2017 (8) TMI 867 - AT - Insolvency and Bankruptcy

Amendment for Fresh Cause of Action Barred by Limitation; Tribunal Directed to Proceed with Original Pleadings

Aurosagar Estates Private Limited & Ors. Versus MC Davar Holdings Private Limited

The Tribunal's order allowing the amendment seeking a fresh cause of action unrelated to the original petition under Section 241 of the Companies Act, ... Amendment with regard to a fresh cause of action - Tribunal empowerment to amend any petition - Held that:- In the present case we have observed that the Tribunal otherwise is not empowered to amend any petition except to the extent as prescribed under the Act and the Rules; the Tribunal cannot allow substantial amendment to the petition/application/appeal, on merely asking for it, unrelated to the original cause of action or prayer, though it is open to the Tribunal to allow the party to file additional affidavit/reply affidavit bringing to the notice of the Tribunal the other relevant fact which are related to the original cause of action and the prayer as has already been made. In any case the Tribunal cannot allow any petition for amendment with regard to a fresh cause of action other than the cause of action for which the petition under Section 241 of the Companies Act, 2013 has been preferred. In the present case, as the amendment sought with regard to a fresh cause of action which has taken place more than three years back on 15th October, 2012, prayer made in amendment petition being barred by limitation, the Tribunal was not competent to allow the amendment. In view of discussion as made above, impugned order cannot be upheld. We, accordingly, set aside the impugned order dated 10th March 2017 and direct the Tribunal to hear the petition on the basis of the pleadings as already made in the petition under Section 241 of the Companies Act, 2013, reply thereof and rejoinder, if any, filed. However, it will be open to the Tribunal to peruse any document and call for any document if it is satisfied related to the cause of action and allegation, originally made. It is desirable that the petition be disposed of expeditiously, more than three months having already passed Issues Involved:1. Tribunal's power to amend a petition under Section 241 of the Companies Act, 2013.2. Whether the amendment sought and allowed by the Tribunal amounts to a fresh cause of action.3. Whether the amendment is barred by limitation.Issue-wise Detailed Analysis:1. Tribunal's Power to Amend a Petition under Section 241 of the Companies Act, 2013:The Tribunal has general power to amend defects or errors in any proceeding before it, as per Rule 155 of the NCLT Rules, 2016. This rule allows the Tribunal to amend any defect or error within thirty days from the date of completion of pleadings to determine the real question or issue raised. However, this power is limited and does not provide an inherent right to parties to file a petition for amendment of their pleadings or prayers. The Tribunal is not bound by the Code of Civil Procedure, 1908, but is guided by principles of natural justice and the provisions of the Companies Act, 2013, and the rules made thereunder (Sections 420 and 424 of the Companies Act, 2013).2. Whether the Amendment Sought and Allowed by the Tribunal Amounts to a Fresh Cause of Action:The amendment sought by the Respondent pertained to challenging amendments to the Articles of Association of the 1st Appellant company carried out on 15th October 2012. This was unrelated to the original allegations of 'oppression and mismanagement' made in the petition under Section 241 of the Companies Act, 2013. The Tribunal was not competent to allow an amendment concerning a separate cause of action not originally pleaded or prayed for in the initial petition. The amendment related to a different cause of action, thus, it was deemed inappropriate for the Tribunal to permit such an amendment.3. Whether the Amendment is Barred by Limitation:Section 433 of the Companies Act, 2013, incorporates the provisions of the Limitation Act, 1963, to proceedings or appeals before the Tribunal. The amendment sought by the Respondent was related to an event that occurred on 15th October 2012, which was more than three years before the filing of the original petition on 22nd August 2016. As per judicial precedent, any cause of action barred by limitation cannot be introduced through an amendment to the pleadings. The Tribunal cannot allow an amendment that seeks to introduce a fresh cause of action barred by the limitation period.Conclusion:The Tribunal's order allowing the amendment was set aside. The Tribunal is directed to hear the petition based on the original pleadings under Section 241 of the Companies Act, 2013, and any related documents. The petition should be disposed of expeditiously. The appeal is allowed with no order as to costs.