Mandatory Timeline Of 120 Days For Filing WS Not Applicable To Suits Filed Prior To Enactment Of Commercial Courts Act: Bombay HC

Justice SJ Kathawalla has held that a commercial court may hold case management hearings with regard to such suits that are also referred to as 'transferred' suits. Case management hearings are prescribed under the newly-introduced Order XV-A of the Civil Procedure Code.

The court was hearing a notice of motion filed by Colonial Life Insurance Company Limited in a commercial suit filed by Reliance General Insurance Company. It only examined the question of law as to whether a mandatory timeline of 120 days would be applicable to transferred suits.

In the present suit, which was a transferred suit, the defendant Colonial Life Insurance Company failed to file a written statement within the prescribed period of 120 days as mandated under the said Act.

Commercial Courts Act

At the very outset, the court examined the Statement of Object and Reasons of the Act itself and concluded that the Act, which came into force from October 3, 2015, was primarily aimed at providing speedy disposal of commercial disputes in order to reduce the pendency of cases and facilitate an environment of ease of doing business in India.

Chapter V, Section 15 of the Commercial Courts Act provides for the transfer of suits and applications relating to commercial disputes of a specified value pending before the high court to the commercial division of the high court.

Submissions

The defendant Colonial Life Insurance's counsel Sharan Jagtiani submitted that the Commercial Courts Act excludes the applicability of the strict timeline of 120 days to transferred suits and provides the high court with the necessary power to prescribe new timelines for filing a written statement in so far as transferred suits are concerned.

He placed reliance on Chapter V, Section 15 of the Commercial Courts Act and argued that Section 15(4) empowers this court to hold case management hearings for such transferred suits in order to prescribe new timelines, with a proviso that excludes the applicability of the strict timeline of 120 days imposed under Order V Rule 1 of the CPC.

On the other hand, advocates Zubin Behramkamdin and Shyam Kapadia appeared on behalf of the plaintiff, Reliance. They submitted that Section 15(4) of the Commercial Courts Act would come into play only if Writ of Summons is issued under Order V Rule 1. Further, they argued that even if Section 15(4) of the Commercial Courts was to apply, it does not suspend the operation of the mandatory timeline of 120 days.

Judgment

The court observed-

"A bare reading of Section 15 (4) of the Commercial Courts Act begs the interpretation that a Commercial Division, such as the present one, is vested with jurisdiction to hold Case Management Hearings in respect of transferred suits in order to prescribe new timelines or issue such further directions as may be necessary for a speedy and efficacious disposal of transferred suits or applications in accordance with Order XV-A of the CPC. The proviso to Section 15 (4) further provides that the proviso to sub-rule (1) of Rule 1 of Order V of the CPC shall not apply to such transferred suits and the court may, in its discretion, prescribe a new time period within which a written statement shall be filed."

Thereafter, the court rejected the plaintiff's arguments and examined several judgments cited by both parties and relevant to the present case.

"In my view, Section 15 (4) and the proviso thereto applies squarely to suits which were filed prior to the enactment of the Commercial Courts Act but have been subsequently 'transferred' as Commercial Suits to be heard by a Commercial Division of this Court.

I therefore hold that the mandatory timeline of 120 days for filing a written statement in a Commercial Suit is not applicable to suits which were filed prior to the enactment of the Commercial Courts Act, 2015 and subsequently 'transferred' as Commercial Suits to be heard by a Commercial Division of this Court."