Thursday, April 19, 2012

United India Insurance Co. Ltd. Vs. Laxmamma & Ors.

Motor Vehicles Act - Sections 145, 147 and 149- Liability of insurance company towards third party when cheque of insured is bounced.
Where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance companyb s liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.

Supreme Court of India
CIVIL APPEAL NO . 3589 OF 2012
(Arising out of SLP(C) No. 23511 of 2009)
Hon'ble Judge(s):  R.M. Lodha and H. L. Gokhale
Date of Judgment: April 17, 2012 
United India Insurance Co. Ltd. Vs. Laxmamma & Ors.

JUDGMENT
R.M . Lodha , J .
Leave granted.
2. The only question that arises for consideration in this appeal by special leave is: whether the appellant, United India Insurance Company Limited (insurer) is absolved of its obligations to the third party under the policy of insurance because the cheque given by the owner of the vehicle towards the premium got dishonoured and subsequent to the accident, the insurer cancelled the policy of insurance.
3. The above question arises in this way. M. Nagaraj (husband of respondent no. 1 and father of respondent nos. 2 and 3) was travelling in a bus bearing registration no. KA 018116 on May 11, 2004. At about 8.50 a.m. on that day due to negligent application of brake by the bus driver, the back door of the bus suddenly opened and M. Nagaraj standing near the door fell down. He sustained grievous injuries and subsequently died. The respondent nos. 1 to 3, to be referred as claimants, filed a claim petition before the Motor Accident Claims Tribunal, Bangalore (for short, ‘Tribunal’) seeking compensation of Rs. 15 lakhs. The present appellant, insurer was impleaded as respondent no. 2 while the owner of the bus was impleaded as respondent no.1. The owner and the insurer contested the claim petition on diverse grounds. The insurer raised the plea in the written statement that the insurance policy dated April 14, 2004 issued by it covering the said bus for the period April 16, 2004 to April 15, 2005 was not valid as the premium was paid through cheque and the cheque got dishonoured and, therefore, there was no liability on it to cover the third party risk.
4. The Tribunal on recording the evidence and after hearing the parties held that the claimants were successful in proving that on May 11, 2004 at 8.50 a.m. the deceased M. Nagaraj was travelling in the bus and he fell down from the bus through the door by sudden application of brake negligently by the driver and died due to the injuries sustained in that accident. The Tribunal also recorded the finding of fact on examination of the documentary and oral evidence that cancellation of policy because of non-payment of the premium was done by the insurer after the accident had taken place and intimation of cancellation was given to the owner on May 21, 2004 whereas accident took place on May 11, 2004. The Tribunal, thus, held that the insurer was liable to the claimants. The Tribunal in its award dated June 28, 2006 held that claimants were entitled to compensation in the sum of Rs. 6,01,244/- and apportioned that amount amongst claimants. Aggrieved by the award of the Tribunal, the insurer preferred appeal before the High Court. The High Court dismissed the insurer’s appeal on November 11, 2008. It is from this order that the present appeal has arisen.
5. Mr. A.K. De, learned counsel for the appellant strenuously urged that having regard to the undisputed fact that the cheque issued by the owner of the vehicle towards the premium for insurance of vehicle was dishonoured, the contract of insurance became void and the insurer could not be compelled to perform its part of promise under the policy. He submitted that no liability can be fastened on the insurers qua third party if the policy of insurance is rendered void for want of consideration to the insurer. Learned counsel submitted that the view taken by this Court in Oriental Insurance Co. Ltd. v. Inderjit Kaur and others, (1998) 1 SCC 371 has been diluted by the later decisions of this Court in the case of National Insurance Co. Ltd. v. Seema Malhotra and others, (2001) 3 SCC 151 and Deddappa and others v. Branch Manager, National Insurance Co. Ltd., (2008) 2 SCC 595. In the alternative, learned counsel for the insurer submitted that if the Court holds that the insurer is liable to pay compensation to the claimants, the amount so paid by the insurer to the claimants must be allowed to be recovered from the insured.
6. Mr. P.R. Ramasesh, learned counsel for respondent no. 4 (owner) supported the view of the High Court. He submitted that on the date of the accident, the policy was subsisting and the liability of the insurer continued and, therefore, the insurer cannot recover the amount paid to the claimants from the insured.
7. Section 64-VB of the Insurance Act, 1938 (for short, ‘Insurance Act’) provides as under :
“64-VB. No risk to be assumed unless premium is received in advance.- (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation.- Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.
(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurers, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.
(5) The Central Government, may, by rules, relax the requirements of sub-section (1) in respect of particular categories in insurance policies.
(6) The Authority may, from time to time, specify, by the regulations made by it, the manner of receipt of premium by the insurer.”
The above provision states that no risk is assumed by the insurer unless premium payable is received in advance.
8. The Motor Vehicles Act, 1988 (for short, ‘the M.V. Act’) in Chapter XI deals with insurance of motor vehicles against third party risks. Section 145 in that Chapter provides for definitions:
(a) authorised insurer,
(b) certificate of insurance,
(c) liability,
(d) policy of insurance,
(e) property,
(f) reciprocating country and
(g) third party.
9. Section 146 mandates insurance of a motor vehicle against third party risk. Inter alia, it provides that no person shall use the motor vehicle in a public place unless a policy of insurance has been taken with regard to such vehicle complying with requirements as set out in Chapter XI. The owner of vehicle, thus, is statutorily mandated to obtain insurance for the motor vehicle to cover the third party risk except in exempted and exception categories as set out in Section 146 itself.
10. Section 147 makes provision for requirements of policies and limits of liability. Sub-section (5) thereof is relevant for the present purposes which reads as follows :
“S. 147. – Requirements of policies and limits of liability.- (1) ) to (4)
xxx xxx xxx xxx xxx xxx
(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.”
11. Section 149 deals with the duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub-section (1) which is relevant for the present purposes reads as under:
“S.149.- Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.”
12. The above provisions came up for consideration in the case of Inderjit Kaur. That was a case where a bus met with an accident. The policy of insurance was issued by the Oriental Insurance Company Limited on November 30, 1989. The premium for the policy was paid by cheque but the cheque was dishonoured. The insurance company sent a letter to the insured on January 23, 1990 that the cheque towards premium had been dishonoured and, therefore, the insurance company was not at risk. The premium was paid in cash on May 2, 1990 but in the meantime on April 19, 1990 the accident took place, the bus collided with the truck and the truck driver died. The truck driver’s wife and minor sons filed claim petition. A three-Judge Bench of this Court noticed the above provisions and then held in paragraphs 9, 10 and 12 (pages 375 and 376) as under :
“9. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.
10. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured.
12. It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant.”
13. In Inderjit Kaur, the Court invoked the doctrine of public interest and held that the insurance company was liable to indemnify third parties in respect of the liability which the policy covered despite the bar created by Section 64-VB of the Insurance Act. The Court did leave open the question of insurer’s entitlement to avoid or cancel the policy as against insured when the cheque issued for payment of the premium was dishonoured.
14. In New India Assurance Co. Ltd. v. Rula and others, (2000) 3 SCC 195 the Court was concerned with a question very similar to the question posed before us. That was a case where the insurance policy was issued by the New India Assurance Co. Ltd. in terms of the requirements of the M.V. Act but the cheque by which the owner had paid the premium bounced and the policy was cancelled by the insurance company but before the cancellation of the policy, accident had taken place. A two-Judge Bench of this Court considered the statutory provisions contained in the M.V. Act and the judgment in Inderjit Kaur. In paragraph 13 (at 0), the Court held as under :
“13. This decision, which is a three-Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. If, on the date of accident, there was a policy of insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party” (Emphasis supplied)
15. In Seema Malhotra, the Court was concerned with the question whether the insurer is liable to honour the contract of insurance where the insured gave a cheque to the insurer towards the premium amount but the cheque was dishonoured by the drawee bank due to insufficiency of funds in the account of the drawer. In the case of Seema Malhotra2, the above question arose from the following facts : the owner of a Maruti car entered into an insurance contract with National Insurance Company Limited on December 21, 1993; on the same day the owner gave a cheque of Rs. 4,492/- towards the first instalment of the premium; the insurance company issued a cover note as contemplated in Section 149 of the M.V. Act; the car met with an accident on December 31, 1993 in which the owner died and the car was completely damaged; on January 10, 1994 the bank on which the cheque was drawn by the insured sent an intimation to the insurance company that the cheque was dishonoured as there were no funds in the account of the drawer and on January 20, 1994 the business concern of the owner was informed that the cheque having been dishonoured by the bank, the insurance policy is cancelled with immediate effect and the company is not at risk. The widow and children of the owner filed a claim for the loss of the vehicle with the insurance company. When the claim was repudiated, they moved the State Consumer Protection Commission (for short, ‘Commission’). The Commission rejected the claim of the claimants and held that insurer was justified in repudiating the contract as soon as cheque got bounced. The claimants moved the Jammu and Kashmir High Court. The High Court reversed the order of the Commission and held that the insurance company chose to cancel the insurance policy from the date of issuance of communication and not from the date the cheque was issued which got bounced. The matter reached this Court from the above judgment of the High Court. The Court referred to Section 64-VB of the Insurance Act, Sections 25, 51,52,54 and 65 of the Indian Contract Act and the decisions of this Court in Inderjit Kaur and Rula and held (at pages 156 and 157) as under :
“17. In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid.
18. Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation.
19. Under Section 25 of the Contract Act an agreement made without consideration is void. Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, the insurer is entitled to get the money back.
20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case, the Insurance Company is legally justified in refusing to pay the amount claimed by the respondents.”
16. In Deddappa, the Court was concerned with the plea of the insurance company that although the vehicle was insured by the owner for the period October 17, 1997 to October 16, 1998 but the cheque issued therefor having been dishonoured, the policy was cancelled and, thus, it was not liable. That was a case where for the above period of policy, the cheque was issued by the owner on October 15, 1997; the bank issued a return memo on October 21, 1997 disclosing dishonour of the cheque with remarks “fund insufficient” and the insurance company, thereafter, cancelled the policy of insurance by communicating to the owner of the vehicle and an intimation to the concerned RTO. The accident occurred on February 6, 1998 after the cancellation of the policy.
17. The Court in Deddappa again considered the relevant statutory provisions and decisions of this Court including the above three decisions in Inderjit Kaur, Rula and Seema Malhotra. In para 24 (at 1) of the Report, the Court observed as under:
“24. We are not oblivious of the distinction between the statutory liability of the insurance company vis-à-vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim.”
Then in para 26 (at 2), the Court invoked extraordinary jurisdiction under Article 142 of the Constitution of India and directed the insurance company to pay the amount of claim to the claimants and recover the same from the owner of the vehicle.
18. We find it hard to accept the submission of the learned counsel for the insurer that the three-Judge Bench decision in Inderjit Kaur1 has been diluted by the subsequent decisions in Seema Malhotra and Deddappa. Seema Malhotra and Deddappa turned on the facts obtaining therein. In the case of Seema Malhotra, the claim was by the legal heirs of the insured for the damage to the insured vehicle. In this peculiar fact situation, the Court held that when the cheque for premium returned dishonoured, the insurer was not obligated to perform its part of the promise. Insofar as Deddappa is concerned, that was a case where the accident of the vehicle occurred after the insurance policy had already been cancelled by the insurance company.
19. In our view, the legal position is this : where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company’s liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.
20. Having regard to the above legal position, insofar as facts of the present case are concerned, the owner of the bus obtained policy of insurance from the insurer for the period April 16, 2004 to April 15, 2005 for which premium was paid through cheque on April 14, 2004. The accident occurred on May 11, 2004. It was only thereafter that the insurer cancelled the insurance policy by communication dated May 13, 2004 on the ground of dishonour of cheque which was received by the owner of the vehicle on May 21, 2004. The cancellation of policy having been done by the insurer after the accident, the insurer became liable to satisfy award of compensation passed in favour of the claimants.
21. In view of the above, the judgment of the High Court impugned in the appeal does not call for any interference. Civil appeal is dismissed. However, the insurer shall be at liberty to prosecute its remedy to recover the amount paid to the claimants from the insured. No order as to costs.

Friday, April 6, 2012

Rameshkumar Agarwal Vs. Rajmala Exports Pvt. Ltd. & Ors.

Civil Procedure Code, 1908 - Order 6 Rule 17- While deciding the application for amendment ordinarily the Court must not refuse bona fide, legitimate, honest and necessary amendments and should never permit mala fide and dishonest amendments. The purpose and object of Order VI Rule 17 of the Code is to allow either party to alter or amend his pleadings in such manner and on such terms as may be just. Amendment cannot be claimed as a matter of right and under all circumstances, but the Courts while deciding such prayers should not adopt a hyper-technical approach. Liberal approach should be the general rule particularly, in cases where the other side can be compensated with costs. Normally, amendments are allowed in the pleadings to avoid multiplicity of litigations.

Supreme Court of India


[Civil Appeal No. 3295 of 2012 arising out of S.L.P. (Civil) No. 27961 of 2010]
Hon'ble Judge(s): P. SATHASIVAM AND J. CHELAMESWAR
Date of Judgment: MARCH 30, 2012
Rameshkumar Agarwal Vs. Rajmala Exports Pvt. Ltd. & Ors.

Order

P. Sathasivam,J.

1. Leave granted.

2. This appeal is directed against the final judgment and order dated 08.06.2010 passed by the High Court of Judicature at Bombay in Appeal No. 40 of 2010 in Chamber Summons No. 1233 of 2008 in Suit No. 2374 of 2007whereby the High Court disposed of the appeal filed by the appellant here in by partly allowing Chamber Summons No. 1233 of 2008 filed by respondentNo.1 herein for amendment in the plaint.

3. Brief facts:

a. The property (Bungalow) in question was constructed by the late Ganpatrai Agarwal, father of the appellant herein. Vipin Kumar Agarwal, respondent No.4 is the brother of the appellant. The land on which the said bungalow is constructed is a leasehold property and belongs to Hatkesh Co-operative Housing Society Limited (hereinafter referred to as "the Society"). The Society granted leasehold rights in respect of the said plot by indenture of lease dated 22.02.1976. The mother of the appellant passed away in 1991 and his father also passed away in 2002. After the death of the parents, the appellant holds 50% share in the suit property and his brother, respondent No.4 herein, also holds remaining 50% share in the suit property.

b. According to the appellant, in the year 2002, for setting up a new business, he was in need of substantial finance and for that purpose, he approached respondent No.1-Company through its Director Mr. Rajendra Kumar Aggarwal, who is his co-brother. Respondent No.2 agreed to finance the proposed projects on the condition that some documents are required to be executed as security. In 2006, the appellant signed an agreement with the Company promising to give his share in the bungalow as a security for the loan. The said agreement was to be acted only when the Company will give an advance loan of Rs.1,85,00,000/- and further upon failure of the appellant to repay the same within a period of two years from the date of disbursement of the full amount of loan with interest @ 12% p.a. Even before getting the loan amount, the appellant herein signed the agreement. Due to adverse market conditions, the appellant did not go ahead with the proposed project and did not take any kind of financial assistance from respondent No.1 - Company and respondent No.2 - co-brother of the appellant.

c. According to respondent No.2, the appellant signed an agreement for sale on 02.02.2006 for selling 50% of his undivided right, title and interest in the suit property. On 16.08.2007, respondent No.1-Companyfiled a suit for specific performance being Suit No.2374 of 2007 before the High Court of Bombay alleging that the appellant herein had agreed to sell his 50% share in the suit property to the Company for a consideration ofRs.1,85,00,000/- and also alleged that the appellant ensured that respondent No.4 - the brother of the appellant would sell his 50% undivided share in the property to the Company for Rs.3,00,00,000/- and represented him as an agent of respondent No.4. On 06.09.2007, respondent No.1 -Company took out Notice of Motion No.3241 of 2007 in which an ex-parte ad interim order was passed in their favour.

d. The appellant herein sent a letter dated 10.09.2007 through his advocate to respondent Nos. 1 & 2 for seeking details of the consideration of Rs.1,85,00,000/- and also for inspection of various documents referred to and relied on by them in the plaint as well as in the Notice of Motion. After inspecting the documents, the appellant filed a reply and prayed for vacating of the ex-parte ad interim order dated 06.09.2007. After hearing the parties, the High Court, by order dated 26.11.2007, vacated the ex-parte ad interim order. On 20.08.2008, respondent No.1-Company took out Chamber Summons No. 1233 of 2008 in Suit No. 2374 of 2007 with a prayer to amend the plaint by impleading other parties. The appellant herein opposed the same. However, by order dated 21.11.2009, learned Single Judge of the High Court partly allowed the Chamber Summons.

e. Against the order dated 21.11.2009, the appellant herein preferred an appeal before the Division Bench being Appeal No. 40 of 2009 in Chamber Summons No. 1233 of 2008 in Suit No. 2374 of 2007. By the impugned order dated 08.06.2010, the Division Bench of the High Court dismissed the appeal.

f. Aggrieved by the said order of the High Court, the appellant has filed this appeal by way of special leave before this Court.

4. Heard Mr. Shekhar Naphade, learned senior counsel for the appellant, Mr. Gaurav Agrawal, learned counsel for respondent Nos. 1-3 and Mr. Vinay Navare, learned counsel for respondent No.4.

5. After filing a suit for specific performance in the year 2007, the plaintiff filed Chamber Summons No. 1233 of 2008 for amendment of plaint for impleadment of two parties as plaintiff Nos. 2 & 3 and three parties as defendant Nos. 3,4 & 5 apart from the fact that he wants to explain how money was paid.

A perusal of the amendment application shows that plaintiff by this amendment seeks to incorporate certain facts, which according to him, establish that an aggregate amount of Rs. 2,05,00,000/-was paid by him and the proposed plaintiffs prior to the suit agreement; that defendant No.1 confirmed having received the payment from the plaintiffs in the name of his nominees, namely, proposed defendant Nos. 3-5and the receipt of the amount was reflected in the accounts of proposed defendant Nos. 3-5.

It is also projected that the proposed amendment is limited to the extent of contending that defendant Nos. 1 and 2 and the proposed defendants treated the payment made by the plaintiffs to defendantNos.3 to 5 as payment having been made to defendant No.1. Though the appellant herein - defendant No.1 therein, contended that the proposed amendment altered the cause of action, after perusal of the entire averments, we are of the view that it merely introduce facts/evidence in support of the contention already pleaded, viz., that the entire consideration under the agreement has been paid.

In the original plaint, the details of payment of consideration have not been stated and by the present amendment, the plaintiff wants to explain how money was paid. Accordingly, there is no inconsistency in the case of the plaintiff. The claim that the present amendment being barred by limitation is also rightly rejected by the Courts below. In fact, the learned single Judge allowed the Chamber summons only to the extent of prayers (a) and (b) subject to clarification made in paragraph 14 of his order.

6. Order VI Rule 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as "the Code") makes it clear that every pleading shall contain only a statement in a concise form of the material facts on which the party pleading relies for his claim or defence but not the evidence by which the yare to be proved. Sub-rule (2) of Rule 2 makes it clear that every pleading shall be divided into paragraphs, numbered consecutively, each allegation being, so far as is convenient, contained in a separate paragraph. Sub-rule (3) of Rule 2 mandates that dates, sums and numbers shall be expressed in a pleading in figures as well as in words.

7. Order VI Rule 17 of the Code enables the parties to make amendment of the plaint which reads as under; "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."

8. Order I Rule 1 of the Code speaks about who may be joined in a suit as plaintiffs. Mr. Shekhar Naphade, learned senior counsel for the appellant, after taking us through the agreement for sale dated 02.02.2006,pointed out that the parties to the said agreement being only Rameshkumar Agarwal, the present appellant and Rajmala Exports Pvt. Ltd., respondentNo.1 herein and the other proposed parties, particularly, Plaintiff Nos. 2 & 3 have nothing to do with the contract, and according to him, the Courts below have committed an error in entertaining the amendment application. In the light of the said contention, we have carefully perused the agreement for sale dated 02.02.2006, parties to the same and the relevant provisions from the Code. We have already pointed out that the learned single Judge himself has agreed with the objection as to proposed defendant Nos. 3-5 and found that they are not necessary parties to the suit, however, inasmuch as the main object of the amendment sought for by the plaintiff is to explain how the money was paid, permitted the other reliefs including impleadment of plaintiff Nos. 2 & 3 as parties to the suit.

9. In Rajkumar Gurawara (Dead) Through L.Rs vs. S.K. Sarwagi & Company Private Limited & Anr. (2008) 14 SCC 364, this Court considered the scope of amendment of pleadings before or after the commencement of the trial. In paragraph 18, this Court held as under:- "...........It is settled law that the grant of application for amendment be subject to certain conditions, namely,

i. when the nature of it is changed by permitting amendment;

ii. when the amendment would result in introducing new cause of action and intends to prejudice the other party;

iii. when allowing amendment application defeats the law of limitation........."

10. In Revajeetu Builders & Developers vs. Narayanaswamy & Sons & Ors.(2009) 10 SCC 84, this Court once again considered the scope of amendment of pleadings. In paragraph 63, it concluded as follows: "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.

These are some of the important factors which may be kept in mind while dealing with application filed under Order 6 Rule 17. These are only illustrative and not exhaustive."

11. It is clear that while deciding the application for amendment ordinarily the Court must not refuse bona fide, legitimate, honest and necessary amendments and should never permit mala fide and dishonest amendments. The purpose and object of Order VI Rule 17 of the Code is to allow either party to alter or amend his pleadings in such manner and on such terms as may be just. Amendment cannot be claimed as a matter of right and under all circumstances, but the Courts while deciding such prayers should not adopt a hyper-technical approach. Liberal approach should be the general rule particularly, in cases where the other side can be compensated with costs. Normally, amendments are allowed in the pleadings to avoid multiplicity of litigations.

12. In view of the fact that the amendment application came to be filed immediately after filing of the suit (suit came to be filed in 2007 and the amendment application was in 2008) i.e. before commencement of the trial and taking note of the fact that the learned single Judge confined the relief only to a certain extent and also that in the proposed amendment the plaintiff wants to explain how the money was paid, though necessary averments in the form of foundation have already been laid in the original plaint, we hold that by this process the plaintiff is not altering the cause of action and in any way prejudice defendants.

13. By the present amendment, the plaintiff furnished more details about the mode of payment of consideration. Accordingly, we hold that there is no inconsistency and the amendment sought for is not barred by limitation. We fully agree with the conclusion arrived at by the learned single Judge and the Division Bench of the High Court.

14. In the light of what we have stated above, we do not find any merit in the appeal, consequently, the same is dismissed. No order as to costs.