 2022 and 4th October, 2022 and had raised objections under Section 13(3A) of the SARFAESI Act.
44. It is submitted that the impleadment application bearing I.A. No. 1746/2023, filed by the defendant No.9 for impleadment of the members of the consortium of lenders, was not authorized to be filed by the defendant No. 7 and therefore, the defendant No.7 was impleaded in the suit by this Court without hearing its arguments.
45. It is submitted that since the defendant Bank have already filed applications for dismissal of the suit on the grounds of non-maintainability, the application seeking amendment of the Plaint is nothing but a gross misuse of the process of law and the same also deserves to be dismissed by this Court.
46. It is submitted that the defendant No. 7 has exercised its legal right to declare the account of Plaintiff as an NPA and therefore, the issuance of demand notice was in accordance with the law.
47. It is further submitted that the Civil Courts do not have jurisdiction to scrutinize the actions of Banks under SARFAESI Act and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act hereinafter), and therefore, this Court cannot restrain the defendant No.7 to exercise the rights provided under the aforesaid special legislations.
48. Therefore, in view of the foregoing submissions, the learned counsel for the defendant No.7 submitted that the instant application may be dismissed.
(On behalf of defendant No. 6/Bank of Maharashtra)
49. Per Contra, Mr. Sudhir Makkar, learned senior counsel appearing on behalf of the defendant No. 6 also opposed the instant application submitting to the effect that the captioned suit was filed by the Plaintiff against the Yes Bank and the defendant No. 6 was impleaded as party to the suit by allowing the application bearing I.A. No.1746/2023 filed by the defendant No.9/ M/S Exclusive Capital Ltd. It is submitted that in the said application, the instant defendant was neither given a notice, nor an opportunity to present its arguments.
50. It is submitted that the instant application has been filed by the Plaintiff to introduce new cause of actions based on new facts against the newly impleaded defendants which are based on an independent cause of action and not anywhere related to the party against which the original suit was filed.
51. It is submitted that the present amendment application has been filed to create confusion among the set of facts even though it is evident that the said application does not seek to determine the real question in controversy.
52. It is submitted that the captioned suit is barred in view of the provisions of Section 34 of the SARFAESI Act and the remedy available against the actions taken by the defendant Banks can only be determined by the Debt Recovery Tribunal (DRT hereinafter), therefore, this Court is not the appropriate forum for adjudication of the dispute between the parties.
53. It is also submitted that the instant application has been filed by the Plaintiff to incorporate new facts against the newly impleaded parties that has no connection to the original impugned actions, therefore, the present application is impermissible in law as it seeks to change the very nature and character of the suit.
54. It is further submitted that an application bearing I.A. No. 7982/2023, filed for deletion of the defendant No.6 from array of the parties, has been pending before this Court and the Plaintiff has cleverly prayed to cure the defects as demonstrated in the said application by filing the instant application.
55. Therefore, in view of the foregoing submissions, Mr. Makkar prayed that the present application may be dismissed with heavy costs.
56. Pursuant to completion of the submissions by the learned senior counsel, Mr. Nishant Awana, learned counsel appearing on behalf of the defendant No.8/Axis Bank & defendant No. 6 apprised this Court that the submissions advanced by the learned senior counsel may be considered as the submissions advanced for the defendant No. 8, i.e., Axis Bank as well.
57. A perusal of the reply filed by the defendant No.8 in the instant application depicts that the defendant No.8 has taken identical grounds as taken by the defendant No.6 and argued in detail by the learned senior counsel. Therefore, for brevity, this Court deems it appropriate to not reproduce the same.

(Rejoinder by the applicant/Plaintiff)
58. Mr. Vikram Nankani, learned senior counsel began his submissions by denying the allegations levelled by Mr. Sudhir Makkar, learned senior counsel for the defendant No. 8 and submitted that the averments regarding the maintainability of the captioned suit are misconceived as there is no material change in the nature of suit and the amendment sought by way of filing the instant application concerns only the contractual dispute between the parties.
59. It is submitted that the Plaintiff had already made a prima facie case that the Agreements have been implemented and acted upon by the defendant Banks, and there is no default on part of the Plaintiff, and on being satisfied on both the parameters, the Predecessor Bench of this Court had granted the stay on the operation of the recall notice dated 17th February, 2022 vide order dated 24th February, 2022.
60. It is submitted that pursuant to filing of the captioned suit, certain developments occurred which are directly related to the issues pending before this Court, therefore, amendment in the original Plaint is sought by the Plaintiff as the same is necessary for proper adjudication.
61. It is submitted that the amendments sought in the suit are in line with the existing nature of the suit and imperative to determine the real controversy regarding the Agreements executed among the Plaintiff and defendant Banks.
62. It is submitted that the defendant No. 7 had acted upon the OTR scheme Master Amendment Agreement, TRA agreement and FITL agreement, and the same is evident from the FITL mechanism created by the defendant No.7. Furthermore, the said position was expressly admitted by the defendant No. 7 during the JLM held on 14th March, 2022.
63. It is submitted that despite acting upon the Agreements, the defendant No.7 undertook actions which are in violation of the OTR scheme and the Agreements executed in pursuance thereof.
64. It is also submitted that the dispute in the instant suit is regarding the obligation of the parties under various agreements executed among them and therefore, this Court is well within its jurisdiction to adjudicate the same.
65. The learned senior counsel further submitted that the objections, if any, regarding the jurisdiction can be raised at an appropriate stage and the reply to the amendment application is not the appropriate stage for raising such objections.
66. It is submitted that the other arguments, i.e., the alleged non-implementation of the Agreements falls into the category of objections concerning the merits and as per the settled position of law, the correctness or falsity of the amendment sought is not relevant for deciding the application filed under Order VI Rule 17 of the CPC.
67. On the allegation of Plaintiffs negligence in non-implementation of the OTR scheme and the Agreements, the learned senior counsel submitted that it was failure on part of the lender Banks to ensure effective action to implement the agreement and the defendant Banks had a duty towards the Plaintiff to ensure the same, however, they failed to do so, and instead issued notices for recovery of the loans.
68. In view of the foregoing submissions, the learned senior counsel submitted that the arguments taken by the learned counsel for the defendant Banks do not hold weight and therefore, the instant application may be allowed and amended Plaint may be taken on record accordingly.
ANALYSIS AND FINDINGS
69. Heard learned senior counsel for the parties and counsel appearing on behalf of the defendant No. 7 & 9, and perused the contents made in the application as well as in other pleadings filed by the respective parties.
70. The defendant Banks have objected to the instant amendment application on the grounds that firstly, the said amendment changed the nature of the suit, secondly, the amendments are based on new cause of action and thirdly, the said amendments are barred by law under Sections 34 and 35 of SARFAESI Act. Before delving into the issue, it is important for this Court to discuss the scheme of the Order 6 Rule 17 of the CPC, under which the present application has been filed.
71. The said provision reads as under:
Order 6 Rule 17. Amendment of pleadings.The Court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties: Provided that no application for amendment shall be allowed after the trial has commenced, unless the Court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial.

72. The plain reading of the above provision states that the Courts are empowered to amend the pleadings at any stage of the proceedings if an application under the said provision is filed by the Plaintiff. The latter part of the provision also clarifies that once the trial commences, no amendment would ordinarily be allowed, except in the cases where the Court finds it necessary, on subsequent events, such as change in factual circumstances, which could not have been discovered at an initial stage even after proper due diligence.
73. The said provision empowers the Plaintiff to amend its own pleadings where such amendment may not change the character of a suit and no prejudice or harm is inflicted upon the opposite party.
74. As per the settled position of law, a bonafide amendment application is vital for the adjudication of real questions in dispute and therefore, should be allowed without taking into account the negligence on part of the Plaintiff.
75. The scope of allowing the amendment under the above said provision has been discussed by the Honble Supreme Court in a catena of judgments, whereby, the Honble Court affirmed the idea of liberal interpretation of an application filed under Order VI Rule 17 of the CPC.
76. In Rajesh Kumar Aggarwal v. K.K. Modi,2 the Honble Supreme Court discussed the aforesaid principle in the following manner:
14. Order 6 Rule 17 CPC reads thus:
17. Amendment of pleadings.The court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties:
Provided that no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial.
This rule declares that the court may, at any stage of the proceedings, allow either party to alter or amend his pleadings in such a manner and on such terms as may be just. It also states that such amendments should be necessary for the purpose of determining the real question in controversy between the parties. The proviso enacts that no application for amendment should be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter for which amendment is sought before the commencement of the trial.
15. The object of the rule is that the courts should try the merits of the case that come before them and should, consequently, allow all amendments that may be necessary for determining the real question in controversy between the parties provided it does not cause injustice or prejudice to the other side.
16. Order 6 Rule 17 consists of two parts. Whereas the first part is discretionary (may) and leaves it to the court to order amendment of pleading. The second part is imperative (shall) and enjoins the court to allow all amendments which are necessary for the purpose of determining the real question in controversy between the parties.
17. In our view, since the cause of action arose during the pendency of the suit, proposed amendment ought to have been granted because the basic structure of the suit has not changed and that there was merely change in the nature of relief claimed. We fail to understand if it is permissible for the appellants to file an independent suit, why the same relief which could be prayed for in the new suit cannot be permitted to be incorporated in the pending suit.
18. As discussed above, the real controversy test is the basic or cardinal test and it is the primary duty of the court to decide whether such an amendment is necessary to decide the real dispute between the parties. If it is, the amendment will be allowed; if it is not, the amendment will be refused. On the contrary, the learned Judges of the High Court without deciding whether such an amendment is necessary have expressed certain opinions and entered into a discussion on merits of the amendment. In cases like this, the court should also take notice of subsequent events in order to shorten the litigation, to preserve and safeguard the rights of both parties and to subserve the ends of justice. It is settled by a catena of decisions of this Court that the rule of amendment is essentially a rule of justice, equity and good conscience and the power of amendment should be exercised in the larger interest of doing full and complete justice to the parties before the court.
19. While considering whether an application for amendment should or should not be allowed, the court should not go into the correctness or falsity of the case in the amendment. Likewise, it should not record a finding on the merits of the amendment and the merits of the amendment sought to be incorporated by way of amendment are not to be adjudged at the stage of allowing the prayer for amendment. This cardinal principle has not been followed by the High Court in the instant case.
20. We shall now consider the proposed amendment and to see whether it introduces a totally different, new and inconsistent case as observed by the Hon’ble Judges of the Division Bench and as to whether the application does not appear to have been made in good faith. We have already noticed the prayer in the Plaint and the application for amendment. In our view, the amendment sought was necessary for the purpose of determining the real controversy between the parties as the beneficiaries of the Trust. It was alleged that Respondent 1 is not only in exclusive possession of 57, 942 shares of GPI and the dividend received on the said shares but has also been and is still exercising voting rights with regard to these shares and that he has used the Trust to strengthen his control over GPI. Therefore, the proposed amendment was sought in the interest of the beneficiaries and to sell the shares and have the proceeds invested in government bonds and/or securities. A reading of the entire Plaint and the prayer made thereunder and the proposed amendment would go to show that there was no question of any inconsistency with the case originally made out in the Plaint. The court always gives leave to amend the pleadings of a party unless it is satisfied that the party applying was acting mala fide. There is a plethora of precedents pertaining to the grant or refusal of permission for amendment of pleadings. The various decisions rendered by this Court and the proposition laid down therein are widely known. This Court has consistently held that the amendment to pleading should be liberally allowed since procedural obstacles ought not to impede the dispensation of justice. The amendments sought for by the appellants have become necessary in view of the facts that the appellants being the beneficiaries of the Trust are not deriving any benefit from the creation of the Trust since 1991-92 and that if the shares are sold and then invested in government bonds/securities the investment would yield a minimum return of 10-12%. It was alleged by the appellants that Respondent 1 is opposing the sale in view of the fact that if the said shares are sold after the suit is decreed in favour of the appellants, he will be the loser and, therefore, it is solely on account of the attitude on the part of Respondent 1 that the appellants have been constrained to seek relief against the same.
21. We shall now consider the argument of the learned Senior Counsel for the respondent on Sections 60 and 61 of the Trusts Act. It was submitted by the appellants that since Respondent 1 did not act in a bona fide manner as a result of which the appellants were compelled to file the suit before the High Court in the capacity of the beneficiaries of the Trust and that the amended Plaint is not alien and extraneous to the ambit and purview of Sections 60 and 61 of the Trusts Act.
22. We shall now consider the judgments cited by learned Senior Counsel for the appellants:
1. Ganesh Trading Co. v. Moji Ram [(1978) 2 SCC 91]
This Court held that the main rules of pleadings in Order 6 CPC, 1908, show that the provision for the amendment of pleadings subject to such terms as to costs and giving to all parties concerned necessary opportunities to meet exact situations resulting from any amendment, are intended for promoting the ends of justice and not for defeating them. This Court further held that the amendment only sought to give notice to the defendant on facts which the Plaintiff would and could have tried to prove in any case. Such notice was given only by way of abundant caution so that no technical objection can be taken that what was sought to be proved was outside the pleadings.
2. Jai Jai Ram Manohar Lal v. National Building Material Supply [(1969) 1 SCC 869 : AIR 1969 SC 1267]
It was held that a party cannot be refused just relief merely because of some mistake, negligence, inadvertence or even infraction of the rules of procedure. The court always gives leave to amend the pleading of a party, unless it is satisfied that the party applying was acting mala fide, or that by his blunder he had caused injury to his opponent which may not be compensated for by an order of costs. However negligent or careless may have been the first omission and however late the proposed amendment, the amendment may be allowed if it can be made without injustice to the other side.
3. Ragu Thilak D. John v. S. Rayappan [(2001) 2 SCC 472]
Sethi, J. speaking for the Bench has observed that the amendment sought would change the nature of the suit originally filed was not a reason for refusing application for amendment and that the dominant purpose of Order 6 Rule 17 was to minimise litigation and that the plea that the relief sought for by way of amendment was barred by time is arguable in the circumstances of the case. This Court further observed in para 5 as under: (SCC p. 473)
5. After referring to the judgments in Charan Das v. Amir Khan [(1920) 47 IA 255 : AIR 1921 PC 50] , L.J. Leach & Co. Ltd. v. Jardine Skinner & Co. [1957 SCR 438 : AIR 1957 SC 357] , Ganga Bai v. Vijay Kumar [(1974) 2 SCC 393] , Ganesh Trading Co. v. Moji Ram [(1978) 2 SCC 91] and various other authorities, this Court in B.K. Narayana Pillai v. Parameswaran Pillai [(2000) 1 SCC 712] held: (SCC p. 715, para 3)
3. The purpose and object of Order 6 Rule 17 CPC is to allow either party to alter or amend his pleadings in such manner and on such terms as may be just. The power to allow the amendment is wide and can be exercised at any stage of the proceedings in the interests of justice on the basis of guidelines laid down by various High Courts and this Court. It is true that the amendment cannot be claimed as a matter of right and under all circumstances. But it is equally true that the courts while deciding such prayers should not adopt a hypertechnical approach. Liberal approach should be the general rule particularly in cases where the other side can be compensated with the costs. Technicalities of law should not be permitted to hamper the courts in the administration of justice between the parties. Amendments are allowed in the pleadings to avoid uncalled for multiplicity of litigation.
23. We shall now consider the judgments relied on by Mr Ganesh, learned Senior Counsel for the respondent.
1. K.K. Modi v. K.N. Modi [(1998) 3 SCC 573]
This civil appeal was filed by K.K. Modi against K.N. Modi and others and this judgment was relied on by Mr Ganesh to show that the parties are litigating before different forums and that the directions issued by this Court pending final disposal of the suit in the Delhi High Court.
2. Kanda v. Waghu [(1949) 77 IA 15 : AIR 1950 PC 68]
The Privy Council, in the above case, has observed as under: (IA pp. 21-22)
The powers of amendment must be exercised in accordance with legal principles. An amendment which involves the setting up of a new case and alters the real matter in controversy between the parties cannot be allowed. (AIR p. 68)
3. Kumaraswami Gounder v. D.R. NanjappaGounder [AIR 1978 Mad 285 (FB)]
Likewise, the above case was cited in regard to the permissibility of amendment by introducing a new cause of action. This Full Bench decision of the Madras High Court was cited for the proposition that when the amendment sought for sets up a totally different cause of action which ex facie cannot stand in line with the original pleading, the courts cannot allow such application for amendment and that a pleading could only be amended if it is to substantiate, elucidate and expand the pre-existing facts already contained in the original pleadings; but under the guise of an amendment a new cause and a case cannot be substituted and the courts cannot be asked to adjudicate the alternative case instead of the original case.

77. The position of law regarding powers granted to the Civil Courts for amendment of a Plaint was again discussed by the Honble Supreme Court in J. Samuel v. Gattu Mahesh, 3 where the Honble Court discussed the situations in which an application seeking amendment can be rejected. The relevant part of the said judgment reads as under:
11. Before considering the acceptability or otherwise of the reasoning of the High Court, it is useful to refer to Order 6 Rule 17 CPC:
17.Amendment of pleadings.The court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties:
Provided that no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial.
The said provision was omitted by the Civil Procedure Code (Amendment) Act, 1999.
12. Section 16 of the Amendment Act reads as under:
16.Amendment of Order 6.In the First Schedule, in Order 6,
(i)-(ii)***
(iii) Rules 17 and 18 shall be omitted.
13. After stiff resistance by the litigants and the members of the Bar, again Order 6 Rule 17 was reintroduced with proviso appended therein. As per the said proviso, no application for amendment shall be allowed after the trial has commenced. However, there is an exception to the said Rule i.e. if the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of the trial, such application for amendment may be allowed.
14. Before proceeding further, it is also useful to refer to Section 16(c) of the Specific Relief Act which reads as under:
16. Personal bars to relief.Specific performance of a contract cannot be enforced in favour of a person
(a)-(b)***
(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.
Explanation.For the purposes of clause (c),
(i) where a contract involves the payment of money, it is not essential for the Plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the Plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.
It is clear that in a suit for specific performance of a contract, unless there is a specific averment that he has performed or has always been ready and willing to perform the essential terms of the contract, the suit filed by him is liable to be dismissed. In other words, in the absence of the abovesaid claim that he is always ready and willing to perform his part of the contract, the decree for specific performance cannot be granted by the court.
15. In this legal background, we have to once again recapitulate the factual details. In the case on hand, Suit OS No. 9 of 2004 after prolonged trial came to an end in September 2010. The application for amendment under Order 6 Rule 17 CPC was filed on 24-9-2010, that is, after the arguments were concluded on 22-9-2010 and the matter was posted for judgment on 4-10-2010. We have already mentioned that Section 16(c) of the Specific Relief Act contemplates that specific averments have to be made in the Plaint that he has performed and has always been willing to perform the essential terms of the Act (sic contract) which have to be performed by him. This is an essential ingredient of Section 16(c) and the form prescribes for the due performance. The proviso inserted in Rule 17 clearly states that no amendment shall be allowed after the trial has commenced except when the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of the trial.
16. As stated earlier, in the present case, the amendment application itself was filed only on 24-9-2010 after the arguments were completed and the matter was posted for judgment on 4-10-2010. On proper interpretation of the proviso to Rule 17 of Order 6, the party has to satisfy the court that it could not have discovered that ground which was pleaded by amendment, in spite of due diligence. No doubt, Rule 17 confers power on the court to amend the pleadings at any stage of the proceedings. However, the proviso restricts that power once the trial has commenced. Unless the court satisfies (sic itself) that there is a reasonable cause for allowing the amendment, normally the court has to reject such a request.
17. An argument was advanced that since in the legal notice sent before the filing of the suit, there is reference to readiness and willingness and the Plaintiff has also led in evidence, nothing precluded the court from entertaining the said application which we are unable to accept in the light of Section 16(c) of the Specific Relief Act as well as proviso to Order 6 Rule 17. The only reason stated so in the form of an affidavit is omission by type mistake. Admittedly, it is not an omission to mention a word or an arithmetical number. The omission is with reference to specific plea which is mandated in terms of Section 16(c) of the Specific Relief Act.
18. The primary aim of the court is to try the case on its merits and ensure that the rule of justice prevails. For this the need is for the true facts of the case to be placed before the court so that the court has access to all the relevant information in coming to its decision. Therefore, at times it is required to permit parties to amend their Plaints. The court’s discretion to grant permission for a party to amend his pleading lies on two conditions, firstly, no injustice must be done to the other side and secondly, the amendment must be necessary for the purpose of determining the real question in controversy between the parties. However, to balance the interests of the parties in pursuit of doing justice, the proviso has been added which clearly states that:
no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial.
19. Due diligence is the idea that reasonable investigation is necessary before certain kinds of relief are requested. Duly diligent efforts are a requirement for a party seeking to use the adjudicatory mechanism to attain an anticipated relief. An advocate representing someone must engage in due diligence to determine that the representations made are factually accurate and sufficient. The term due diligence is specifically used in the Code so as to provide a test for determining whether to exercise the discretion in situations of requested amendment after the commencement of trial.
20. A party requesting a relief stemming out of a claim is required to exercise due diligence and it is a requirement which cannot be dispensed with. The term due diligence determines the scope of a party’s constructive knowledge, claim and is very critical to the outcome of the suit.
21. In the given facts, there is a clear lack of due diligence and the mistake committed certainly does not come within the preview of a typographical error. The term typographical error is defined as a mistake made in the printed/typed material during a printing/typing process. The term includes errors due to mechanical failure or slips of the hand or finger, but usually excludes errors of ignorance. Therefore, the act of neglecting to perform an action which one has an obligation to do cannot be called as a typographical error. As a consequence the plea of typographical error cannot be entertained in this regard since the situation is of lack of due diligence wherein such amendment is impliedly barred under the Code.
23. Though the counsel for the appellants have cited many decisions, on perusal, we are of the view that some of those cases have been decided prior to the insertion of Order 6 Rule 17 with proviso or on the peculiar facts of that case. This Court in various decisions upheld the power that in deserving cases, the Court can allow delayed amendment by compensating the other side by awarding costs. The entire object of the amendment to Order 6 Rule 17 as introduced in 2002 is to stall filing of application for amending a pleading subsequent to the commencement of trial, to avoid surprises and that the parties had sufficient knowledge of other’s case. It also helps checking the delays in filing the applications. [Vide AniglaseYohannan v. Ramlatha [(2005) 7 SCC 534] , Ajendraprasadji N. Pandey v. Swami Keshavprakeshdasji N. [(2006) 12 SCC 1] , Chander Kanta Bansal v. Rajinder Singh Anand [(2008) 5 SCC 117] , RajkumarGurawara v. S.K. Sarwagi and Co. (P) Ltd. [(2008) 14 SCC 364] , Vidyabai v. Padmalatha [(2009) 2 SCC 409 : (2009) 1 SCC (Civ) 563] and Man Kaur v. Hartar Singh Sangha [(2010) 10 SCC 512 : (2010) 4 SCC (Civ) 239] .]

78. Recently,