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Judgment
N. Ananda, J.—The petitioner-plaintiff had filed third application (IA No. 16) under Order VI Rule 17 CPC to amend the plaint to replace existing Para 26A of the; plaint and substitute as follows:-
26A. In January 1999, the Original Plaintiff viz. Ultrafilter GmbH was converted from company with limited liability into a company limited by shares or owned by shareholders. Accordingly, the name of the erstwhile Plaintiff was changed from Ultrafilter GmbH to Ultrafilter International AG. During the year, 2002 the entire share capital of Ultrafilter International AG was taken over by two entities viz. Donaldson Deutschland Holding GmbH and Donaldson Torit B.V. Upon the purchase of share capital, the corporate form of Ultrafilter International AG was changed from a stock corporation (AG) into a company with limited liability (GmbH) and the name of Ultrafilter International AG was changed to Donaldson Filtration Deutschland GmbH. In the above manner, Donaldson Filtration Deutschland GmbH has stepped into the shoes of the Plaintiff herein and has thus become entitled to prosecute the above suit.
The learned trial Judge has dismissed the application. Therefore, plaintiff is before this court.
I have heard Sri S.S. Naganand, learned senior counsel for petitioner/plaintiff and Sri Sajan Poovayya, learned counsel for respondents-defendants.
In order to appreciate the rival contentions of parties, it is necessary to state reliefs sought for in the suit, earlier applications filed by plaintiff under Order VI Rule 17 CPC as also result of proceedings initiated under sections 397 & 398 of Companies Act in C.P. No. 57/1998 before the Company Law Board and proceedings before this court in COMPA. 6/2005 and Special Leave to Appeal (Civil) No. 6488/2012, filed by plaintiff before the Supreme Court, against the judgment made by this court in COMPA. 6/2005.
On 23.01.1999, the instant suit was filed for following reliefs:-
a) pass an order of permanent injunction restraining Defendants, their servants and agents from using the words "Ultrafilter" or Ultrafilter International" as part of the Corporate name of the 1st defendant company and from using the words "Ultrafilter" or "Ultrafilter International" in the labels, cartons, letterheads, correspondence, brochures, publicity material, advertisements, agreements, contracts, visiting cards, advertisements or in any other manner in the course of the business of the 1st defendant company so as to pass off the 1st defendant''s goods or name as the goods/name of the plaintiff;
b) direct defendants 1 & 2 to pay to the plaintiff a sum or Rs. 50 lakhs (Rupees Fifty Lakhs) as damages;
c) direct defendants to render a true and faithful account of all profits earned by the defendants by suing the word "Ultrafilter" & Ultrafilter International" and direct them to pay to the plaintiff such amount as may be found due on such accounts being taken;
d) direct the defendants, their servants and agents to deliver up for destruction all goods, articles and things bearing the word "Ultrafilter" or "Ultrafilter International" to the plaintiff;
On 30.11.2007, plaintiff had filed first application (IA No. 6) under Order VI Rule 17 CPC to permit plaintiff to amend its name in the causetitle to "Donaldson Filtration Deutschland GmbH", inter alia contending that during pendency of this suit, ownership of plaintiff company has changed hands and subsequently the name of plaintiff company has been changed. The plaintiff company now is known as "Donaldson Filtration Deutschland GmbH". The legal entity continues to exist and only its name has changed "due to aforesaid change of ownership.
This application was accepted by trial court in terms of order dated 05.02.2008, consequent to which causetitle of plaint was amended. The original plaintiff namely "Ultrafilter GmbH", was substituted with "Donaldson Filtration Deutschland GmbH".
On 08.03.2010, plaintiff had filed second application (IA No. 10) for amendment under Order VI Rule 17 CPC to include paragraph 26A, after paragraph 26, before paragraph 27 as follows:-
26A During the pendency of the above suit, the business of the plaintiff viz. ultrafilter GmbH was merged with Ultrafilter International AG with effect from 21.01.2004. Consequently, Ultrafilter GmbH transferred its assets and liabilities in whole with all rights and duties, subject to dissolution without winding up by way of merger to Ultrafilter International AG. Subsequently, at the general meeting of the shareholders of Ultrafilter International AG, the merger between Ultrafilter GmbH and Ultrafilter International AG was approved and in the same meeting the share holders resolved to change the name and corporate form of Ultrafilter International AG. Accordingly, the corporate form of Ultrafilter International AG was changed from a stock corporation (AG) into a company with limited liability (GmbH) and the name of Ultrafilter International AG was changed to Donaldson Filtration Deutschland GmbH. IN the above manner, Donaldson Filtration Deutschland GmbH has stepped into the shoes of the Plaintiff herein and has thus become entitled to prosecute the above suit.
In the affidavit annexed to I.A. No. 10, plaintiff had contended that during pendency of suit, ownership of plaintiff company had changed hands and consequently the name and corporate form of the company which overtook plaintiff company has undergone changes. It has become necessary for plaintiff to amend its plaint by aforestated paragraph regarding right of "Donaldson Filtration Deutschland GmbH" to continue to prosecute the above suit. The defendants filed objections and opposed the application. The trial court by order dated 22.04.2010 accepted the application.
Though plaintiff had filed applications IA No. 6, IA No. 10 and IA No. 16 under Order VI Rule 17 CPC, virtually these applications were filed for substitution of plaintiff, pleading devolution of interest during pendency of suit governed by the provisions of Order XXII Rule 10 CPC.
At this juncture, it is necessary to state the tardy progress of trial. On 17.08.2009, Sri R.P. Murthy, one of the Directors of Donaldson India Filter Systems Private Limited, which is wholly owned subsidiary of Donaldson Company Inc., filed an affidavit in lieu of examination-in-chief, inter alia stating that plaintiff has also nominated him as its nominated Director of I-defendant company. The above said affidavit in lieu of examination-in-chief was filed by R.P. Murthy as a witness for plaintiff. His evidence was recorded by the Commissioner appointed by Court. On 10.02.2010, evidence of PW1 was recorded. PW1 was recalled and duly sworn on 05.08.2010 and further examination-in-chief was continued on 05.08.2010. Further examination-in-chief was recorded before trial court on 15.03.2011. On 13.04.2011, PW1 was cross-examined by learned counsel for defendants. Further cross-examination, of PW1 was continued on 30.05.2011, 26.08.20.11, 21.10.2011, 09.11.2011, 24.07.2012 and cross-examination was concluded on 22.08.2012. Thus, evidence of PW1 which commenced on 17.08.2009 was concluded on 22.08.2012.
When cross-examination of PW1 was under progress, plaintiff filed the instant application (IA No. 16) under Order VI Rule 17 CPC, seeking amendment of plaint, as extracted above. The defendants filed objections and opposed application. The instant application was dismissed in terms of the impugned order.
At this juncture, it is relevant to state that before plaintiff filed IA No. 6 (first application for amendment) for substitution of original plaintiff namely "Ultrafilter GmbH" with "Donaldson Filtration Deutschland GmbH", defendants herein had filed an application under sections 397 & 398 of Companies Act, 1956 (for short, ''the Act'') in C.P. No. 57/1998 before the Company Law Board, Additional Principal Bench at Chennai, alleging that plaintiff herein, who had 26% share holding (a minority shareholder) has committed acts of oppression and mis-management of affairs of the company. The application was contested by plaintiff. The Company Law Board by order dated 12.12.2001, accepted the application. The operative portion of order in C.P. No. 57/1998 dated 12.12.2001 reads thus:-
In the present case, as has been held in number of cases, it is the minority shareholder, being the respondent, who should go out of the Company on receipt of fair consideration for its shares. Accordingly, in terms of Section 402 of the Act, we direct the petitioner/Company to purchase the shares held by the respondent on a fair value to be determined by the statutory auditors of the Company on the basis of the Balance Sheet as on 31.03.1999 being the proximate date of the petition. The statutory auditor will compute the fair value of the shares within a period of three months from the date of this order and the value so computed shall be binding on both the parties. On determination of the value, in case the second petitioner his group is willing to purchase the shares held by the respondent, they should pay the consideration within six weeks thereafter. Otherwise, the Company will purchase the shares and reduce the share capital of the Company to the extent of the face value of the shares.
The plaintiff herein challenged the aforestated order before this court in COMPA. 6/2005. A Division Bench of this court by order dated 26.08.2011, confirmed the order of Company Law Board and dismissed COMPA. 6/2005. The decision of this court is reported in ILR 2012 KAR 2809.
The plaintiff has made available documents to show that in COMPA. 6/2005, plaintiff had filed Misc. Cvl. No. 15069/2009 under Order XXII Rule 10 CPC read with rules 6 & 9 of the Company (Court) Rules, 1959, inter alia contending that during pendency of "COMPA. 6/2005, appellant (plaintiff herein) namely "Ultrafilter GmbH" merged with "Ultrafilter International AG" with effect from 21.01.2004. Consequently, "Ultrafilter GmbH" transferred its assets in whole with all rights and duties, subject to dissolution without winding up by way of merger to Ultrafilter International AG. Subsequently, at the general meeting of shareholders of Ultrafilter International AG, the merger between Ultrafilter GmbH and Ultrafilter International AG was approved and in the same meeting the share holders resolved, to change the corporate form and name of Ultrafilter International AG. Accordingly, the corporate form of Ultrafilter International AG was changed from a stock corporation; (AG) into a company with limited liability (GmbH) and the name of Ultrafilter International AG was changed to Donaldsor Filtration Deutschland GmbH. In the circumstances, Donaldson Filtration Deutschland GmbH has stepped into the shoes of appellant namely "Ultrafilter GmbH". However, for the reasons best known to plaintiff, the application filed in COMPA. 6/2005 was not pursued. As already stated, this court dismissed COMPA. 6/2005 on 26.08.2011. Thus, order made by the Company Law Board in C.P. No. 57/1998 dated 12.12.2001 extracted supra was confirmed by this court.
The Special Leave to Appeal (Civil) No. 6488/2012 filed by plaintiff against the judgment passed by this court in COMPA. 6/2005 dated 26.08.2011 was dismissed on 02.04.2012.
The plaintiff had filed instant application (IA No. 16) by suppressing the proceedings before the Company Law Board in C.P. No. 57/1998, order of Company Law Board dated 12.12.2001 in CP No. 57/1998, judgment dated 26.08.2011 passed by this court in COMPA. 6/2005 and also dismissal of Special, Leave to Appeal (Civil) No. 6488/2012 filed against COMPA. 6/2005 on 02.04.2012.
The proceedings before Company Law Board in C.P. No. 57/1998 and the order dated 12.12.2001 passed therein (extracted supra) which has attained finality should have been brought to the notice of trial court as proceedings in C.P. No. 57/1998 had been initiated before institution of instant suit on 23.01.1999. The order passed in C.P. No. 57/1998 dated 12.12.2001 and judgment passed in COMPA. 6/2005 dated 26.08.2011 and order dated 02.04.2012 passed by the Supreme-Court in Special Leave to Appeal (Civil) No. 6488/2012, have direct bearing on instant suit.
The plaintiff has pleaded devolution of interest by invoking the provisions of Order VI Rule 17 CPC In fact, first application (IA No. 6) and second application (IA No. 10) filed by plaintiff though related to devolution of interest pleaded by plaintiff, were accepted by trial court under Order VI Rule 17 CPC. The instant application (IA No. 16) was filed by plaintiff to substitute paragraph 26A (amendment introduced consequent upon order made on IA No. 10).
It is also interesting to notice that instant application (IA No. 16) was filed when cross-examination of PW1 was under progress, inter alia contending that plaintiff has inadvertently and erroneously placed fact relating to merger of another entity by name "Ultrafilter GmbH" with original plaintiff "Ultrafilter GmbH" (renamed as Ultrafilter International AG) and what was taken over by "M/s. Donaldson Filtration Deutschland GmbH" was an independent entity by name "Ultrafilter GmbH". Therefore, plaintiff has sought for amendment of plaint to substitute paragraph 26A, which was introduced consequent upon order passed on IA No. 10 (application filed under Order VI Rule 17 CPC).
Thus, from various applications filed by plaintiff from time to time before trial court and orders passed in C.P. No. 57/1998 under sections 397 & 398 of Companies Act before the Company Law Board, which attained finality by dismissal of Special Leave to Appeal (Civil) No. 6488/2012, we find that plaintiff has taken inconsistent stands. The plaintiff has sought for substitution of parties, pleading devolution of interest during pendency of proceedings by invoking the provisions of Order VI Rule 17 CPC. At this juncture, it is necessary to state that provisions of Order VI Rule 17 CPC are distinct from the provisions of Order XXII Rule 10 CPC.
PW1-R.P. Murthy examined on behalf of plaintiff has filed an affidavit in lieu of examination-in-chief reading as hereunder:-
During the pendency of the above suit, the erstwhile plaintiff viz. Ultrafilter GmbH was merged with Ultrafilter International AG with effect from 21.01.2004. Consequent to the merger of Ultrafilter GmbH with Ultrafilter International AG, Ultrafilter GmbH transferred its assets in whole with all rights and duties, subject to dissolution without winding up by way of merger to Ultrafilter International AG. Subsequently, at the general meeting of the shareholders of Ultrafilter International AG, the merger between Ultrafilter GmbH and Ultrafilter International AG was approved and in the same meeting the change of corporate form and name of Ultrafilter International AG were also approved. Accordingly, the corporate form of Ultrafilter AG was changed from a stock corporation (AG) into a company with limited liability (GmbH) and the name of Ultrafilter International AG was changed to Donaldson Filtration Deutschland GmbH. Thus Donaldson Filtration Deutschland GmbH which has taken over all the assets and duties of erstwhile Ultrafilter GmbH is entitled to continue the present suit against the Defendants.
During cross-examination of PW1 on 24.07.2012, PW1 has admitted that Ultrafilter GmbH HRB 2530 is still an existing company in Germany. He does not know that HRB. 4515 is an existing company in Germany.
The learned senior counsel for plaintiff has made following submissions:-
I. The application for amendment cannot be refused on technical grounds. The rules of procedure are intended to be a handmaid to the administration of justice. A party cannot be refused just relief merely because of some mistake, negligence, inadvertence or even infraction of the rules of procedure.
II. The procedural law is intended to facilitate and not to obstruct the course of substantive justice.
III. The provisions of Order VI Rule 17 proviso (as added by CPC (Amendment) Act, 2002 are not applicable to the instant suit filed before amendment.
IV. When an application under Order VI Rule 17 CPC is made, delay is no ground to refuse prayer for amendment.
V The two preconditions for accepting amendment of pleadings are: (a) of not working injustice to other side, and (b) of being necessary for the purpose of determining real questions in controversy between parties. Amendment should be refused only where the other party cannot be placed in same position if pleading had not been amended and amendment would cause him an injury which cannot be compensated in costs.
VI. The application for amendment cannot be rejected merely on the ground of delay if court finds that by allowing application real controversy between parties may be resolved.
The learned senior counsel for plaintiff has relied on following decisions:-
I. Jai Jai Ram Manohar Lal Vs. National Building Material Supply Gurgaon,
II. Ganesh Trading Co. Vs. Moji Ram,
III. State Bank of Hyderabad Vs. Town Municipal Council,
IV. North Eastern Railway Administration, Gorakhpur Vs. Bhagwan Das (D) by Lrs.,
V. Surender Kumar Sharma Vs. Makhan Singh,
The learned counsel for respondents-defendants has made following submissions:-
I. The instant application (IA No. 16) filed to amend amended pleadings is not maintainable. It is apparent from records that plaintiff has not established that despite due diligence, plaintiff could not discover facts sought to be introduced by amendment before commencement of trial. The contents of various applications filed before this court and also before the Supreme Court and contents of IA No. 10 are contrary to contents of instant application (IA No. 16).
II. In the instant application, plaintiff has amended plaint on two occasions and instant application filed to amend amended pleadings is not maintainable.
III. If proposed amendment is accepted, that would take away admissions made by PW1 during cross-examination.
The learned counsel for respondents-defendants has relied on following decisions:-
I. J. Samuel and Others Vs. Gattu Mahesh and Others,
II. Mrs. Vandana S.P. Salgaonkar Vs. Bank of India and Another,
III. Shiv Gopal Sah @ Shiv Gopal Sahu Vs. Sita Ram Saraugi and Others,
IV. Chander Kanta Bansal Vs. Rajinder Singh Anand,
V. Aisha and Others Vs. State of Jammu and Kashmir
On consideration of the instant application (IA No. 16), earlier applications (IA No. 6 and IA No. 10) filed under Order VI Rule 17 CPC and also application filed in COMPA. 6/2005 and application filed before the Supreme Court in Special Leave to Appeal (Civil) No. 6488/2012, I find that plaintiff has pleaded devolution of interest during pendency of suit. The plaintiff instead of invoking the provisions of Order XXII Rule 10 CPC has invoked the provisions of Order VI Rule 17 CPC.
It is needless to state that there is distinction between provisions of Order VI Rule 17 CPC and provisions of Order XXII Rule 10 CPC. In fact, plaintiff had made Misc. Cvl. No. 15069/2009 under Order XXII Rule 10 CPC in COMPA. 6/2005 on 18.08.2009. However, in the instant application, plaintiff has invoked the provisions of Order VI Rule 17 CPC for the reasons best known to plaintiff. Even in the application filed along with Special Leave to Appeal (Civil) No. 6488/2012, plaintiff has pleaded merger of original plaintiff namely ''Ultrafilter GMBH'' with. ''Ultrafilter International AG'' with effect from 21.01.2004 and consequent transfer of assets of ''Ultrafilter GMBH'' in whole with all rights and duties subject to dissolution without winding up by way of merger to ''Ultrafilter International AG''. The plaintiff had pleaded in the meeting of shareholders of ''Ultrafilter International AG'' the merger between ''Ultrafilter GMBH'' and ''Ultrafilter International AG'' was approved and the share holders in said meeting also resolved to change the corporate form and name of ''Ultrafilter International AG''. Accordingly the corporate form of ''Ultrafilter International AG'' was changed from a stock corporation (AG) into a company with limited liability (GMBH) and the name of ''Ultrafilter International AG'' was changed to ''Donaldson Filtration Deutschland GmbH''. In view of this development, ''Ultrafilter GMBH'' has now become ''Donaldson Filtration Deutschland GmbH''.
In a decision reported in J. Samuel and Others Vs. Gattu Mahesh and Others, (in the case of J. Samuel and Others Vs. Gattu Mahesh and Others), the supreme court has held;
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.
(emphasis supplied)
In the case on hand, plaintiff has sought for amendment of plaint by invoking provisions of Order VI Rule 17 CPC, though what has been pleaded is devolution of interest during pendency of suit. Before trial court, plaintiff has suppressed the proceedings before the Company Law Board in C.P. No. 57/1998, order of Company Law Board dated 12.12.2001 in C.P. No. 57/1998, judgment dated 26.08.2011 passed by this court in COMPA. 6/2005 and also dismissal of Special Leave to Appeal (Civil) No. 6488/2012 on 02.04.2012. The plaintiff has also suppressed applications which had been filed in COMPA. 6/2005 before this court and also application for substitution of party filed in Special Leave to Appeal (Civil) No. 6488/2012. The trial court has proceeded on the assumption that application is filed under Order VI Rule 17 CPC. The trial court has dismissed IA No. 16 by holding that plaintiff cannot be permitted to amend the pleadings after commencement of trial, more particularly when plaintiff has not satisfied the court that despite due diligence, he could not discover these facts before commencement of trial.
The decisions relied upon by learned senior counsel for plaintiff are not applicable to the facts of instant case.
In view of the above discussion, there are no reasons to interfere with the impugned order though the trial court has assigned different reasons to reject the application. In the result, I pass the following:-
ORDER
The writ petition is dismissed.