L.J. Leach and Company Ltd v Jardine Skinner and Co (1957)

This is the decision that carries Charan Das into the Supreme Court and turns it into a rule of general application: the bar of limitation against a fresh suit on the amended claim is a matter for the exercise of discretion, not a limit on the power of the court.

It is also the strongest illustration of the principle, because the amendment was allowed at the very last stage — in the Supreme Court itself, on an appeal from a decree dismissing the suit — and it changed the legal basis of the claim from conversion to breach of contract. What saved it was that all the facts needed for the new claim were already pleaded.

The second plaintiff, Mr Leach, dealt in lubricants and imported them through the defendants. By an agreement of 6 June 1941 he was given an exclusive right to sell lubricants of a particular make within specified territories for five years. Clause 13 declared the relationship between the parties to be that of "principal and principal only". Clause 14 made the agreement terminable on three months' notice, "but without prejudice to the rights and liabilities of the parties respectively which shall have accrued prior to such termination."

The first plaintiff company was incorporated on 18 March 1944 and the second plaintiff assigned his business to it on 30 March 1944. On 13 June 1945 the defendants wrote cancelling the agency on the ground that the agreement had been assigned without their written consent. Goods ordered before that date arrived afterwards; the defendants refused to deliver them. The plaintiffs sued in the Bombay High Court for damages for conversion, alleging that the defendants had ordered the goods as their agents.

Shah J decreed the suit. On appeal, Chagla C.J. and Gajendragadkar J held that title to the goods vested in the defendants and would pass to the plaintiffs only on endorsement of the shipping documents, which had not occurred, and dismissed the suit.

The Supreme Court states the law on trover without dispute: before the plaintiffs can maintain such an action they must establish that they had title to the goods and further that they were entitled to possession when they called upon the defendants to deliver them. If the parties stood as sellers and purchasers, title had to pass under the Sale of Goods Act; if the defendants imported as agents, title would be with the plaintiffs.

Reading the agreement as a whole, the Court holds it to be a composite one: as to one clause the second plaintiff was an agent, but as to the rest he was a purchaser from the defendants. Under the later Lease and Lend scheme, the Government was the importer, and dealers became entitled to the goods only on the shipping documents being endorsed to them. The plaintiffs had made no deposits with the Government and were not on its list of traders; the documents stood in the defendants' name and had not been endorsed to the plaintiffs. The claim in conversion therefore failed, and that would have entailed dismissal of the appeal.

The plaintiffs then applied in the Supreme Court to amend the plaint by raising, in the alternative, a claim for damages for breach of contract for non-delivery of the goods. The respondents resisted. They contended that the amendment introduced a new cause of action, that a suit on that cause of action would now be barred by limitation, that the plaintiffs had had ample opportunity to amend and failed to do so, and that owing to lapse of time the defendants would be seriously prejudiced. The Court records that there is considerable force in the objections — and then allows the amendment.

The reasons are worth setting out in order, because they are the checklist a candidate should apply to any amendment problem.

The claim is within the scope of the suit. The plaintiffs claimed damages only for non-delivery of goods ordered and accepted before termination. Clause 14 expressly reserved that right, and the suit being founded on the agreement, "a claim based on Cl. 14 thereof cannot be said to be foreign to the scope of the suit."

The facts are already pleaded. A schedule to the plaint mentioned the several indents in respect of which the defendants had defaulted, with the damages claimed; the prayer was general and merely claimed damages. "Thus, all the allegations which are necessary for sustaining a claim for damages for breach of contract are already in the plaint." What was lacking was only the allegation that the plaintiffs were, in the alternative, entitled to claim damages for breach of contract by the non-delivery of the goods.

The defendants' own conduct. The defendants had cancelled the contract without strictly complying with the terms of cl. 14, and the record showed that after the assignment they had continued to have business transactions with both plaintiffs, so that the ground of cancellation appeared to be "a mere device to deprive the plaintiffs of the benefits of the orders which they had placed."

The Court states the principle in the sentence for which the case is cited: courts would, "as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application." "But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice." Charan Das is quoted and followed.

"We are of opinion that the justice of the case requires that the amendment should be granted." The appeal was allowed, the decree under appeal set aside and the suit remanded to the trial court for rehearing on the amended claim, the defendants to file their written statement to it. Because the plaintiffs were getting an indulgence, they were ordered to pay the defendants' costs in the suit and in the High Court appeal; each side bore its own costs in the Supreme Court.