Full Text
HIGH COURT OF DELHI
RELIGARE FINVEST LIMITED ..... Plaintiff
Through: Mr. Ashish Dholakia, Sr. Adv. alongwith Mr. Sandeep D. Das, Mr. Siddharth Sharma, Ms. Kritika Mundra, Mr. Rohan Chawla and
Mr. Arpit Kumar Singh, Advs.
Through: Mr. Jayant Bhushan, Sr. Adv. along with Ms. Sushmita Gandhi, Mr. Bhargav Kosuru, Ms. Vatsala Pant, Mr. Amartya Bhushan and
Mr. Tushar Bhushan, Advs. Mr. Darpan Wadhwa, Sr. Adv. along with Mr. Prateek Kumar, Mr. Madhav Khosla, Ms. Moha Paranjpe and
Mr. Amer Vaid, Advs. for applicant (SBI) in IA-12197/2019.
JUDGMENT
1. The present application has been filed under Order VI Rule 17 r/w Order I Rule 10 of the Code of Civil Procedure, 1908 (“CPC”) seeking the following prayers: “(a) Implead RHC Holdings Private Limited; Ranchem Private Limited; Malvinder Mohan Singh; and Shivinder Mohan Singh as party Defendants Nos. 2 to 5, respectively, in the present suit and permit describing of the present Defendant as Defendant No. 1; (b) Allow amendment of the plaint in terms of the amendments proposed hereinabove in paragraph 9;
(c) Take on record, the plaint as amended and enclosed the present application;
(d) Pass such other and further orders as this Hon'ble Court may deem fit and proper in the interests of justice”
2. The present suit has been filed by the plaintiff inter alia seeking that liquidation of four of the plaintiff’s lien-free fixed deposits (FDs) by the defendant be declared to be illegal and praying for recovery of the said amount.
3. Briefly stated, the case of the plaintiff as stated in the plaint is that the plaintiff, at no point of time, had created any encumbrance by way of charge, lien, pledge or otherwise on the FDs opened with the defendant bank. It is averred in the plaint that several communications regarding the same were issued to the defendant and the defendant never disputed or denied the unencumbered nature of the plaintiff’s FDs. It is averred in the plaint that the plaintiff was not a party to the alleged third party’s loans and borrowings claimed to have been sanctioned by the defendant. It is further averred that liquidation of the plaintiff’s FDs for closure of loans availed of by the third parties/borrowers is illegal and void.
4. It is averred in the present application that after filing of the present suit certain facts have come to light, particularly an interim order dated 14.03.2019 passed by SEBI on the basis of a forensic audit of Religare Enterprises Limited, which holds approximately 85.5% equity shareholding in the plaintiff, which shows that the defendant (now proposed to be defendant no.1) had colluded and conspired with other proposed defendant nos. 2 to 5, and misappropriated the plaintiff’s FDs. It is averred that the said interim order demonstrates that no lien or security was created over the FDs but regardless thereof, loans were purportedly provided against the FDs by the defendant bank to the proposed defendant nos. 2 and 3. It is averred that on the day the FDs were created, the proposed defendant nos. 4 and 5 exercised an all-pervasive control over the affairs of the plaintiff. The proposed defendant nos. 2 and 3 are stated to be the promoter group entities i.e. majority owned and controlled by the proposed defendant nos. 4 and 5. It is further averred that on the date of institution of the suit neither the plaintiff nor Religare Enterprises Limited was significantly owned or controlled by either the proposed defendants or entities under their control. It is averred that the amendments and the proposed defendants are therefore necessary to enable the court to effectively and completely adjudicate upon and settle all the questions involved in the suit. Submissions of the Parties
5. Learned senior counsel for the plaintiff has submitted that the suit is at a nascent stage and issues are yet to be framed, therefore, no prejudice would be caused to the defendant bank if the amendment sought is allowed. It is submitted that the amendments sought are necessary to determine the real controversy between the parties and do not in any manner, change the nature of the suit. It is further submitted that even in a situation where amendment/s have been sought belatedly, the same cannot be a ground to disallow the amendment/s, where the primary ingredient envisioned in Order VI Rule 17 of the CPC, 1908 is clearly satisfied. In this regard reference is made to the judgment of the Supreme Court in Andhra Bank v. ABN Amro Bank N.V.[1] and Revajeetu Builders & Developers v. Narayanaswamy & Sons.2. It is further submitted that it is the defendant’s own case in I.A NO. 12112/2018 that the proposed defendants are necessary parties, therefore, the defendant’s opposition to the present application is clearly malafide and only to delay the proceedings. It is further submitted that the amendments sought are based on facts which were not within the public domain and were only disclosed pursuant to a forensic audit conducted by SEBI. It is submitted that, in any case, the question whether the material facts have been withheld and were within the knowledge of the plaintiff is a matter of trial and cannot be determined at this stage, without leading evidence.
6. Per contra, learned senior counsel for the defendant has submitted that the amendments sought are belated and malafide and seeks to avoid the implication of the non-impleadment of necessary parties as sought by the defendant vide its I.A. No. 12112/2018. It is submitted that the plaintiff was always aware of misfeasance committed by the erstwhile promoters i.e proposed defendant no(s). 4 & 5 in connivance with the plaintiff and proposed defendant no(s). 2 & 3. It is submitted that the pleadings in the plaint are false and the same cannot be cured by amendment. Learned senior counsel for the defendant has also relied upon various documents to submit that the plaintiff’s FDs were given as a security in respect of the loan obtained by the Religare Group Companies/borrowers. It is submitted that plaintiff despite being aware of the entire sequence of events i.e., from disbursement of the loans to the borrowers/group companies and opening of the FDs by the plaintiff as a security, and despite having direct connect with the borrowers, did not make any averment or mention about them in the plaint. It is submitted that in fact, a clear attempt was made to mislead the court by referring to borrowers as third parties. It is submitted that the plaintiff, being guilty of serious suppression of facts, does not deserve any discretionary relief by this Court. In this regard reliance has been placed upon Revajeetu Builders & Developers v. Narayanaswamy & Sons (supra) and Mashyak Grihnirman Sahakari Sanstha Maryadit v. Usman Habib Dhuka.[3] Analysis and Conclusion
7. Having perused the record and having heard learned counsel for the parties, I am inclined to allow this application. The reasons are enumerated hereunder.
8. The present suit has been occasioned on account of liquidation of the plaintiff’s FDs by the defendant bank for closing the loans of certain third parties/borrowers. The case of the plaintiff is that, at no point, the plaintiff created any lien or charge on its FD’s to secure loans taken by third parties/borrowers. By way of the instant suit, the plaintiff seeks a declaration that liquidation of plaintiff’s FDs is illegal and seeks recovery of the said amount. The case of the defendant is that these third parties, who have availed the loans, are the group companies of the plaintiff and the plaintiff was aware, and in fact, had created a lien or charge on its FDs to secure loans taken by these third parties/borrowers/group companies. The defendant has also filed an application [I.A. 12112/2018] seeking rejection of the plaint on the ground of, inter alia, non-joinder of these third parties/borrowers who are stated to be necessary parties and in the alternative, has prayed that these third parties/borrowers be impleaded as defendants to the present suit and seeking a direction to the plaintiff to carry out the consequential amendments.
9. By way of the present application, the plaintiff seeks impleadment of these third parties/borrowers [RHC Holding Private Limited and Ranchem Private Limited] as defendant nos. 2 and 3, and further seeks impleadment of Mr. Malvinder Mohan Singh and Mr. Shivinder Mohan Singh as defendant nos. 4 and 5, who are stated to be prior significant shareholder/s and director/s of Religare Enterprises Limited and promoter/owner of these third parties/borrowers, and further seeks to make consequential amendments to highlight the purported collusion between the defendant and proposed defendant nos. 2 to[5].
10. In view of the averments in I.A. 12112/2018, it transpires that it is the common case of the parties that the proposed defendants are necessary parties for the purpose of adjudicating the controversy involved in the present case.
11. The Supreme Court in Revajeetu Builders (supra), has held as under: “Factors to be taken into consideration while dealing with applications for amendments
63. On critically analysing both the English and Indian cases, some basic principles emerge which ought to be taken into consideration while allowing or rejecting the application for amendment: (1) whether the amendment sought is imperative for proper and effective adjudication of the case; (2) whether the application for amendment is bona fide or mala fide; (3) the amendment should not cause such prejudice to the other side which cannot be compensated adequately in terms of money; (4) refusing amendment would in fact lead to injustice or lead to multiple litigation; (5) whether the proposed amendment constitutionally or fundamentally changes the nature and character of the case; and (6) as a general rule, the court should decline amendments if a fresh suit on the amended claims would be barred by limitation on the date of application.”
12. The Supreme Court in LIC v. Sanjeev Builders (P) Ltd.4, has held as under:
(ii) the amendment changes the nature of the suit,
(iii) the prayer for amendment is malafide, or
(iv) by the amendment, the other side loses a valid defence.
(v) In dealing with a prayer for amendment of pleadings, the court should avoid a hypertechnical approach, and is ordinarily required to be liberal especially where the opposite party can be compensated by costs.
(vi) 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.
(vii) 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.
(viii) Amendment may be justifiably allowed where it is intended to rectify the absence of material particulars in the plaint.
(ix) 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.
(x) 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.
(xi) 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. (See Vijay Gupta v. Gagninder Kr. Gandhi, 2022 SCC OnLine Del 1897)”
13. The tests laid down by the Supreme Court in above pronouncements are completely satisfied in the present case. In the facts of the present case, the proposed amendment/s: (i) have been sought to be made at the pre-trial stage; (ii) are necessary for effective and proper adjudication of the entire controversy between the parties; (iii) do not seek to withdraw any clear admission made by the party which confers a right on the other side; (iv) do not change the nature of the suit; and (v) will avoid multiplicity of proceedings.
14. There is no merit in the contention of the learned senior counsel for the defendant that the delay in filing the amendment application must entail in rejection of the present application. It is well settled that where the amendment is sought before commencement of trial, the court is required to be liberal in its approach. Further, the Supreme Court in Andhra Bank (supra), has held that delay is no ground to refuse the prayer for amendment. It was further held that the only question at the time of considering the amendment of the pleadings would be whether such amendment would be necessary for decision of the real controversy between the parties in the suit.
15. The judgement in the case of Mashyak Grihnirman (supra), relied upon by the defendant, is not applicable to facts of the present case inasmuch as in that case the plaintiff therein by way of amendment sought to incorporate the relief of declaration of conveyance deed as illegal. In the facts of that case, the court found that the existence of conveyance deed was well within the knowledge of plaintiff at the time of institution of the suit and amendment sought by the plaintiff was clearly an afterthought for oblique purpose. In the present case, the plaintiff by way of the present amendment application does not seek incorporation of any new relief against the defendant.
16. Further, the stand of the plaintiff in the unamended plaint and amended plaint is consistent that it has no connection with the borrowers; and that the borrowers and the plaintiff are not group companies. The interim order dated 14.03.2019 passed by the SEBI has purportedly highlighted the collusion between the defendant and the proposed defendants, and that the FDs were not created as part of normal business transactions. The order passed by the SEBI is a subsequent development. The forensic audit conducted by an agency appointed by the SEBI is a subsequent development. Prima facie, the plaintiff is right in contending that extent and precise nature of collusion could not have been pleaded when the suit was originally filed. It cannot be said that the present application is filed with a malafide intention or that the unamended plaint suffers from gross suppression of facts. Even otherwise, as held by the Supreme Court in Sanjeev Builders (supra), “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”; further “amendment may be justifiably allowed where it is intended to rectify the absence of material particulars in the plaint.”
17. The contention of learned senior counsel for defendant that the plaintiff by way of present application seeks to avoid implication of the nonimpleadment of necessary party as sought by the defendant vide its I.A. NO. 12112/2018, is also without merit. As noticed hereinabove, vide the said application, the defendant itself has sought impleadment of the borrowers, albeit alternatively. The defendant cannot be aggrieved if any one of the alternative reliefs is being granted by this court[5]. Even otherwise, it is a settled principle of law that an application under Order VI Rule 17 CPC must be considered first, regardless of whether it is filed before or after filing the application under Order VII Rule 11 CPC[6].
18. Further, at this stage, the court is not to assess the merit of the averments made in the plaint. The defence of the defendant that various documents show plaintiff’s knowledge of the actions of the proposed defendant nos. 2 to 5 and that the plaintiff’s FDs were given as security for the loans availed by the borrowers, is to be tested in trial.
19. As already stated above, in the present case, the amendments have been sought at the pre-trial stage and the defendant would have ample opportunity to meet the case set up by the plaintiff.
20. In view of the aforesaid, the present application is allowed.
21. The amended plaint filed, along with the present application, is taken on record.
22. List CS(COMM) 940/2018, alongwith pending IAs, on 21.12.2023.
SACHIN DATTA, J DECEMBER 15, 2023 hg See: U.G. Srinivasa Rao v. Vinaykumar, ILR 2004 Kar 2928 See: Rajesh Kumar Mehlawat v. Naresh Gupta, 2017 SCC OnLine Del 9645; Wasudhir Foundation v. C. Lal & Sons, 1991 Supp DRJ 483; Dera Baba Bhumman Shah Sangar Sarista v. Subhash Narula, 2020 SCC OnLine P&H 1625; Suchitra Dubey v. Sattar, 2023 SCC OnLine MP 1795