LIMITATION FOR FILING WRITTEN STATEMENT IN A COMMERCIAL COURT CASE

[Mr. M. GOVINDARAJAN]

Written Statement

Order 8 Rule 1 of Civil Procedure Code, 1908 (‘Code’ for short)  provides that the defendant shall, within 30 days from the date of service of summons on him, present a written statement of his defence.  Where the defendant fails to file the written statement within the said period of 30 days, he shall be allowed to file the written statement on such other day, as may be specified by the court, for reasons to be recorded in writing and on payment of such costs as the court deems fit, but which shall not be later than 120 days from the date of service of summons and on expiry of 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.  Therefore the written statement cannot be filed beyond 120 days from the date of issue of summon.

Issue

The issue to be discussed in this article is whether the defendant can file written statement even after the expiry of 120 days as prescribed under Order 8 Rule 1 by condoning the delay.  The time limit and the extended period of time limit are mandatory and not directory.  Therefore the written statement is to be filed within 30 days.  If the same could not be filed within the said limitation it can file within 90 days by condoning the delay by the Court.

Case law

 In ADITYA KHAITAN & ORS. VERSUS IL AND FS FINANCIAL SERVICES LIMITED - 2023 (10) TMI 155 - SUPREME COURT, the IL & FS  Financial Services Limited (‘respondent’ for reference) filed a suit for recovery of money and for other consequential relied before the High Court, Calcutta in IL AND FS FINANCIAL SERVICES LTD VERSUS ADITYA KHAITAN & ORS. - 2021 (2) TMI 1363 - CALCUTTA HIGH COURT .  There are nine defendants in the said suit.   The said defendants were issued summons by the Court on 07.02.2020.  They have to file their written statements within a period of 30 days from the date of summon.   The delay in filing written statement may be condoned for a further period of 90 days which also expired on 06.06.2020. 

The defendants filed applications before the High Court on 20.01.2021.  They prayed the Court that the written statement be extended by extending the time.  The defendants submitted the following before the Court-

• The World Health Organization declared COVID-19 as a pandemic on 11.03.2020.
• The Government of India promulgated the orders on 11.03.2020 under the Disaster Management Act, 2005 to enhance the preparedness and containment of the pandemic.
• The Government of West Bengal imposed lock down with effect from 23.03.2020.
• During the COVID period all the offices of the applicants were remain closed.

The plaintiffs contended that the suo motu orders of Supreme Court would not come into the rescue of the defendants since the limitation period has expired before 25.03.2020.  The High Court held that the applications cannot be allowed as the period of 30 days to file the written statements had expired on 08.03.2020.  The High Court also held that the suo motu extension of time granted by Supreme Court due to COVID would not enure to the benefit of the applicants/defendants since the limitation period for filing the written statements had expired on 08.03.2020.  The High Court further held that the High Court under  Article 142 of the Constitution of India extended only ‘the period of limitation’ and not the period up to which delay can be condoned, the applications for taking on record the written statements cannot be entertained.

Being aggrieved against the order of High Court the appellants filed the present appeal before the Supreme Court.  The appellants relied on the judgment in PRAKASH CORPORATES VERSUS DEE VEE PROJECTS LIMITED - 2022 (2) TMI 1268 - SUPREME COURT   The Supreme Court had exercised the plenary powers under Article 142 of the Constitution of India and issued necessary orders from time to time in SMWP No. 3 of 2020.  The Supreme Court was of the view that the period envisaged finally in the order dated 23.09.2021 is required to be excluded in computing the period of limitation even for filing the written statement and even in cases where the delay is otherwise not condonable.  These orders were of extraordinary measures in extraordinary circumstances and their operation cannot be curtailed with reference to the ordinary operation of law.  These special and extraordinary measures were provided by this Court for advancing the cause of justice in the wake of challenges thrown by the pandemic; and their applicability cannot be denied in relation to the period prescribed for filing the written statement.  The appellants contended that the said case law is squarely applicable to them.

The plaintiffs (respondents in the present appeal) reiterated the findings of the High Court and submitted that the applicants have forfeited their right to file the written statements.

The Supreme Court considered the question for its consideration is as to whether the High Court was justified in rejecting the application for extension of time dated 21.10.2021 and not taking the written statements on record.

The Supreme Court observed that when the whole world was in the grip of devastating pandemic, it could never have been said that the parties were sleeping over their rights. It is, at this juncture, that the Supreme Court stepped in and after taking suo motu cognizance passed orders under Article 142 of the Constitution of India extending the deadlines. The extraordinary situation was dealt with rightly by extraordinary orders protecting the rights of parties by ensuring that their remedies and defences were not barred.

In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded.  Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.  In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.

The period from 15.03.2020 till 14.03.2021 shall also stand excluded in computing the periods prescribed under-

• Sections 23(4) and 29-A of the Arbitration and Conciliation Act, 1996;
• Section 12-A of the Commercial Courts Act, 2015; and
•  provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881;
•  and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.

The Supreme Court analyzed the provisions of Commercial Courts Act, 2015 which came into force with effect from 23.10.2015.  The Schedules to the said Act amended some provisions of Civil Procedure Code.  Section 16 of the Commercial Courts Act, 2015 provides that the provisions of the Code shall, in their application to any suit in respect of a commercial dispute of a Specified Value, stand amended in the manner as specified in the Schedule.  The Commercial Division and Commercial Court shall follow the provisions of the Code, as amended by this Act, in the trial of a suit in respect of a commercial dispute of a Specified Value.   Where any provision of any Rule of the jurisdictional High Court or any amendment to the Code, by the State Government is in conflict with the provisions of the Code, as amended by this Act, the provisions of the Code as amended by this Act shall prevail.  Therefore the provisions of Order 8 Rule 1 shall be applicable to Commercial Court cases also.

The Supreme Court held that the outer limit within which the court or Tribunal can condone the delay is 120 days from the date of issue of summons.  In this case-

• The summons was issued on 07.02.2020.
• Written statement is to be filed within 30 days from 07.07.2020.
• 30 days period expired on 08.03.2020.
• The outer limit of 120 days expired on 06.06.2020.
• The application for taking on record the written statements and the extension of time was filed on 20.01.2021.

The Supreme Court held that applying the orders of 08.03.2021 and the orders made thereafter and excluding the time stipulated therein, the applications filed by the applicants on 19.01.2021 are well within time.

 The Supreme Court allowed the appeals filed by the appellants and directed to take the written statements on record.