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High Court Of Calcutta
SABYASACHI MUKHERJI
I.T.C.LIMITED - Appellant
Versus
M.M.P.LINES PVT.LTD. - Respondent
Suit 267 Of 1974
Decided On : 12/15/1977
AMENDMENT OF PLAINT - LIMITATION - INSURANCE POLICY - ASSIGNMENT - DENIAL OF CLAIM - CAUSE OF ACTION - LIMITATION ACT, 1963, ARTICLES 44(B), 58 - SECTION 3(2)(C) - CIVIL PROCEDURE CODE, ORDER VI, RULES 3, 5.
Fact of the Case:
Plaintiff, I.T.C. Ltd., filed a suit against seven defendants, including defendant No. 1, a company with defendants Nos. 2 and 3 as Directors and guarantors. Plaintiff alleged that defendant No. 1 borrowed money and agreed to pledge two Trawlers as security. One Trawler, Akashi Maru, was lost on 15th Sept. 1973. Plaintiff wrote to defendant No. 5, National Insurance Company Ltd., about the assignment of insurance policies in favor of the plaintiff and claimed damages. Defendant No. 5 responded that they were not informed about the assignment. Plaintiff filed a suit seeking specific performance, a declaration of lien on the Trawlers, and the benefit of insurance policies. Plaintiff sought to amend the plaint to allege that the payment made by defendant No. 5 was illegal, fraudulent, and in collusion with defendants Nos. 1 and 5.
Finding of the Court:
The court held that the amendment sought did not introduce a new cause of action and was not barred by limitation. The court found that the cause of action arose when the claim on the assigned policy was denied by defendant No. 5, which occurred on the date of the written statement filed on 23rd May 1975. The court also held that the application for amendment was made on the date the summons was taken out, which was 25th June 1977, and was within the limitation period.
Issues: 1. Whether the amendment sought introduced a new cause of action barred by limitation? 2. When did the cause of action arise in this case?
Ratio Decidendi: 1. The court held that the amendment sought did not introduce a new cause of action as it arose out of the claim originally made and was not foreign to it. The court relied on the Supreme Court decisions in Leach and Co. Ltd. v. Jar-dine Skinner and Co. and P. H. Patil v. K. S. Patil, which held that amendments should be allowed unless they divest vested rights or introduce a new cause of action barred by limitation. 2. The court held that the cause of action arose when the claim on the assigned policy was denied by defendant No. 5, which occurred on the date of the written statement filed on 23rd May 1975. The court relied on Article 44(b) and Article 58 of the Limitation Act, 1963, which provide for a limitation period of 3 years from the date of the occurrence causing the loss or the date of denial of the claim on the policy.
Final Decision: The court allowed the plaintiff's application for amendment of the plaint. The plaintiff was directed to effect the amendments within 3 weeks and serve copies of the amended plaint on the defendants. The defendants were granted time to file additional written statements, if any.
( 1 ) THIS is an application for amendment of the plaint. The suit in question was filed on 25th June, 1974. The Master's Summons for the application for amendment of the plaint was taken out on 25th June, 1977. The summons was made returnable on the 4th July, 1977 and on the 4th July, 1977 directions for affidavits were obtained from the Court. The suit is by the plaintiff, I. T. C. Ltd. against seven defendants. The main defendant, however, is the defendant No. 1 and the plaintiff alleged that the defendant No. 1, of which the defendants Nos. 2 and 3 are the Directors and guarantors, had borrowed some money and the plaintiff had agreed to lend and advance to the defendant No. 1 the said moneys on, inter alia, the terms that they would pledge two Trawlers to the plaintiff as security for repayment of the amounts advanced. Both the trawlers were insure with the National Insurance Company Ltd. being the defendant No. 5 herein. The material fact for the present purpose is that one of the Trawlers viz. Akashi Maru was lost on 15th Sept. 1973. It is alleged that on 30th Oct. 1973 the plaintiff wrote to the defendant No. 5 about the assignment of the policies of the insurance in favour of the plaintiff and claimed damages payable under the insurance policies. On 3rd Nov. 1973 the defendant No. 5 wrote back to say that the defendant No. 5 was not informed about the assignment of the policies, Thereafter the suit was filed, as I have mentioned before, on the 25th June, 1974 and there was an order of injunction restraining the insurance company from making any payment to the defendant No. 1. In opposition to that application on the 27th June, 1974 on behalf of the defendant No. 5 a statement was made in Court stating that in respect of Akashi Maru the amount covered by the policy had been paid to the defendant No. 1. Originally the plaintiff in the suit had claimed, inter alia, a decree for specific performance against the first defendant and a declaration that the plaintiff is entitled to a lien or charge on the Trawlers to secure the said amount of Rs. 5,22,000/ and a further declaration, inter alia, that the plaintiff is entitled to the benefit of the insurance policies mentioned in para 8 of the plaint and to any moneys payable thereunder and such moneys are charged with liability for payment of the plaintiff's claim and for other relief to which it is not necessary for me to refer for the purpose of this application.
( 2 ) IN the proposed amendment, the plaintiff seeks to amend the plaint by stating that the payment made by the 5th defendant had been made with knowledge of the assignment and was therefore illegal and made fraudulently and in collusion with the first and the fifth defendants. Consequently the plaintiff has sought to amend the prayers in the plaint by asking a declaration that the payment made by the fifth defendant under the policies has not discharged the fifth defendant of its liability to pay the plaintiff and a decree to pay Rs. 5 lakhs or Rs. 3 lacs as to be determined by this Court.
( 3 ) ON behalf of the respondents, viz. , the respondents Nos. 1 and 5, it was urged that the amendments sought to introduce a new cause of action and, therefore, it should not be allowed. It was further submitted that the amendment sought to introduce a claim on cause of action which had become barred by lapse of time. Reliance in this connection was placed on Article 44 (b) of the Schedule to the Limitation Act, 1963. It was said that the period of limitation for a cause of action on a policy of insurance of this nature starts from the date of the occurrence causing the loss, or where the claim on policy is denied, either wholly or partly, the date of such denial, and the period of limitation is 3 years from the accrual of the cause of action.
( 4 ) NOW, the question in this case is when did the cause of action arise? The loss indisputably had occurred on the 15th Sept. , 1973. Therefore, the applic
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