2025 (2) TMI 1202 - HC - Indian Laws

Applicability of the timeline prescribed under Order VIII Rule 1 of the Code of Civil Procedure (CPC) - applicability to the timeline within which reply to the counter claim in the written statement sometimes also referred to as an additional written statement is to be filed by the plaintiff or not - requirement to reply to a counter statement within 120 days from the service of the written statement with counterclaim upon the plaintiff - HELD THAT - Order VIII Rule 9 of the Code of Civil Procedure contemplates that the court may at any time require a written statement or additional written statement from any of the parties and fix a time not more than 30 days for presenting the same. This provision does not in any event enlarge the time limit fixed under Order VIII Rule 1 as amended by the Commercial Courts Act 2015. The counter claim in a written statement is treated as a plaint and the plaintiff may file an additional written statement in answer to the said counter claim in view of the fact that the suit was filed in the original side of the High Court. The procedures insofar as filing scrutiny and other related matters are concerned in absence of any practice directions shall be governed by the Original Side Rules unless these rules are not in conflict with the procedure prescribed under the Commercial Courts Act. Admittedly the written statement was served on 18th July 2023 after the defendant was permitted to file the written statement with counterclaim by an order dated 13th July 2023. In terms of the order dated 13th July 2023 the department could accept the written statement provided it was filed on that date on the basis of the endorsement on the fait and the same is in proper form and order . The original written statement is produced by the department wherefrom it appears that the written statement with counter-claim was presented on 13th July 2023 and was accepted by the department meaning thereby that it was in proper form and order - Since the plaintiff has not contended that the written statement served was incomplete or defective the plaintiff cannot escape the time limit within which the reply to the counter statement is required to be filed. In Prakash Corporates 2022 (2) TMI 1268 - SUPREME COURT the Hon ble Supreme Court was considering the effect of the extension of limitation period from 15th March 2020 to 2nd October 2021 and subsequently extended to 28th February 2022 during the Covid-19 pandemic vis- -vis limitation period for filing written statement in a Commercial dispute. In view of the stringent provisions in the Commercial Court Act with regard to filing of pleadings and more particularly written statement it is imperative that the Original Side Rules so far as acceptance of counterclaim and reply thereto requires amendment. In view of the fact that writ of summons along with the plaint is served upon the defendant after scrutiny and after removal of all defects and only upon service of such authenticated plaint the obligation of the defendant to file written statement arises similarly for a reply to the counter claim which in effect partakes the character of a written statement only upon service of an authenticated copy thereof the time to file reply to the counter statement shall arise and the period of 120 days is required to be calculated from the date of service of such authenticated copy of the written statement along with counter claim. Conclusion - i) The 120-day timeline under Order VIII Rule 1 CPC as amended by the Commercial Courts Act applies to the filing of the plaintiff s reply to the counter claim. ii) The timeline for filing the reply begins from the date of service of the counter claim after scrutiny and acceptance by the Registry. iii) The appeal against the order rejecting the extension of time to file the reply is not maintainable under the Commercial Courts Act or Letters Patent. The appeal and the application fails.

Summary

The primary issue raised in the appeal concerns the applicability of the timeline prescribed under Order VIII Rule 1 of the Code of Civil Procedure (CPC), as amended by the Commercial Courts Act, 2015, to the filing of a reply by the plaintiff to the counter claim included in the defendant's written statement (also termed an additional written statement).

Another significant issue is the maintainability of the appeal itself, particularly in light of the proviso to Section 13(1-A) of the Commercial Courts Act, 2015, and the exclusion of appeals under Letters Patent of the High Court as per Section 13(2) of the Act.

Additionally, procedural questions arise regarding the scrutiny and service of the counter claim and the consequent commencement of the timeline for filing the plaintiff's reply thereto, especially in the context of the Original Side Rules of the Calcutta High Court and the absence of specific amendments therein post the Commercial Courts Act.

Lastly, the Court considers the interplay between the amended provisions of the CPC, the Commercial Courts Act, and the Original Side Rules, and the appropriate practice directions to harmonize these procedural aspects.

Issue 1: Applicability of the 120-day timeline under Order VIII Rule 1 (CPC) as amended by the Commercial Courts Act, 2015, to the filing of reply to the counter claim by the plaintiff

The legal framework involves the amendments made to Order VIII Rule 1 of the CPC by the Commercial Courts Act, 2015, which prescribe a strict timeline of 120 days for the defendant to file a written statement from the date of service of summons, with forfeiture of the right to file thereafter. However, the provisions governing the filing of a reply to a counter claim by the plaintiff, which is effectively an additional written statement, are contained in Order VIII Rules 6A to 6G, which have not been amended by the Commercial Courts Act.

Order VIII Rule 6A(3) mandates that the Court fix a time within which the plaintiff is required to file a reply to the counter claim, but it does not specify a fixed timeline. Rule 6G clarifies that the rules relating to a written statement by a defendant apply to a written statement filed in answer to a counter claim, suggesting the 120-day timeline applies. Meanwhile, Order VIII Rule 9 restricts subsequent pleadings after the filing of written statements except with leave of the Court, but this provision does not apply to replies to counter claims.

The Court examined precedents including Nirottam Sharma v. Ram Kishore and Mrs. Shalini Nunes Mascarnehas v. Mr. Trevor Nunes, which support the proposition that the Court must fix the time for filing the reply to the counter claim and that the 120-day limit applies from the date of service of the counter claim.

The appellant argued that since the Single Judge did not fix any time for filing the reply, the plaintiff should not be penalized for delay and that the Court has the power to enlarge the time. It was also contended that the amended Order VIII Rule 1 does not automatically apply to replies to counter claims, given the absence of explicit amendment and the distinct procedural requirements for filing such replies.

The Court, however, held that the 120-day timeline under Order VIII Rule 1 as amended is applicable to the reply to the counter claim, as per Rule 6G. The counter claim is treated as a plaint, and the plaintiff's obligation to file a reply arises upon service of the counter claim. The Court emphasized that the time to file the reply commences from the date of service of the counter claim after proper scrutiny and acceptance by the Registry.

The Court further noted that the Original Side Rules of the Calcutta High Court, specifically Chapter 9 Rule 12A, prescribe a 10-day period for filing a reply to the counter claim, subject to extension by the Court. The Court found that the plaintiff failed to seek extension within the prescribed period. Moreover, since the written statement with counter claim was accepted by the Registry on 13th July 2023 and served on the plaintiff on 18th July 2023, the timeline for filing the reply began from that date.

The Court distinguished the decision in Prakash Corporates v. Dee Vee Projects Ltd., which dealt with extension of limitation periods during the COVID-19 pandemic and pendency of applications under Section 10 CPC, finding that the facts of the present case did not warrant similar relief.

Issue 2: Maintainability of the appeal under the Commercial Courts Act, 2015 and Letters Patent of the High Court

The respondent challenged the maintainability of the appeal, relying on the proviso to Section 13(1-A) of the Commercial Courts Act, which restricts appeals to those orders specifically enumerated under Order XLIII of the CPC, and Section 13(2), which excludes appeals under Letters Patent against orders or decrees under the Act.

The Court analyzed the ratio in Kandla Export Corporation v. OCI Corporation, which clarified that the proviso to Section 13(1-A) is an exception to the main provision and must be construed narrowly. It does not create an additional right of appeal but restricts it to specified orders. The Court also examined precedents interpreting the effect of statutory provisions on the right of appeal under Letters Patent, particularly in arbitration-related matters, concluding that the Commercial Courts Act, being a special statute, provides a self-contained code for appeals and excludes other modes of appeal such as Letters Patent appeals.

The Court held that the appeal was not maintainable under the Commercial Courts Act or Letters Patent, as the impugned order was not among those enumerated for appeal under Order XLIII CPC or Section 37 of the Arbitration Act.

Issue 3: Procedural aspects relating to scrutiny and service of counter claim and commencement of the timeline for filing reply

The Court addressed the procedural lacuna in the Original Side Rules regarding scrutiny and service of counter claims in commercial suits. It acknowledged that for a counter claim to be effective and to trigger the timeline for filing a reply, it must be scrutinized and accepted by the Registry, and an authenticated copy along with supporting documents must be served on the plaintiff.

In the present case, the written statement with counter claim was accepted by the Registry on 13th July 2023 and served on the plaintiff on 18th July 2023. The plaintiff did not contest the completeness or authenticity of the served documents, and thus the timeline for filing the reply started from the date of service.

To address the procedural gap, the Court issued practice directions effective from 1st March 2025, mandating:

• Scrutiny of every counter claim filed in the Commercial Division, following the procedure applicable to plaint scrutiny before service of summons.
• Service of notice along with a copy of the counter claim on the plaintiff or their advocate within seven working days after scrutiny.
• Removal of all curable defects by the defendant within a fortnight from intimation, failing which the matter shall be placed before the Commercial Division.
• The period for filing the written statement by the plaintiff in response to the counter claim shall be reckoned from the date of service of the notice and copy of the counter claim.
• Ensuring simultaneous delivery of all documents relied upon by the defendant in support of the counter claim to the plaintiff.

Issue 4: Application of the law to facts and treatment of competing arguments

The appellant's argument that the 120-day timeline under Order VIII Rule 1 should not apply to the reply to the counter claim, or that the Court must fix a time before the timeline starts, was rejected. The Court reasoned that the statutory provisions and rules clearly apply the 120-day limit to replies to counter claims, and the absence of a fixed time by the Single Judge does not extend this period. The Court also found that the Original Side Rules' 10-day period is subject to extension, but no such extension was sought timely.

The appellant's contention that the time to file reply should start only after scrutiny and service of an authenticated copy was accepted in principle, but since the written statement with counter claim was accepted and served properly, the timeline commenced accordingly.

The respondent's submission on maintainability was upheld, with the Court relying on authoritative precedents to conclude that the appeal was not maintainable under the Commercial Courts Act or Letters Patent.

Significant holdings and core principles established:

"Order VIII Rule 6G of the Code of Civil Procedure clearly provides that the rules relating to a written statement by a defendant shall apply to a written statement filed in answer to a counter claim."

"The time to file a reply to the counter claim shall be reckoned from the date on which the notice along with copy of the counter claim is served by the Registry of the Court on the plaintiff or his advocate."

"The proviso to Section 13(1-A) of the Commercial Courts Act, 2015 is an exception to the main provision and must be construed harmoniously; it restricts the right of appeal to orders specifically enumerated under Order XLIII CPC and does not create a general right of appeal."

"An appeal is a creature of statute and the Commercial Courts Act, being a special statute, provides a self-contained code for appeals, excluding other modes such as Letters Patent appeals."

"In the absence of specific rules framed under Section 18 of the Commercial Courts Act, the Original Side Rules shall govern procedural aspects unless they conflict with the Act."

"Rules of procedure are handmaid of justice and intended to sub-serve the cause of justice; they must be read in conjunction with other provisions and not in isolation."

"The Court issued practice directions to ensure proper scrutiny and service of counter claims in commercial suits, thereby standardizing the commencement of timelines for filing replies."

Final determinations:

• The 120-day timeline under Order VIII Rule 1 CPC as amended by the Commercial Courts Act applies to the filing of the plaintiff's reply to the counter claim.
• The timeline for filing the reply begins from the date of service of the counter claim after scrutiny and acceptance by the Registry.
• The appeal against the order rejecting the extension of time to file the reply is not maintainable under the Commercial Courts Act or Letters Patent.
• Practice directions are issued to regulate scrutiny, service, and timelines for counter claims and replies in commercial suits on the Original Side of the High Court.