Supreme Court Allows Amendment for Enhanced Damages in Specific Performance Suit: LIC vs. Sanjeev Builders (2022)

Date of the Judgment: September 1, 2022

Citation: 2022 INSC 783

Judges: Aniruddha Bose, J. and J.B. Pardiwala, J.

Can a party amend their legal claim to seek a higher amount of damages after many years have passed since the initial filing of the case? The Supreme Court of India recently addressed this question in a case concerning a suit for specific performance of a contract, where the plaintiff sought to increase the damages claim significantly after a long delay. This judgment clarifies the circumstances under which such amendments can be allowed, balancing the need for justice with the principle of avoiding undue prejudice to the opposing party. The bench was composed of Justice Aniruddha Bose and Justice J.B. Pardiwala, with the majority opinion authored by Justice J.B. Pardiwala.

Case Background

The case involves a suit filed by Sanjeev Builders Private Limited (the plaintiffs) against Life Insurance Corporation of India (LIC) (the defendant), seeking specific performance of an agreement dated June 8, 1979. In the alternative, the plaintiffs also sought damages. The plaintiffs later filed an application to amend the plaint to increase the amount of damages they were claiming. The original claim for damages was ₹1,01,00,000, which was sought to be increased to ₹4,00,01,00,000. The defendant, LIC, opposed this amendment, arguing that it was filed after a significant delay of 31 years and was barred by limitation.

Timeline:

Course of Proceedings

The plaintiffs initially filed a suit seeking specific performance of the agreement, along with an alternative claim for damages of ₹1,01,00,000. Later, they filed Chamber Summons No. 854 of 2017 to amend the plaint and increase the damages to ₹4,00,01,00,000. The Single Judge of the High Court allowed the amendment, keeping the issue of limitation open for the trial. The defendant appealed this decision, but the Division Bench of the High Court upheld the Single Judge’s order. The High Court noted that the trial had not yet commenced, and the defendant could raise the issue of limitation in its additional written statement. This led to the present appeal before the Supreme Court.

Legal Framework

The Supreme Court considered several key legal provisions:

• Order II Rule 2 of the Civil Procedure Code, 1908 (CPC): This provision deals with the principle that a suit should include the whole claim, and a plaintiff cannot later sue for a portion of the claim that was intentionally relinquished or omitted.
• Order VI Rule 17 of the CPC: This rule allows the court to permit amendments to pleadings at any stage of the proceedings if it is necessary for determining the real issue in controversy.
• Section 21 of the Specific Relief Act, 1963: This section empowers the court to award compensation in addition to or in substitution of specific performance. It also includes a proviso that allows a plaintiff to amend the plaint at any stage to include a claim for compensation if it was not initially claimed.
• Section 22 of the Specific Relief Act, 1963: This section allows a plaintiff in a suit for specific performance to claim possession, partition, or refund of earnest money. It also includes a proviso allowing amendment of the plaint to include these claims, if not initially made.

The Court also discussed the interplay of these provisions, particularly in the context of amendments sought after a delay and the issue of limitation.

Arguments

Appellant (LIC)’s Submissions:

• The High Court erred in allowing the amendment after 31 years, especially after the Supreme Court had previously rejected an amendment to implead an assignee in the same suit.
• The amendment was barred by Order II Rule 2 of the CPC, as it sought to introduce a new claim after a long delay.
• The principle of constructive res judicata should apply, preventing the amendment.
• The increase in damages from ₹1,01,00,000 to ₹4,00,01,00,000 was a substantial change and should not be allowed.

Respondents (Sanjeev Builders)’ Submissions:

• The High Court did not err, as the issue of limitation was kept open for trial, and the defendant was allowed to file an additional written statement.
• The delay in amending the plaint would not cause serious prejudice to the defendant.
• Order II Rule 2 of the CPC does not apply to applications for amendment of the plaint.
• The previous Supreme Court decision was in a different context, regarding the impleadment of an assignee, not the enhancement of damages.

The innovativeness of the argument of the appellant was to argue that the amendment was barred by Order II Rule 2 of the CPC and the principle of constructive res judicata, which was not accepted by the Court.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the High Court committed any material irregularity or jurisdictional error in passing the impugned order?
2. Whether the provisions of Order II Rule 2 CPC can be made applicable to an amendment application?
3. Whether the amendment of plaint for the purpose of enhancing the amount towards damages could be said to be hit by the doctrine of constructive res judicata?
4. Whether the judgment and order passed by a coordinate Bench of this Court in the case of Life Insurance Corporation of India (supra) between the same parties has any bearing on the present appeal?
5. Whether the present appeal is covered by the proviso to Section 21(5) and Section 22(2) of the Specific Relief Act, 1963?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Court considered the following authorities:

Judgment

The Supreme Court analyzed the submissions and the authorities, and held that the High Court was correct in allowing the amendment of the plaint. The Court emphasized that:

The Court also analyzed how each authority was viewed:

• The Court relied on L.J. Leach & Co. Ltd. & Anr. v. Jardine Skinner & Co., AIR 1957 SC 357* to emphasize that while courts generally decline amendments if a fresh suit would be barred by limitation, it is a factor to be considered and does not affect the court’s power to allow it in the interest of justice.
• The Court reiterated the principle from T.N. Alloy Foundry Co. Ltd. v. T.N. Electricity Board & Ors., (2004) 3 SCC 392* that courts may allow amendments even if a fresh suit would be time-barred, if it serves the interest of justice.
• The Court cited Charan Das & Ors. v. Amir Khan & Ors., AIR 1921 PC 50* to highlight that while amendments should not take away legal rights accrued to the defendant by lapse of time, special circumstances may outweigh this consideration.
• The Court relied on Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil & 2 Ors., 1957 SCR 595 : AIR 1957 SC 363* to lay down the principles governing the exercise of discretion in allowing amendments, focusing on whether it works injustice to the other side and is necessary for determining the real questions in controversy.
• The Court approved the observations of Batchelor, J., in Kisandas Rupchand & Anr. v. Rachappa Vithoba Shilwant and Ors., ILR (1909) 33 Bom 644* which stated that amendments should be refused only where the other party cannot be placed in the same position as if the pleading had been originally correct.
• The Court stated the principle from Ganga Bai v. Vijay Kumar & Ors., (1974) 2 SCC 393* that the power to allow amendments is wide and may be exercised at any stage in the interest of justice, notwithstanding the law of limitation.
• The Court emphasized the principle in M/s Ganesh Trading Co. v. Moji Ram, (1978) 2 SCC 91* that provisions for amendment of pleadings are intended for promoting the ends of justice, not for defeating them.
• The Court cited South Konkan Distilleries & Anr. v. Prabhakar Gajanan Naik & Ors., (2008) 14 SCC 632* to lay down that courts are more generous in allowing amendments to written statements, provided it doesn’t cause injustice or withdraw admissions.
• The Court held in A.K. Gupta & Sons Ltd. v. Damodar Valley Corporation, AIR 1967 SC 96 : (1966) 1 SCR 796* that amendments that do not add a new cause of action but are a different approach to the same facts should be allowed even after the limitation period.
• The Court allowed an amendment in G. Nagamma & Anr. v. Siromanamma & Anr., (1996) 2 SCC 25* where the cause of action and relief were not materially affected, and the plaintiff was seeking alternative reliefs.
• The Court held in Pankaja & Anr. v. Yellappa (dead) by lrs. & Ors., (2004) 6 SCC 415* that it is within the court’s discretion to allow amendments even if the relief is allegedly barred by limitation, depending on the facts and circumstances.
• The Court observed in Ragu Thilak D. John v. S. Rayappan & Ors., (2001) 2 SCC 472* that if the amendment was barred by time is a disputed question of fact, the prayer for amendment could not be rejected.
• The Court held in Vishwambhar & Ors. v. Laxminarayan (Dead) through Lrs. & Anr., (2001) 6 SCC 163* that an amendment, though properly made, cannot relate back to the date of filing of the suit, but to the date of filing of the application.
• The Court held in Vineet Kumar v. Mangal Sain Wadhera, (1984) 3 SCC 352 : AIR 1985 SC 817* that if an amendment merely adds to the facts already on record, it would be allowed even after the statutory period of limitation.
• The Court discussed and upheld the Single Judge’s order in Sanjeev Builders Pvt. Ltd. & Ors. v. Life Insurance Corporation of India, 2018 SCC OnLine Bom 15283* allowing the amendment.
• The Court discussed the coordinate bench decision in Life Insurance Corporation of India v. Sanjeev Builders Pvt. Ltd. & Ors., (2018) 11 SCC 722*, and it was held that it had no application to the present case.
• The Court discussed the principles under Order II Rule 2 CPC in Mohd. Khalil Khan & Ors. v. Mahbub Ali Mian & Ors., AIR 1949 PC 78*, emphasizing that the cause of action is the foundation for the suit.
• The Court cited Upendra Narain Roy v. Rai Janoki Nath Roy, AIR 1919 Cal 904* to highlight that Order II Rule 2 CPC applies to subsequent suits, not to amendments in an existing suit.
• The Court discussed the scope and applicability of Order II Rule 2 of the CPC in Gurbux Singh v. Bhooralal, AIR 1964 SC 1810* and held that it applies only to subsequent suits.
• The Court cited Vaish Cooperative Adarsh Bank Ltd. v. Geetanjali Despande & Ors., (2003) 102 DLT 570* to reiterate that the bar under Order II Rule 2 CPC applies only to subsequent suits, not to amendments.
• The Court held in Shamsu Suhara Beevi v. G. Alex & Anr., (2004) 8 SCC 569* that compensation under Section 21 cannot be granted without a prayer in the plaint or an amendment.
• The Court explained in Kahini Developers Pvt. Ltd. v. Mukesh Morarji panchamatia & Ors., (2013) 3 Mah LJ 440* that amendments under Section 21(5) and 22(2) of the Specific Relief Act are not barred by limitation.
• The Court held in B.K. Narayana Pillai v. Parameswaran Pillai & Anr., (2000) 1 SCC 712* that courts should adopt a liberal approach in the matter of amendments, declining only when the other side has acquired a legal right due to lapse of time.
• The Court analyzed Section 21 of the Specific Relief Act in Jagdish Singh v. Natthu Singh, (1992) 1 SCC 647 : AIR 1992 SC 1604*, stating that amendments for compensation in addition to specific performance should be allowed at any stage.
• The Court held in The Arya Pradeshak Pritinidhi Sabha, Sindh, Punjab & Bilochistan v. Lahori Mal & Ors., (1924) 6 Lah LJ 286 : AIR 1924 Lah 713* that the court has the power to award damages in substitution of or in addition to specific performance even though the plaintiff has not specifically claimed the same in its plaint.
• The Court held in Somasundaram Chettiar v. Chidambaram Chettiar, AIR 1951 Mad 282* that the court could not award damages in absence of a specific claim for damages.
• The Court cited Vijay Gupta v. Gagninder Kr. Gandhi & Ors., 2022 SCC OnLine Del 1897* to emphasize that 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.

The Court also clarified that the proviso to Section 21(5) and Section 22(2) of the Specific Relief Act, 1963, specifically allow for amendments to include claims for compensation or other reliefs at any stage of the proceedings, which supports the High Court’s decision. The Supreme Court, therefore, dismissed the appeal, upholding the High Court’s decision to allow the amendment.

Flowchart of the Decision

Conclusion

The Supreme Court’s decision in LIC vs. Sanjeev Builders (2022) clarifies that amendments to pleadings, particularly for enhancing damages in specific performance suits, can be allowed even after a significant delay. The Court emphasized that the provisions of the Specific Relief Act, 1963, and the principles of justice support such amendments, provided they are necessary for determining the real issues in controversy and do not unduly prejudice the opposing party. The Court also clarified that Order II Rule 2 of the CPC does not apply to amendment applications and that the principle of constructive res judicata does not apply in the absence of a formal adjudication after a full hearing. This judgment provides valuable guidance on the scope and permissibility of amendments in civil suits, particularly in the context of specific performance.