delhihighcourt

CLARION DEALING PVT. LTD. vs COMPETENT FINLEASE PVT. LTD. & ANR.

$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 11.09.2024
+ CS(COMM) 173/2019
CLARION DEALING PVT. LTD. …..Plaintiff
Through: Mr.Akshay Ringe, Ms.Megha Mukerjee & Mr.Dhananjay Gupta, Advs.
versus
COMPETENT FINLEASE PVT. LTD. …..Defendant
Through: Mr.Hemant Chaudhri, Mr.Ranjan Vyas, Mr.Arjun Sanjay & Mr.Vasu Goyal, Advs.

CORAM:
HON’BLE MR. JUSTICE NAVIN CHAWLA

NAVIN CHAWLA, J. (ORAL)

I.A. 4646/2021 and I.A. 4647/2021
1. By way of I.A. 4646/2021, filed under Order VI Rule 17 of the Code of Civil Procedure, 1908 (in short, ‘CPC’), the defendant seeks permission of this Court to amend its written statement and to add paragraph 15A to the same.
2. As a brief background, the present suit has been filed by the plaintiff seeking recovery of an amount of Rs. 12,18,90,720/- with interest from the defendant, stating that the defendant has acted in breach of the Securities Lending and Borrowing Agreement dated 03.09.2015 entered between the parties.
3. It is claimed that pursuant to the said Agreement, the plaintiff lent securities to the defendant in the form of 3,00,000 (Three Lakh) shares of Arcotech Limited, valued at Rs. 10,35,00,000/-, for a period of six months from the date of the aforesaid Agreement, at the rate of interest of 6% per annum, to be paid monthly pro rata by the 5th day of every month for the preceding month.
4. It is claimed that the defendant issued a post-dated cheque, as a security, equivalent to the value of the securities, that is, Rs.10,35,00,000/-. The plaintiff claims that the understanding between the parties was that when the shares would be returned by the defendant, the plaintiff would return the said cheque to the defendant, however, in the event of non-compliance, the plaintiff was to encash the said cheque.
5. The plaintiff claims that on the expiry of the period of the said Agreement, the plaintiff approached the defendant for the return of the shares, however, the defendant requested for further time to comply with the terms of the said Agreement.
6. The plaintiff further asserts that it was only pursuant to an email dated 09.01.2019, that the defendant returned only 24,850 shares to the plaintiff on 11.01.2019. The total value of the shares returned was only Rs.1,86,375/-. The plaintiff alleges further exchanges of correspondence between the parties, and that the non-discharge of the liability of the defendant towards the plaintiff in respect of the Securities Lending and Borrowing Agreement dated 03.09.2015 has resulted in the filing of the present suit.
7. In the written statement, the defendant inter alia has pleaded that the plaintiff has concealed the execution of the Master Finance Agreement dated 08.09.2015, which was entered into for the purposes of availing the loan after executing the Securities Lending and Borrowing Agreement dated 03.09.2015 referred hereinabove. The defendant has further pleaded that the purpose of the plaintiff giving the shares to the defendant was for the plaintiff to avail a loan against the securities. The defendant has pleaded that the shares of the plaintiff were transferred by the defendant into the account of one of its sister-concerns, namely, Avtar Instalments Pvt. Ltd. (in short, ‘AIPL’), for funding the plaintiff in terms of the Agreement. The defendant has further contended that AIPL paid an amount of Rs.4,23,00,000/- to the plaintiff, pursuant to which the plaintiff executed a Master Financial Agreement dated 08.02.2017 with AIPL and also executed an irrevocable Power of Attorney dated 08.02.2017 in favour of AIPL. The defendant has claimed that the plaintiff’s account with AIPL was settled by AIPL on 31.03.2018. The defendant has further claimed that by a letter dated 09.01.2019, the plaintiff requested AIPL to transfer the shares to its account, which were duly transferred to the account of Astor Mercantile Pvt. Ltd. The defendant has pleaded that therefore, the present suit is liable to be dismissed.
8. By way of the present application, as noted hereinabove, the defendant seeks to add paragraph 15A to its written statement, which reads as follows:
“15A. The Plaintiff executed a specific consent letter dated 08.09.2015 for transferring of said 3 lac shares to M/s Avtar Instalments Pvt. Ltd. and upon the said transfer having taken place, M/s Avtar Instalments Pvt. Ltd. in January, 2016 issued a sanction letter in favour of the Plaintiff and gave a loan of Rs.4.23 Crores to the Plaintiff. The Plaintiff entered into a Share Sale & Purchase Agreement with M/s Avtar Instalments Pvt. Ltd., as well as executed various consent letters, authorising M/s Avtar Instalments Pvt. Ltd. to conduct various transactions on its behalf. The said 3 lac shares of ARCOTECH LTD. were sold by M/s Avtar Instalments Pvt. Ltd. in order to recover its loan, which fact was admitted and accepted by the Plaintiff vide letter dated 31.01.2018. The sale transactions conducted by M/s Avtar Instalments Pvt. Ltd. were further confirmed and accepted by the Plaintiff by signing on the various debit notes. After adjusting its dues and also adjusting the losses incurred by the Plaintiff in the sale/ purchase transactions, M/s Avtar Instalments Pvt. Ltd. adjusted the balance loss amount recoverable, on the asking of the Plaintiff, with the sister concern of the Plaintiff i.e. M/s Astor Mercantile Pvt. Ltd. After adjusting the accounts, 24850 shares were transferred by the Defendant to the Plaintiff, for squaring of the entire transaction. Hence, all the transactions are related and inter linked and clearly establish that the present suit of the Plaintiff is false and frivolous and the Defendant is not liable to pay any amount to the Plaintiff, much less the claimed amount.”

9. The learned counsel for the defendant submits that the amendment is merely clarificatory in nature and does not, in any manner, alter the defence of the defendant. He submits that the proposed amendment merely elaborates what has already been contended in the written statement, only giving more particulars about the same. He submits that earlier, these documents were not traceable with the defendant, and it is only with the change of the authorized representative of the defendant that these documents were traced and are now sought to be brought on record by a separate application, being I.A. 4647/2021, filed under Order XI Rule 1(4) of the CPC, as applicable to commercial disputes.
10. On the other hand, the learned counsel for the plaintiff has drawn my attention to the Order dated 02.12.2019 passed by this Court, dismissing I.A. 14423/2019 filed by the defendant under Section 8 of the Arbitration and Conciliation Act, 1996, wherein the Court, inter alia, observed as follows:
“14. I have perused the two transactions statements but do not find anything therein to link the same to the Master Financing Agreement dated 8th September, 2015. Else, the transfer by the plaintiff of the said 3,00,000 shares to the defendant/applicant under the Securities Loan and Borrowing Agreement dated 3rd September, 2015 is not in dispute. Otherwise also, I am unable to co-relate the Master Financing Agreement dated 8th September, 2015 with the Securities Lending and Borrowing Agreement dated 3rd September, 2015. The Master Financing Agreement dated 8th September, 2015 envisages grant of facilities by the defendant / applicant to the plaintiff against marketable securities. It is not the case of the defendant / applicant that any loan was provided by the defendant / applicant to the plaintiff. Loan is stated to have been provided by Avtar Instalments Pvt. Ltd. but which is not a party in this suit and qua which the contention of the counsel for the defendant / applicant is that Avtar Instalments Pvt. Ltd. is required to be impleaded as a party. The said Avtar Instalments Pvt. Ltd. being not a party to the Master Financing Agreement dated 8th September, 2015, would axiomatically be not bound by the arbitration clause therein as well.”

11. She submits that this Court, having already found that the Agreements now sought to be pleaded by the defendant are not relevant to the present Suit, the amendment filed by the defendant and the permission sought by the defendant to place on record additional documents, are both liable to be rejected.
12. I have considered the submissions made by the learned counsels for the parties.
13. From a reading of the written statement filed by the defendant, it is evident that the defendant has pleaded about the transfer of the shares to AIPL, and about AIPL extending a loan facility to the plaintiff. It has also been pleaded that AIPL finally settled the account of the plaintiff and returned the balance shares to the plaintiff. By way of the amendment, the defendant is merely elaborating on the defence by placing specific reliance on the documents that it claims have now been traced by the defendant pursuant to the change of the authorized representative of the defendant.
14. The Order dated 02.12.2019, relied upon by the learned counsel for the plaintiff, after making the above-quoted observation, further records as under:
“17. However till now Avtar Installments Pvt. Ltd. is not a party to the present suit and thus the arbitration clause between Avtar Installments Pvt. Ltd. and the plaintiff is of no avail.”

15. This was an order passed on an application under Section 8 of the Arbitration and Conciliation Act, 1996 and the Court found that there was no Arbitration Agreement between the plaintiff and the defendant herein. The said order, therefore, cannot act as res judicata on the claims/defence of the defendant. The claim/defence of the defendant has to be decided in a trial.
16. The fact remains that the suit is still at the stage of completion of pleadings and the marking of the documents is yet to be done. The trial is, therefore, yet to begin. It is settled law that the Court would be more liberal in granting an amendment to the written statement where it seeks to only elaborate the defence. In Life Insurance Corporation v. Sanjeev Builders Pvt. Ltd. (2022) 16 SCC 1, the Supreme Court stated the principles applicable to Order VI Rule 17 of the CPC, as under:-
“71.2. All amendments are to be allowed which are necessary for determining the real question in controversy provided it does not cause injustice or prejudice to the other side. This is mandatory, as is apparent from the use of the word “shall”, in the latter part of Order 6 Rule 17 CPC.
71.3. The prayer for amendment is to be allowed:
71.3.1. If the amendment is required for effective and proper adjudication of the controversy between the parties.
71.3.2. To avoid multiplicity of proceedings, provided
(a) the amendment does not result in injustice to the other side,
(b) by the amendment, the parties seeking amendment do not seek to withdraw any clear admission made by the party which confers a right on the other side, and
(c) the amendment does not raise a time-barred claim, resulting in divesting of the other side of a valuable accrued right (in certain situations).
71.4. A prayer for amendment is generally required to be allowed unless:
71.4.1. By the amendment, a time-barred claim is sought to be introduced, in which case the fact that the claim would be time-barred becomes a relevant factor for consideration.
71.4.2. The amendment changes the nature of the suit.
71.4.3. The prayer for amendment is mala fide, or
71.4.4. By the amendment, the other side loses a valid defence.
71.5. In dealing with a prayer for amendment of pleadings, the court should avoid a hyper technical approach, and is ordinarily required to be liberal especially where the opposite party can be compensated by costs.
71.6. Where the amendment would enable the court to pin-pointedly consider the dispute and would aid in rendering a more satisfactory decision, the prayer for amendment should be allowed.
71.7. Where the amendment merely sought to introduce an additional or a new approach without introducing a time-barred cause of action, the amendment is liable to be allowed even after expiry of limitation.
71.8. Amendment may be justifiably allowed where it is intended to rectify the absence of material particulars in the plaint.
71.9. Delay in applying for amendment alone is not a ground to disallow the prayer. Where the aspect of delay is arguable, the prayer for amendment could be allowed and the issue of limitation framed separately for decision.
71.10. Where the amendment changes the nature of the suit or the cause of action, so as to set up an entirely new case, foreign to the case set up in the plaint, the amendment must be disallowed. Where, however, the amendment sought is only with respect to the relief in the plaint, and is predicated on facts which are already pleaded in the plaint, ordinarily the amendment is required to be allowed.
71.11. Where the amendment is sought before commencement of trial, the court is required to be liberal in its approach. The court is required to bear in mind the fact that the opposite party would have a chance to meet the case set up in amendment. As such, where the amendment does not result in irreparable prejudice to the opposite party, or divest the opposite party of an advantage which it had secured as a result of an admission by the party seeking amendment, the amendment is required to be allowed. Equally, where the amendment is necessary for the court to effectively adjudicate on the main issues in controversy between the parties, the amendment should be allowed.”

17. Applying the above test to the facts of the present case, as the amendment merely seeks to elaborate on the defence already urged by the defendant, and the trial is yet to commence, the application filed by the defendant under Order VI Rule 17 of the CPC is allowed.
18. For the additional documents, the defendant has pleaded that they were not traceable at the time of filing of the written statement. They also relate to other parties.
19. In my view, therefore, the defendant has also made out a case for grant of permission to place the said documents on record.
20. Accordingly, the applications are allowed.
21. Needless to state, that the application seeking amendment has been allowed without the plaintiff admitting to the contents of the amended paragraph.
I.A. No. 15822/2022
22. This application already stands allowed by the Order dated 09.11.2022 and should not be shown in the cause list any further.
CRL.M.A. 5174/2021
23. The learned counsel for the defendant fairly submits that this application should await the trial and be decided alongside the main suit.
I.A. 4808/2019
24. This application is disposed of, reserving liberty of the plaintiff to file a fresh application at a later stage, if so advised.
CS(COMM) 173/2019
25. The amended written statement and the additional documents filed by the defendant are taken on record. Replication, if any, be filed within the statutory period. Along with the replication, the plaintiff shall file an affidavit of admission/denial of the documents taken on record today.
26. The plaintiff shall file a joint schedule of documents within three weeks thereafter.
27. List the Suit before the learned Joint Registrar (Judicial) for the marking of documents on 19th December, 2024.

NAVIN CHAWLA, J
SEPTEMBER 11, 2024/rv/SJ
Click here to check corrigendum, if any

CS(COMM) 173/2019 Page 8 of 10