Commercial Courts Have The Power To Permit New Timeline For Submission Of Written Statement In Transferred Cases: Andhra Pradesh High Court

Justice C. Praveen Kumar and Justice Ravi Nath Tilhari ruled as follows:

"1) where the suit or application has been transferred to the Commercial Court under Section 15 (2) of the Act, 2015 from the civil court and the procedure for filing written statement had not been completed at the time of transfer, the commercial court shall have the power and jurisdiction to prescribe a new time period for filing written statement, irrespective of the expiry of 120 days from the date of service of summons on the concerned defendant.

2) In a suit or application transferred to the commercial court under Section 15(2) of the Act, 2015, the written statement shall be filed within the new time period prescribed by the Commercial Court in exercise of power under Section 15(4) of the Act, 2015, failing which, on expiry of new time line so prescribed, the defendant shall forfeit his right to file written statement and the court shall neither take the written statement on record nor shall extend the new prescribed time period as mandated by Order VIII rules 1 and 10 CPC."

Brief Facts

The brief facts are that the plaintiff/respondent initially instituted a suit in the civil court from where it was transferred to the Commercial Court under the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (referred as the Commercial Courts Act, 2015). The petitioner/defendant did not file his written statement in the suit within the stipulated period of 120 days prescribed in Order VIII Rule 1 of Civil Procedure Code. On the date of transfer of the suit to Commercial Court, the period of 120 days had already expired. The Commercial Court did not allow the petitioner/defendant to file the written statement as it has no power to extend the time as Section 148 CPC does not apply to the Commercial Courts and particularly, in view of Order VIII Rules 1 & 10 CPC.

Issue

The issue is with respect to those suits which are transferred to the Commercial Court from the Regular Civil Court under Section 15(2) of the Act, 2015. Whether the Commercial Court has the jurisdiction to extend the period of 120 days or grant a fresh period beyond 120 days, from the date of service of summons on the defendant, for filing the written statement? 

Provisions of Commercial Courts Act, 2015 and CPC

Section 15(2) of the Commercial Courts Act, 2015 provides for transfer of pending cases relating to commercial dispute from Civil court to Commercial Division/Court. As per Section 15(4), the Commercial Court shall prescribe new timelines for efficacious disposal of suits and applications. It is also provided that Rule 1 of Order V of Civil Procedure Code shall not apply to transferred suits or applications.

Section 16 of the Commercial Courts Act, 2015 has amended the CPC in its application to Commercial Disputes, and post coming into force of the aforesaid Act, there are two regimes of civil procedure. The commercial disputes are governed by CPC as amended by Section 16 and all other non-commercial disputes fall within the ambit of original provisions of CPC. As per the amendment, time limit of maximum 120 days for filing written statement is mandatory and there is lack of discretion for the Commercial court to condone any delay.

According to Order V Rule 1 CPC, the defendant has to file the written statement within the period of 30 days from the date of service of summons on such defendant and if he fails to file written statement within such period, he shall be allowed to file the written statement on such other day as may be specified by the court which shall not be later than 120 days from the date of service of summons and on expiry of 120 days the defendant shall forfeit the right to file the written the statement. Order VIII Rule 1 CPC also provides the same and the proviso to Rule 10 of Order VIII states that no court shall make an order to extend the time provided under Rule 1 of Order VIII for filing the written statement.

Finding of the Court

Keeping in view the principles of interpretation of statute, the Court analyzed the object of the Commercial Courts Act in order to bring harmony to the anomaly in interpretation of statutes. The intention of the Parliament in enacting the Commercial Act, 2015 is to provide for speedy disposal of high value commercial disputes. With this object, the Commercial Act, 2015 through Section 16 amended the CPC in its application to commercial disputes of specified value.

The time line of 120 days for filing written statement under Order V, rule 1, sub rule (1) proviso and Order VIII rule 1 proviso shall not apply to the suits and application transferred to the commercial court under Section 15(2) and with respect to those suits and applications a new time line may be prescribed by the court in exercise of power under Section 15(4). Within such new time line the written statement shall be filed by the defendant.


However, the consequences under Order VIII rule 1 and rule 10 CPC shall follow if the written statement is not filed within the time line prescribed by the court under Section 15(4) even to the cases transferred under Section 15(2). In case, the defendant does not comply with the new timeline, the defendant shall forfeit the right to file the written statement.

The Court allowed the Civil Revision Petition.

Case Title:  Amoda Iron Steel Limited v. Sneha Anlytics and Scientifics

Citation: 2022 LiveLaw (AP) 6

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