SHERMAN DE SILVA & CO. LTD., Appellant, and MRS. ARIYALATHA DE SILVA, Respondent

057-NLR-NLR-V-77-SHERMAN-DE-SILVA-CO.-LTD.-Appellant-and-MRS.-ARIYALATHA-DE-SILVA-Respondent.pdf


Sherman de Silva <k Co., Ltd. v. De Silva
275
Present: Wijayatilake, J. and Pathirana, J.SHERMAN DE SILVA & CO. LTD., Appellant, and MRS.ARIYALATHA DE SILVA, Respondent
S. C. 172/69 (Inty.)—D. C. Colombo, 1950/Z
Pleadinps—Civil Procedure Code—Section 93—Amendment of a plaint-—Discretionary power of the Court—Principles which the Courtshould take into consideration.
276
PATH 1RANA, J".—Sherman de Silva & Co., Ltd. v. De Silva
Plaintiff instituted action averring in her plaint that she, asadministratrix of her deceased husband’s estate, was entitled to9,907 shares in the defendant company and that the defendantcompany should be ordered to register the said shares in her name.Before answer was filed, she filed a motion to amend her plaint.In the proposed amended plaint she stated that the shares had beenunlawfully registered in the name of one R. Sherman de Silva andprayed “ for an order that the defendant company do cancel theregistration of the said shares in the name of R. Sherman de Silvaand to register the said shares in the name of the plaintiff asadministratrix of the estate
Held, that the amendment of the plaint should be allowed. Theamendment merely sought to put the real subject matter of theaction in issue even though it was done by way of the additionalrelief claimed. Neither the fundamental character of the suit norits nature and scope was altered by the amendment.
Held further, that an amendment to a plaint must be consideredwithout reference to the ultimate result of the case and quite apartfrom it.
^^PPEAL from an order of the District Court, Colombo.
Ranganathan, with S. C. Crossette-Thambiah, for thedefendant-appellant.
H. W. Jayewardene, with Varuna Basnayake and Miss IvyMarasinghe, for the plaintiff-respondent.
Cur. adv. vult.
November 23, 1972. Pathirana, J.—
The plaintiff-respondent is the administratrix of the estate ofher late husband M. K. de Silva. Letters of Administration hadbeen issued to her by the District Court of Colombo. Her husbandwas a member of the Defendant Company, and in his life-timeheld 9,907 ordinary fully paid shares. By her letter dated 2ndDecember, 1967 she had requested the Defendant Company toregister the said shares in her name as administratrix of theestate of her late husband. She instituted this action on 1stFebruary, 1968 and by her plaint she averred in paragraph 5as follows :—
“ The Directors of the Defendant Company havewrongfully and maliciously refused to register the saidshares in the name of the plaintiff as Administratrix of theestate and are maliciously and wrongfully threatening tosell the said shares to a nominee of theirs. ”
PATHIR VN'A, J.—Sherman de Silva & Co., Ltd. v. Dz Silva
277
In paragraph 6 she pleaded that: —
“ A cause of action has accrued to the plaintiff to sue theDefendant Company for an order that the defendant Com-pany do register the said shares in the name of the plaintiffas Administratrix of the said estate
She had also asked for an interim injunction to restrain theCompany from selling the said shares. In the prayer she has askedfor an order that the Defendant Company do register the saidshares in the name of the plaintiff as administratrix. On 3.2.1968the interim injunction was ordered on the defendant Companyrestraining the Company from selling the said shares until thedetermination of the action. The Journal entry of 14.3.1968 statesthat the interim injunction was served on the Defendant Com-pany. On 4.7.1968 the Defendant Company filed objections to theinterim injunction together with the affidavit of R. Sherman deSilva, Managing Director and Life Director of the Company, andannexed thereto letters written between the plaintiff and theDefendant Company, and also certain resolutions passed by theManaging Director, Sherman de Silva, in pursuance of the powersvested in him.
Sherman de Silva in his affidavit admits that the plaintiff byletter dated 2nd December, 1967, requested the DefendentCompany to register the said shares in the name of the plaintiffas administratrix of the estate of her late husband. He furtherstates that by letter ‘ J ’ dated 8th January, 1968, the plaintiff wasinformed that the said shares which stood in the name of herlate husband were sold on 4th January, 1968 at Rs. 14.25 pershare and the amount of Rs. 141,174.75, etc. was lying to thecredit of the estate of her late husband, and that the plaintiff asadministratrix was entitled to withdraw this sum. By letter ‘ L ’doted 20th January 1968, the plaintiff was further informed thatthe shares had been transferred in accordance with the provisionsof the Articles of Association of the Company to Sherman deSilva in whose name the said shares were registered. Theplaintiff by letter marked ‘K’ dated 10th January 1968 hadstated that at ho stage had she requested the Company to sellthe shares, and she added : —
“Please note that I do not agree to this sale nor will I bea party to it.”
On 20th January, 1968 by letter marked * L ’ the defendent Com-pany forwarded a cheque for Rs. 141,174.75, etc. to the plaintiff.Presumably it has not been accepted.
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VATU IRAN A, J.—Sherman de Silva & Co., Ltd. v. De Silva
It is, therefore, clear that before the plaint was filed on1st P'ebruary 1968, the plaintiff was aware that the defendantCompany registered or purported to register the said shares inthe name of the Life Director R. Sherman de Silva. 16th August1968 was a date fixed for inquiry into the interim injunction, onwhich date the case was taken off the inquiry roll and 23rdSeptember, 1968 was fixed as the date for answer.
Before answer was filed, on 19th September, 1968, the plain-tiff filed a motion to amend her plaint. In the proposed amendedplaint, paragraph 5 of the original plaint was repeated and a newparagraph 6 was added as follows : —
“ The defendent has wrongfully and maliciously registeredthe said 9,907 shares of the late Mr. M. K. de Silva in thename of R. Sherman de Silva. The plaintiff states that thesaid R. Sherman de Silva has acquired no title to or interestin the said shares. ”
In the new paragraph 7 she says: —
“ A cause of action has accrued to the plaintiff to sue theDependent Company to cancel the registration of the saidshares in the name of R. Sherman de Silva and to registerthe said shares in the name of the plaintiff as administratrixof the estate of the deceased. ”
The prayer (a) for the interim injunction remained, and theprayer (b) states as follows : —
“ For an order that the Defendant Company do cancel theregistration of the said shares in the name of R. Sherman deSilva and to register the said shares in the name of the plain-tiff as Administratrix of the said estate. ”
The objections to the amended plaint by the DefendantCompany were filed on 6th December 1968 stating that theproposed amended plaint altered the scope and the nature of theaction; that it prejudiced the defendant ; that the plaintiffpleaded a new cause of action different from the cause of actionpleaded in the original plaint, and that the amendment was notmade bona fide.
The learned District Judge by his order dated 29th April, 1969allowed the motion to amend and accepted the amended plaint.His reasons are that in order to effect the registration of theshares in the name of the plaintiff as administratrix it is neces-sary to set aside the sale in favour of Sherman de Silva. Themere fact that she now asks for an additional remedy does not
PATHIRANA, J.—Sherman de S"va & Co., Ltd. v. Dz Silva
279
alter the scops of the action. This is merely ancillary to the mainapplication that she be registered as the owner of the shares asadministratrix of the estate of the late M. K. de Silva. He furtheradded that no prejudice would be caused to any party by theamendment, and if the rights of Sherman de Silva as a purchaserwould be affected by any order made on the amended plaint, itwas a matter that could be remedied either by one of the partiesthemselves adding Sherman de Silva as a party to the action or bythe Court ex mero motu. He, however, held that the plaintiff wasclearly aware by the letters produced at the time the plaint wasfiled that the shares had been sold to Sherman de Silva and thathe had been registered as the owner of the shares, and in thecircumstances the interim injunction was of no avail and hetherefore ordered the dissolution of the interim injunction.
Under Section 93 of the Civil Procedure Code, the Court hasfull power of amending a plaint in its discretion, but this discre-tion must be exercised judicially and not arbitrarily. The circum-stances under which an Appeal Court would review the exerciseof the discretion are set out by Jenkins L.J., in G. L. Baker Ltd.v. Medway Building & Supplies Ltd.1 (1958) 1 W.L.R. 1216 at1231 : “ I would make some reference to the principle to befollowed in granting or refusing leave to amend, and I start bysaying that there is no doubt whatever in granting or refusing ofan application for such leave is eminently a matter for thediscretion of the Judge with which this Court should not inordinary circumstances interfere unless satisfied that the Judgehas applied a wrong principle or can be said to have reached aconclusion which would work a manifest injustice between theparties. ”
There are two main rules of practice that have emerged fromthe decided cases regarding the principles which a Court shouldtake into consideration when it exercises the power to amend theplaint. Firstly, the amendment should be allowed, if it is neces-sary for the purpose of clarifying or raising the real question orissues between the parties. This rule is based on the principlethat a multiplicity of actions should be avoided. The wholepurpose of pleading is to define, clarify and to limit the issueswhich are to be the subject of the pending contest. Daryanani v.Eastern Silk Emporium Ltd.2—64 N.L.R. 529 at 531.
Secondly, an amendment which works an injustice to theother side should not be allowed, namely, an amendment: —
which alters the nature or scope of the action or whichhas the effect of converting an action of one characterinto an action of another or inconsistent character ;
1 (1958) 1 W. L. R. 1216 at 1231.1 (1963) 64 N. L. R. 529 at 531.
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PATHIRANA, J.—Sherman da Silva cfr Co., Ltd. v. Ds Silva
which has the effect of taking the action out of the
provisions governing the limitation of actions in thePrescription Ordinance or any other enactment oflaw;
which has the effect of prejudicing the rights of the other
side existing at the date of the proposed amendment, orwhich is made mala fide.
Mr. Ranganathan for the appellant has argued that the amend-ment is made mala fide and he refers to para 5 of the originalplaint where the plaintiff had stated that the Defendant Companywas maliciously and wrongfully threatening to sell the said sharesto a nominee of theirs, and on this averment improperly obtainedan interim injunction against the Defendant Company, whenshe knew that at the time the plaint was filed, the shares werealready registered in the name of R. Sherman de Silva. In theamended plaint, however, the additional relief is claimed on thebasis that the shares had already been disposed of in the nameof R. Sherman de Silva. I can understand the allegation of malafides being made in regard to the interim injunction. The learnedDistrict Judge has quite rightly for this reason dissolved theinterim injunction.
The allegation of mala fides cannot, however, be sustainedin respect of the amendment proposed. In the original plaintthe foundation of the plaintiff’s case was based on the allegationthat the defendant wrongfully and unlawfully refused to registerthe said shares in the name of the plaintiff as administratrix.In the amended plaint, she says in effect that the refusal wasdue to the fact that the defendant had wrongfully andmaliciously registered the said shares in the name of Shermande Silva. Two material facts are therefore not controverted bythe parties, namely : —
the refusal on the part of the Company to register the
said shares in the name of the plaintiff ;
that the said shares were registered by the Company
in the name of R. Sherman de Silva.
The parties are only at issue on the question of the legalitycf: —
the refusal to register ;
the registration of the shares.
I do not think, therefore, the charge of mala fides can succeedas the amendment does not necessarily cause any injustice tothe Defendant Company. In this context we have to keep inmind the affidavit filed by three of the Directors of the Company
PATHIRANA, J.—Sherman de Silva & Go., Ltd. v. De Silva
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who have stated that the application for registration of the sharesin the name of the plaintiff as administratrix made on 2.12.1967was not placed before the Board of Directors.
The next objection to the amended plaint is that it introducesa distinct cause of action and therefore alters the nature andscope of the action. If one examines the plaint and the amendedplaint, it is clear that what is alleged as the second cause ofaction, namely, the wrongful and malicious registration of theshares by the Company in the name of R. Sherman de Silva,has a direct causal connection to what is pleaded in the originalplaint and also repeated in the amended plaint, namely, thewrongful and malicious refusal to register the said shares inthe name of the plaintiff as Administratrix. The wrongful andmalicious refusal to register the said shares in the name of theplaintiff arises and springs from the alleged wrongful registrationof the said shares in the name of Sherman de Silva,
Even if the plaintiff went to trial on the original plaint, theposition taken up by the Defendant Company in the affidavit,namely, that the Company was entitled to refuse to registerthe said shares in her name, as the Articles of Association of theCompany permitted the Company to register the said shares inthe name of Sherman de Silva, was a matter which wouldnecessarily have to be put forward as a defence by the DefendantCompany. The same matters have also to be gone into and putin issue even if the trial proceeds on the amended plaint. In thisconnection I have to agree with the observation made by Sansoni
J., in Daryanani v. Eastern Silk Emporium Ltd., 64 N.L.R. 529at 534.1 When he states :—“ But an amendment seeking to add acause of action which is so germane to and so connected withthe original cause of action should be permitted. ” In that casethe plaintiff brought an action in the form of summary procedureto recover a sum of Rs. 7,449.96 upon a cheque drawn in hisfavour by the defendant. The defendant applied for and obtainedleave to appear and defend unconditionally. The plaintiff there-after moved to amend the plaint pleading an alternative causeof action for goods sold and delivered. The identical amountclaimed in the original plaint was claimed on the new cause ofaction. The amendment was allowed as the real subject matterbeing “ indebtedness ” no prejudice was caused to the other side.Likewise in the instant case, the foundation of the plaintiff’s caseis based on the refusal to register the said shares by the Companyin the name of the plaintiff as administratrix. The observationsmade by Baguley J., in Chettiar Firm v. Maung Min Maung andothers—(1933) A.E.R. Rangoon—page 247 at 249’ cited by
1 (1963) 64 N. L. R. 529 at 534.* 11933) A. E. R. (Rangoon) 247 at 249.
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PATHIRANA, J.—Sherman de Silva & Co., Ltd. v. Dz Silva
Tambiah J., in Senanayake v. Anthoniz, 69 N.L.R. 225 at 227 are therefore apposite, “ It would be seen therefore that theone thing which must not be altered by the amendment is thefundamental character of the suit, and I understand that thefundamental character of the suit must refer to the foundationon which a suit is based. It is the foundation on which the suitis based and not the prayer of the plaint that determines thefundamental character.”
The proposed amendment merely seeks to put the real subjectmatter of the action in issue even though it is done by way ofthe additional relief claimed. In my view, the fundamentalcharacter of the suit has therefore not been altered by theamendment.
The next objection is that the reliefs claimed in the plaint andin the amended plaint are different and therefore the nature andscope of the action have been altered. In the original plaint therelief claimed is only for an order that the Defendant Companydo register the said shares in the name of the plaintiff as adminis-tratrix, while in the amended plaint there is an additional relieffor an order that the Defendant Company do cancel the registra-tion of the said shares in the name of R. Sherman de Silva.
Mr. Jayewardene for the plaintiff respondent has pointed outthat the issues between the parties and the fundamental characterof the suit as set out in the plaint have not been altered and theclaim for an additional relief is merely to achieve the object forwhich the original action was brought, as otherwise there willbe an incongruous situation where both the name of the Adminis-tratrix and the name of Sherman de Silva will appear in theregister of shares if the plaintiff ultimately succeeds in the action.The additional relief claimed is merely ancillary to the originalrelief in order to give full effect to the original relief, and there-fore it does not alter the nature and scope of the action.
Mr. Ranganathan has, however, argued that the prayer for thecancellation of the registration of the shares in the name of R.Sherman de Silva amounts to a rectification of the register underSection 99 of the Companies Ordinance (Chapter 144), and thatby reason of the special procedure introduced by Section 360 (b)of Act 15 of 1964, this relief can only be claimed by way ofsummary procedure and not by regular action.
Mr. Jayewardene’s position is that Section 99 of the CompaniesOrdinance does not apply to the facts of this case, and the specialprocedure envisaged by Section 360 (b) is only open to “ anyperson in his capacity of holder of shares in such Company ”,and the plaintiff is not yet a holder of shares as such and shecannot resort to this special procedure. While there is much force
1 (1965) 69 N. L. R. 225 at 227.
PATH IRANA, J.—Sherman de Silva <b Co., Ltd. v. De Silva
283
in the argument of Mr. Jayewardene, I do not think that thiscontention of Mr. Ranganathan can be taken into account at thisstage when the amendment to the plaint is considered by theCourt. The substantive rights of parties are not adjudicated bythe Court at the stage of the amendment of the plaint. It is notfor the Court to decide in anticipation when considering an appli-cation to amend the plaint whether the relief sought by way ofamendment will be ultimately rejected by the Court on theground that the relief claimed calls for a special procedure, otherthan that by way of regular procedure, and therefore on thataccount disallow the amended plaint. The amendment to theplaint has to be considered without reference to the ultimateresult of the case and quite apart from it, and the only considera-tion should be whether it conforms or not to the principles Ihave set out above. So long as the additional relief claimedin the amended plaint does not come into conflict with theserules, leave to amend should be given. In this connection,I will refer again to the case of Senanayake v. Anthonisz1—i69 N.L.R. 225. This was a case in which the plaintiff brought anaction against the defendants on two causes of action arising outof a partnership agreement. The defendants purporting to actunder a clause in the agreement informed the plaintiff that heceased to be a partner. On the first cause of action the plaintiffaverred that the defendants wrongfully repudiated the obligationunder the deed of partnership and claimed a refund ofRs. 100,000 which he paid as premium. On the second cause ofaction, he pleaded that as a result of the defendant’s conduct inwrongfully terminating the services he had suffered damages ina sum of Rs. 100,000. After the trial commenced and certain issueswere framed, the plaintiff sought to amend the plaint by addingtwo additional reliefs, viz : —
that the partnership should be dissolved or
in the alternative the deed of partnership should be
rescinded.
The amendment was refused by the District Judge. On appeal itwas allowed, despite the contention of the defendants that thereliefs claimed in the amendment are inconsistent with the reliefclaimed in the plaint as the cause of action set out in the plaintwas one recognised by common law, while the cause of actionfor dissolution is found in Section 35 of the Partnership Act.Tambiah J., held that as the plaintiff was merely asking foradditional relief by the amendment, he was not therefore alteringthe nature of the action. I am of the view that the additional reliefin the instant case which is ancillary and is merely calculated to
1 (1965) 69 N. L. R. 225.
284
Saravanai v. O. J. C., Police Station, Fort
give effect to the original relief, does not alter the nature andscope of the action. Mr. Ranganathan has cited a number of casesin support of his argument that the amendment should not beallowed. He referred among others, to Don Alwis v. VillageCommittees of Hiripitiya1—54 N.L.R. 225; Wijewardene v.Lenora 2 64 N.L.R. 529 ; Ekanayake v. Ekanayake3—63 N.L.R.188; and Municipal Council, Jaffna v. Dodwell Company Ltd.,Colombo *—73 C.L.W. 41. These decisions are not helpful as thefacts can be clearly distinguished.
As I have observed earlier, the plaintiff complains of a wrongand the foundation of the alleged wrong, is the same in boththe plaint and the amended plaint. In effect the relief claimed byher is substantially the same. I, therefore, hold that the DistrictJudge has acted correctly in permitting the amendment. It is alsomy view that in the interests of justice the amendment shouldbe allowed as no prejudice would be caused to the DefendantCompany. Furthermore, the acceptance of this amendment wouldobviate a multiplicity of actions.
The appeal is, therefore, dismissed with costs.
Wijayatilake. J.—I agree.
Appeal dismissed.