Life Insurance Corporation of India v. Sanjeev Builders Pvt. Ltd. and Ors.
Background
LIC had allegedly agreed in 1979 to sell a property to the original plaintiff, who sued for specific performance in 1986 after LIC said it had rescinded the agreement. In 2014, 27 years after the suit was filed, a company claiming to be an assignee of the original plaintiff's rights (via a 1987 assignment) applied to be added as a co-plaintiff and to amend the suit accordingly. The trial judge and, on appeal, a Division Bench of the Bombay High Court allowed this, holding that no prejudice would be caused to LIC and that LIC could still contest the assignment later, at trial. LIC challenged this before the Supreme Court, arguing that allowing a new party into a 27-year-old suit, without any explanation for the enormous delay, unfairly stripped it of defences it would otherwise have had.
Decision Breakdown
The Supreme Court first held that the order impleading the new party was a "judgment" open to appeal (not a mere unappealable interlocutory order), because it decided a question that vitally affected LIC's rights of defence. On the merits, the Court held that while Order XXII Rule 10 of the Civil Procedure Code does allow a court to let an assignee continue a suit, that discretion must be exercised judicially, considering factors like unreasonable delay and the conduct of the applicant, citing its own precedent (Vidur Impex) that impleadment should be sought within a reasonable time and can be refused where the application is unduly delayed. Finding a 27-year, completely unexplained delay in a case between sophisticated commercial parties (not "rustic litigants"), the Court held the High Court was wrong to allow the amendment, as it caused serious prejudice to LIC's accrued rights of defence. The impugned judgment was set aside and the application to implead the assignee was dismissed.
Lesson Learnt
Even in matters where courts are generally liberal about allowing amendments or new parties to join a case, an unreasonably long and unexplained delay, especially between businesses, as opposed to ordinary individuals, can by itself be a valid reason for a court to refuse the request, because the other side's right to defend the case fairly must also be protected.