Written Statements And Limitation: A Tale Of Two Regimes Under Civil And Commercial Law
Pleading is the foundation of litigation. In a suit, the plaintiff files a plaint setting forth the relevant facts and the relief sought by him, which is defended by the defendant by filing/presenting a written statement of his defence. Both plaint and also written statement are included within the broad expression of “pleading” [Order 6 Rule 1].
In order to bring about timeliness in disposal of suits, the legislature has been making certain changes in the Code of Civil Procedure (CPC) from time to time. The changes have been far more rigorous in commercial cases. Time limit within which a defendant is required to present his written statement of defence (“Written Statement”) is a much-debated issue and has obtained attention of the Courts and several judgments in that regard have been rendered by the Hon'ble Apex Court as also by the Hon'ble High Courts. In this Article, we are summarizing the law and the judicial position for the ease of reference of litigants and lawyers alike.
For this purpose, the discussion may be divided into two parts namely-
Civil suits other than Commercial Disputes i.e., other than those covered in (b) below;
Commercial Disputes covered under the provisions of Commercial Courts Act, 2015 (hereinafter referred to as “Commercial Disputes”).
Civil suits other than commercial disputes covered under the provisions of Commercial Courts Act, 2015
1. Firstly, we invite reference to the provisions as they exist as on date.
(i) [Order 5 Rule1]
ORDER V
ISSUE AND SERVICE OF SUMMONS
Issue of Summons
1. Summons. ‒ (1) When a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim and to file the written statement of his defence, if any, within thirty days from the date of service of summons on that defendant:
…
Provided further that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other days as may be specified by the Court, for reasons to be recorded in writing, but which shall not be later than ninety days from the date of service of summons.
[Emphasis Supplied]
(ii) [Order 8 Rule1]
ORDER VIII
WRITTEN STATEMENT, SET-OFF AND COUNTER-CLAIM
1. Written statement. ‒The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence:
Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be specified by the Court, for reasons to be recorded in writing, but which shall not be later than ninety days from the date of service of summons.
[Emphasis Supplied]
(iii) [Order 8 Rule10]
10.‒Procedure when party fails to present written statement called for by Court.‒Where any party from whom a written statement is required under rule 1 or rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on the pronouncement of such judgment a decree shall be drawn up.
[Emphasis Supplied]
1. It is pertinent to highlight that the provisions of Order 5 Rule 1, and Order 8 Rule 1 were substituted w.e.f. 01.07.2002 vide CPC (Amendment Act, 1999) to introduce the proviso that written statement may be filed even after 30 days but capping the said time limit to 90 days from the date of service of summons.
2. On account of the express provision introduced in 2002 providing for an outer time limit of 90 days from the date of service of summons for the filing of the written statement question arose before the three-judge bench of the Hon'ble Supreme Court in Salem Advocate Bar Association[1]. Speaking for the bench, Hon'ble Justice Y.K. Sabharwal (as his lordship then was) dilated on the provision contained in [Order 8 Rule 1]. Hon'ble Court held that despite use of the word 'shall' in [Order 8 Rule 1], it is not conclusive to determine as to whether the provision mandatory or directory. The Court held that, for this purpose, it is important to have regard to the context in which the same is used, and also to duly consider the intention of the legislation. Hon'ble Court held that this being a rule of procedure is meant to advance the cause of justice and not to defeat it. It was held that rule of procedure which promotes justice and prevents miscarriage thereof has to be preferred.
3. Further, referring to [O.VIII R.10], which provides that in case written statement is not filed within time permitted or fixed by the Court, the Court shall either pronounce the judgment against him or make such other order in relation to the suit as it thinks fit, also reflects that despite use of the word 'shall', the Court has been given the discretion to pass such other orders as it may think fit.
4.As a sequel, the Hon'ble Court held that provisions of [O.VIII R.1] are to be construed as directory and, to borrow the words used by their Lordships-
21.
… the effect would be that under Order 8 Rule 10 the Court in its discretion would have the power to allow the defendant to file written statement even after expiry of the period of 90 days provided in Order 8 Rule 1.
1. The Court, however, went on to caution that while the Court has wide powers and despite the fact that time limit of 90 days to file written statement is directory, the order extending time to file written statement 'cannot be made in routine'; and that it can be extended only in 'exceptionally hard cases'
2. In Rani Kusum[2], Hon'ble Apex Court held that while the amendment brought into effect from 2002 casts an obligation on the defendant to file written statement within 30 days from the date of service of summons and within the extended time falling within 90 days, the said provision does not deal with the power of the Court and does not take away the said power specifically to take the written statement on record despite the same having been filed beyond the time provided for. The Court also held that “while justice delayed may amount to justice denied, justice hurried may in some cases amount to justice buried”.
3. Similar observations were made by the Hon'ble Supreme Court in yet another three judge bench judgements in Kailash[3] and in R.N. Jadi and Brothers[4].
4. The enactment of Commercial Courts Act, 2015 provisions of CPC were amended vide Section 16 in the manner as specified in the schedule to the said Commercial Courts Act, 2015. Certain amendments were made to the provisions concerning time limit for filing of the written statement of defence as provided for in Order 5 Rule 1, Order 8 Rule 1 and Order 8 Rule 10. We shall extract and dilate upon the same a little later.
5. We have highlighted this aspect because on an interpretation of these amendments made by Commercial Courts Act, 2015, the issue again obtained some significance even qua cases other than commercial disputes.
6.However, the same have been put to rest by further judgments of the Hon'ble Apex Court which have duly considered the matter and have held that while these amendments may have led to change in the legal position, but same shall have no impact on disputes other than commercial disputes, because these amendments pertain only to the specified commercial disputes covered under the Commercial Courts Act, 2015. For the sake of completeness, we would like to refer to these judgments:
Atcom Technologies[5]
Desh Raj[6]
In this case another three judge bench of the Hon'ble Supreme Court made a reference to amendments to CPC brought in by Commercial Courts Act, 2015. However, it was categorically noted-
As regards the timeline for filing of written statement in a non-commercial dispute, the observations of this Court in a catena of decisions, most recently in Atcom Technologies Ltd. v. Y.A. Chunawala & Co. holds the field. The unamended Order 8 Rule 1 CPC continues to be directory and does not do away with the inherent discretion of courts to condone certain delays.
… Hence, the appellant is correct in contending that the High Court overlooked the nature of the dispute and mistakenly applied the ratio of a case rendered in light of a modified version of the Code of Civil Procedure, which would only be applicable to commercial disputes.
[Emphasis Supplied]
1. The Hon'ble Court provided that illustratively, extreme hardship or delays occurring due to factors beyond control of parties despite proactive diligence, may be just and equitable instance for condonation of delay.
2. It is noteworthy that in this judgment the Hon'ble Apex Court noted law declared by Hon'ble Supreme Court in Salem Advocate Bar Association (supra) as also the law declared qua Commercial Courts Act, 2015 in SCG Contracts[7], but clearly held that the ratio of SCG (supra) cannot apply to non-commercial disputes.
4. In this case, originally a normal suit for recovery of damages were filed in Civil Court Senior Division Jalgaon. Later, i.e. after expiry of 120 days the matter got transferred to a commercial court. After referring to Salem Advocate Bar Association and SCG Contracts, the court held that the interpretation placed on Order 8 Rule 1 by Hon'ble Apex Court in Salem Advocate Bar Association is to be applied to normal Civil Courts. Ultimately, despite the transfer of the case to Commercial Court, the Hon'ble Apex Court allowed the respondent to contest the claim on merits and directed the Court to take on record the written statement filed by the Appellant.
Commercial disputes covered by the Commercial Courts Act, 2015
We have already indicated in the previous section of this article that far reaching changes were made in the CPC vide section 16 of the Commercial Courts Act, 2015 in the manner as specified in schedule thereof. The provisions as amended by the said schedule, insofar as they are relevant to the present case are as under:
(iv) [Order 5 Rule 1]
ORDER V
ISSUE AND SERVICE OF SUMMONS
Issue of Summons
1. Summons.‒(1) When a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim and to file the written statement of his defence, if any, within thirty days from the date of service of summons on that defendant:
…
Provided further that where the defendant fails to file the written statement within the said period of thirty 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 one hundred twenty days from the date of service of summons and on expiry of one hundred twenty 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.
[Emphasis Supplied]
(v) [Order 8 Rule 1]
ORDER VIII
WRITTEN STATEMENT, SET-OFF AND COUNTER-CLAIM
1. Written statement.‒The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence:
…
Provided that where the defendant fails to file the written statement within the said period of thirty 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 one hundred twenty days from the date of service of summons and on expiry of one hundred twenty 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.
[Emphasis Supplied]
(vi) [Order 8 Rule10]
10.‒Procedure when party fails to present written statement called for by Court. Where any party from whom a written statement is required under rule 1 or rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on the pronouncement of such judgment a decree shall be drawn up.
…
Provided that no Court shall make an order to extend the time provided under rule 1 of this Order for filing of the written statement.;
[Emphasis Supplied]
Before proceeding further, it is important to highlight the provision of section 16(1) of the Commercial Courts Act, 2015:
Amendments to the Code of Civil Procedure, 1908 in its application to commercial disputes.‒(1) The provisions of the Code of Civil Procedure, 1908 (5 of 1908) 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. Thus, in their application to any suit in respect of a commercial dispute covered by this Act, the CPC shall stand amended in the manner specified in the schedule. In other words, only insofar as the commercial disputes covered by Commercial Courts Act, 2015 are concerned, the provisions of CPC amended by Section 16 thereof shall apply.
It may be of some significance to also refer to Section 21 of the said Commercial Courts Act, 2015 for the sake of completeness:
Act to have overriding effect.‒Save as otherwise provided, the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law for the time being in force other than this Act.
Despite the ruling in Salem Advocate Bar Association, when faced with applicability of aforesaid provisions i.e. after amendment brought about by the Commercial Courts Act, 2015, the Hon'ble Apex Court speaking through Hon'ble Justice Nariman held that the amendments “has brought about sweeping changes”. It was emphasized that [Order 8 Rule 1] have now given the consequences of non-filing of a written statement i.e. to forfeit such a right. Reference was also made to the amended Order 8 Rule10 (amended qua commercial disputes covered by Commercial Courts Act, 2015) which had taken away the power of the Court to pass any order to extend the time provided under Order 8 Rule 1 for filing of written statement. We would like to again refer to the judgment of the Hon'ble Supreme Court in Desh Raj (supra) wherein the Hon'ble three Judge bench of the Hon'ble Apex Court held that-
12. The judgment of Oku Tech relied upon by the learned Single Judge is no doubt good law, as recently upheld by this Court in SCG Contracts (India) (P) Ltd. v. K.S. Chamankar Infrastructure (P) Ltd. but its ratio concerning the mandatory nature of the timeline prescribed for filing of written statement and the lack of discretion with courts to condone any delay is applicable only to commercial disputes, as the judgment was undoubtedly rendered in the context of a commercial dispute qua the amended Order 8 Rule 1 CPC.
[Emphasis Supplied]
Thus, in so far as commercial disputes covered by the Commercial Courts Act, 2015 are concerned the provision providing for timeline for filing of written statement are sacrosanct and if written statement is not filed within time the right to file a written statement stands forfeited.
Therefore, in case of commercial disputes, the litigants and lawyers are required to remain far more vigilant in filing the written statements well in time so that the appropriate and available defences can be taken and so that the case proceeds on merits taking into consideration the submissions and the stand of both the sides, rather than being decided without the stand of the defendant being taken on record.
Salem Advocate Bar Association, Tamil Nadu v. Union of India, AIR 2005 SC 3353 : (2005) 6 SCC 344 ↑
Rani Kusum v. Kanchan Devi, AIR 2005 SC 3304 : (2005) 6 SCC 705 ↑
Kailash v. Nanhku, AIR 2005 SC 2441: (2005) 4 SCC 480: : AIR 2005 SC 2441: 2005 (3) SCALE 740: 2005 (3) SCR 289: JT 2005 (4) SC 204. ↑
R.N. Jadi and Brothers v. Subhash Chandra, AIR 2007 SC 2571: (2007) 6 SCC 420. ↑
Atcom Technologies Ltd. v. Y.A. Chunawala & Co. (2018) 6 SCC 639 : (2018) 3 SCC (Civ) 777 ↑
Desh Raj v. Balkishan (DEAD) Through Proposed Legal Representative MS Rohini (2020) 2 SCC 708 ↑
SCG Contracts (India) Private Limited v. K.S. Chamankar Infrastructure Private Limited and Others (2019) 12 SCC 210 ↑
Raj Process Equipments and Systems Pvt. Ltd. and Others v. Honest Derivatives Pvt. Ltd. 2022 SCC OnLine SC 1877 ↑
Authors are practicing Advocates based in Delhi. Views are personal.