Commercial Suit | Plaintiff Seeking Amendment Of Plaint To Produce Documents Must Show Reasonable Cause For Not Disclosing Them Earlier: Bombay HC

Justice Manish Pitale held that the provisions of the Commercial Courts Act must operate rigorously to commercial suits to achieve its objective of speedy disposal of high-value commercial disputes.

“...the only provision under which the Applicant can place on record a document which was in its power, possession, control or custody at the time of filing of the suit but was not filed along with the plaint, is Order XI Rule 1(5) of the CPC, as applicable to the commercial courts. The said provision mandatorily requires the Applicant/Plaintiff to establish a reasonable cause for non-disclosure of the document along with the plaint”, the court held.

The court rejected the proposal to place additional documents on record in a commercial suit and only allowed a partial amendment as per the applicant's proposal.

The dispute arose in a commercial suit filed by the plaintiff company Khanna Rayon Industries Pvt. Ltd. seeking specific performance of a development agreement regarding the plaintiff's entitlement to certain parking spaces in the property, which formed part of the agreement.

The plaintiff sought to amend the plaint under Order VI Rule 17 of the CPC by introducing two Exhibits. As per the proposed amendment in the second Exhibit, the plaintiff sought to place two documents on record.

The defendant objected to the proposed amendment arguing that documents could not be introduced without adhering to the strict requirements of Order XI of the CPC, as amended by the Commercial Courts Act, 2015. The stringent requirements of Order XI of the CPC, applicable to commercial courts, would apply to the proposed amendment that sought to introduce documents that were already within the plaintiff's power, possession, control, or custody at the time of filing the suit, the defendant argued.

The plaintiff argued that the proposed amendment was within the ambit of Order VI Rule 17 of the CPC, and the court should adopt a liberal approach at the pre-trial stage in granting amendments necessary to decide the real questions in dispute between the parties. The plaintiff further argued that accepting the defendants' arguments would lead to two classes of amendments in commercial suits – one a simple amendment and other an amendment seeking to place documents on record. The plaintiff claimed that the Commercial Courts Act brought specific amendments in the CPC but VI Rule 17 was not amended.

Order VI Rule 17 of the CPC provides that the Court may at any stage of the proceedings allow either party to amend his pleadings as necessary for the purpose of determining the controversy between the parties.

As per Order XI Rule 1(5) as applicable to commercial courts, the plaintiff isn’t allowed to rely on documents, which were in his power, possession, control or custody and not disclosed along with plaint, except if the court permits it upon the plaintiff establishing reasonable cause for non-disclosure along with the plaint.

The court emphasized that when the plaintiff intends to place additional documents on record in a commercial suit, the requirements of Order XI of the CPC, as amended for commercial suits, must be met. This includes establishing a reasonable cause for not disclosing the document along with the plaint. The court stressed that the amendment application filed under Order VI Rule 17 of the CPC could not be used to circumvent the rigour of Order XI Rule 1(5) applicable to commercial suits.

“It cannot be said that the rigors introduced in procedural law i.e. the CPC as per the Commercial Courts Act can be ignored because Order VI Rule 17 of the CPC has not been amended in the context of commercial suits. If such an approach is adopted, an application, which in pith and substance is an application relatable to Order XI of the CPC, as applicable to commercial suits, can masquerade as an application for amendment under Order VI Rule 17 of the CPC”, said the court.

According to the court, the plaintiff sought to avoid the mandatory requirement of providing a reasonable cause for not disclosing a document along with the plaint in commercial suits, as specified by Order XI Rule 1(5) of the CPC. They propose to place documents on record by using an application under Order VI Rule 17 of the CPC, which would enable them to bypass the rigorous provisions of Order XI applicable to commercial suits and documents not filed with the plaint would be brought on record through the back door, the court said. Accepting this approach would contradict the objectives of the Commercial Courts Act and the specific amendments made to the CPC, the court held.

The court opined that the plaintiff's application failed to provide sufficient reasonable cause for not disclosing the documents along with the plaint, and deemed the reasons stated as "oversight" and "inadvertence" insufficient. As a result, the court rejected the proposal to place additional documents on record and only allowed the amendment as per the first Exhibit, which was not seriously objected to by the defendants.

Senior Advocate Sharan Jagtiani along with Advocates Saurabhi Agrawal, Sheetal Shah, Jeyhaan Carnac and Ms DD Bitra represented the Plaintiff.

Senior Advocate Ashish Kamat along with Advocates Mohit Khanna, Paresh Shah and Leena Mirasee represented for the Defendants.

Case no. – Commercial Suit No. 316 of 2020

Case Title – Khanna Rayon Industries Pvt. Ltd. v. Swastik Associates & Ors