014-SLLR-SLLR-1999-V-3-HATTON-NATIONAL-BANK-v.-SILVA-AND-ANOTHER.pdf
CA
Hatton National Bank v. Silva and Another
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HATTON NATIONAL BANK
v.SILVA AND ANOTHER
COURT OF APPEALDE SILVA, J.,
WEERASURIYA, J.
C.A. NO. 201/98 (REV).
FEBRUARY 03, 1999.
Civil Procedure Code s. 4 – Amendment No. 9 of 1991 – S. 93 (2) – Amendmentof pleadings – Enjoining Order dissolved – Money released – New cause of actionto sue for damages – Additional prayers brought in – Change of scope of action.
The plaintiff-respondent filed action against the 1st defendant-respondent and the2nd defendant-petitioner (Bank) seeking a declaration that the plaintiff is not liableto pay the 1st defendant a certain sum of money in respect of unsettled bills,and that the 1st defendant is not entitled to demand from the 2nd defendant thesaid sum or any sum of money on the Bank guarantee, and to restrain the 2nddefendant from paying the 1st defendant, on the Bank guarantee. The enjoiningorder granted was later dissolved and the 2nd defendant, released the moneyto the 1st defendant under the guarantee bond.
The trial though fixed for 28.11.96 and 11.3.97 did not take place, but the plaintiffthereafter sought to amend the plant. It was contended that, when the interiminjunction was refused without waiting for the final decision the 2nd defendantBank had paid the money to the 1st plaintiff, and therefore due to the said actof the 2nd defendant a cause of action arose to sue the defendants to claimdamages from them. The plaintiff also sought to bring 2 additional prayers. TheDistrict Court allowed the amendment.
Held:
Per de Silva, J.
"On a perusal of the Order it is clear that in permitting the amendmentthe Court has been influenced by the fact that when the enjoining order wasset aside by Court, the 2nd defendant had paid the money before the final
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determination; if this reasoning is correct then there is no necessity for aparty to seek injunctive relief. It would be sufficient merely to institute an actionto tie the hands of all the parties to an action."
When a Bank has given a guarantee it is required to honour such guaranteeaccording to its terms.
By the said amendment the plaintiff was seeking to bring in a completelynew cause of action against both defendants for damages, thereby alteringthe scope and nature of the action.
The plaintiff cannot amend the plaint to include a new cause of actionwhich arose after the institution of the action.
APPLICATION in Revision from an Order of the District Court of Colombo.
Cases referred to:
Colombo Shipping Co., Ltd. v. Chirayn Clothing (Pvt) Ltd. – [1995]2 Sri L.R. 97.
Kuruppuarachchi v. Andreas – [1996] 2 Sri L.R. 11.
Ekanayake v. Ekanayake – 63 NLR 188.
Thirumany and Another v. Kulandavelu – 66 NLR 285.
Lakdawalla v. Muriyiah – 67 NLW 47.
Lebbe v. Sandenam – 64 NLR 461.
Senanayake v. Anthonisz – 69 LR 225.
Shamil Perera with Ms tndrani Gunasekera for 2nd defendant-petitioner.
S. Srikantha with Ms M. J. M. Jaleel for plaintiff-respondent.
Ms Menaka Munasinghe for 1st defendant-respondent.
March 26, 1999.
Cur. adv. vult.
DE SILVA, J.
By this application the 2nd defendant-petitioner seeks to revise theorder of the learned Additional District Judge dated 24th February,1998, wherein the Additional District Judge allowed the application ofthe plaintiff-respondent to amend the plaint.
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Hatton National Bank v. Silva and Another
(De Silva, J.)
115
The plaintiff-respondent (hereinafter referred to as plaintiff) filedaction against the 1st defendant-respondent (hereinafter referred toas the 1st defendant) and the 2nd defendant-petitioner (hereinafterreferred to as the 2nd defendant) in April, 1996, claiming, inter-alia-
a declaration that the plaintiff is not liable to pay the 1stdefendant the sum of Rs. 486,077.95 in respect of any unsettled bills.
a declaration that the 1 st defendant is not entitled to demandfrom the 2nd defendant the said sum or any sum of money on theBank guarantee.
enjoining order, an interim injunction, and
a permanent injunction restraining the 2nd defendantpaying the 1st defendant on the Bank guarantee.
The Court after hearing submissions of counsel for the plaintiffissued an enjoining order as prayed for in the plaint. Thereafter,objections were filed by the 1 st and 2nd defendants and after inquirythe Court made order on the 20th of June, 1996, dissolving theenjoining order and refusing the application for an interim injunction.The plaintiff did not appeal against the said order. In consequenceof the aforesaid order the 2nd defendant released the money to the1st defendant under the guarantee bond.
The trial in the case was fixed for the 28th of November, 1996.However, the trial was not taken up on that day and it was refixedfor the 11th of March, 1997. The plaintiff, thereafter, sought to amendthe plaint.
In the proposed amended plaint from paragraphs 19-23 plaintiffhas set out what transpired in Court after the institution of the actionby the plaintiff and when the interim injunction was refused withoutwaiting for the final decision of Court the 2nd defendant Bank paidthe money to the 1st defendant. In paragraph 24 it is specifically statedthat due to the said act of the 2nd defendant a cause of action aroseto the plaintiff to sue the defendants to claim damages from them.Furthermore, the plaintiff by the said amendment sought to bring twoadditional prayers, namely –
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for a declaration that the 1st defendant had no right in lawto claim and/or demand from the 2nd defendant Bank any sum ofmoney on the said guarantee and to be paid any sum by the Bank.
for an order directing the defendants jointly and severallyto pay the plaintiff a sum of Rs. 500,000 by way of damages withinterest from date of. institution of the action till date of decree tillpayment in full.
Both defendants objected to the said amendments and after inquirythe learned Judge by order dated 24th February, 1998, permitted theplaintiff to amend the plaint.
At the hearing of this application Mr. Shamil Perera, learned counselfor the 2nd defendant-petitioner, submitted that –
in making the said order the Additional District Judge hasnot given due consideration to the provisions of section 93 (2) of theCivil Procedure Code, and
that by the said amendment plaintiff was seeking to bringin a completely new cause of action against the 2nd defendant. Boththese matters will be dealt with together for convenience.
Section 93 (2) of the Civil Procedure Code as amended by ActNo. 9 of 1991 reads as follows:
"On or after the day first fixed for the trial of the action andbefore final judgment, no application for the amendment of anypleadings shall be allowed unless the Court is satisfied for reasonsto be recorded that grave and irremediable injustice will be causedif such amendment is not permitted and on no other ground, andthat the party so applying has not been guilty of laches."
Learned counsel contended that the plaintiff in his application toamend the plaint has not placed any material before Court to "satisfyCourt that grave and irremediable injustice would be caused to him"if amendment is not permitted.
Ranaraja, J. in Colombo Shipping Co., Ltd. v. Chirayn Clothing (Pvt)Ltd.m at 102 observed as follows:
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Hatton National Bank v. Silva and Another
(De Silva, J.)
117
“The amendments to pleading on or after the first date of trialcan now be allowed only in very limited circumstances, namely,when the Court is satisfied that grave and irremediable injusticewill be caused if the amendment is not permitted and the partyapplying is not guilty of laches. The onus of proving that both theseconditions are fulfilled lies squarely on the party seeking theamendment. The Court is obliged to record the reasons as to howit came to be satisfied that the two conditions have been met."
In Kuruppuarachchi v. Andreas<2) Chief Justice G. P. S. de Silvaafter examining the case law stated that "while the Court earlierdiscouraged amendment of pleadings on the date of trial, now theCourt is precluded from allowing such amendments save on the groundpostulated in the subsection".
On a perusal of the order of the Additional District Judge it is clearthat in permitting the amendment the learned Additional District Judgehas been influenced by the fact that when the enjoining order wasset aside by the Additional District Judge before whom the mattercame up, the 2nd defendant had paid the money before the finaldetermination made by Court on the matters in dispute.
If this reasoning is correct then there is no necessity for a partyto seek injunctive relief. It would be sufficient merely to institute anaction in the District Court to tie the hands of all the parties to anaction. The learned Judge has failed to address his mind to thequestion that when a Bank has given a guarantee, it is required tohonour such guarantee according to its terms.
It is to be noted that by the said amendment the plaintiff wasseeking to bring in a completely new cause of action against boththe defendants for damages and thereby altering the scope and natureof the plaintiff's action. In Ekanayake v. Ekanayakat3) Chief JusticeBasnayake stated that "It has been said over and over again thatthe use of the machinery of amendment of pleadings was not to bepermitted for the conversion of an action of one character to that ofanother". The same view had been expressed in the following casesThirumany and Another v. KulandaveliJA), Lakdawalle v. MuriyialiS) andLebbe v. Sandanani6), Senanayaka v. AnthonisJ71.
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Proviso to section 46 of the Civil Procedure Code reads as follows:“no amendment shall be allowed which would have the effect ofconverting an action of one character into an action of another andinconsistent character".
It is a fundamental principle that the rights of parties are determinedat the time of filing action. In the instant case plaintiff sought adeclaration and injunctive relief. When the injunction was refused byCourt and when the 2nd defendant discharged his obligation, theplaintiff was trying to change the scope of his action to claim damagesby amending the pleadings.
If the 2nd defendant Bank has wrongfully/or fraudulently madepayment to the 1st defendant then a cause of action, if any, has arisenfrom the date of payment. The plaintiff cannot amend the plaint toinclude a new cause of action which arose after the institution of theaction.
The learned Additional District Judge has permitted the amendmenton the basis that it would cause prejudice to the plaintiff if such anamendment was not allowed. However, the learned Judge has failedto consider that the amendment has altered the scope of the actionand brought in a new cause of action and changed the character ofthe original plaint.
Counsel for the plaintiff in his written submissions has concededthe fact that amendments were necessitated due to the acts of thedefendants after the institution of the action.
The amendments that were sought in this instant case are not forthe purpose of correcting any mistake, defect, slips or omission butto introduce a new cause of action.
In these circumstances I hold that the order of the learnedAdditional District Judge dated 24th February, 1997, is erroneousand cannot be supported in law. I allow the application and set asidethe said order dated 24.02.1997 with costs.
WEERASURIYA, J. – I agree.
Application allowed.