Whether Filing Of A 'Statement Of Truth' In A Written Statement Is A Mandatory Requirement Under Commercial Courts Act, 2015?: Calcutta High Court Explains

The Calcutta High Court last week while adjudicating upon a commercial suit expounded in detail whether a 'statement of truth' in a written statement is a mandatory requirement under the Commercial Courts Act, 2015 and whether its absence warrants the disposal of the defence in the suit. 

In the instant case, the petitioner had contended that a written statement in the absence of a 'statement of truth' is an incurable defect while the respondent argued otherwise. The issue in consideration was the interpretation of Order VI Rule 15A of The Code of Civil Procedure, 1908 (CPC) as amended by the Commercial Courts Act, 2015.

Subsequent to the amendments brought in by the Commercial Courts Act 2015, Order VI Rule 15A envisages the following,

''15A. Verification of pleadings in a Commercial Dispute.— (1) Notwithstanding anything contained in Rule 15, every pleading in a Commercial Dispute shall be verified by an affidavit in the manner and form prescribed in the Appendix to this Schedule.

(2) An affidavit under sub-rule (1) above shall be signed by the party or by one of the parties to the proceedings, or by any other person on behalf of such party or parties who is proved to the satisfaction of the Court to be acquainted with the facts of the case and who is duly authorised by such party or parties.

(3) Where a pleading is amended, the amendments must be verified in the form and manner referred to in sub-rule (1) unless the Court orders otherwise.

(4) Where a pleading is not verified in the manner provided under sub-rule (1), the party shall not be permitted to rely on such pleading as evidence or any of the matters set out therein.

(5) The Court may strike out a pleading which is not verified by a Statement of Truth, namely, the affidavit set out in the Appendix to this Schedule."

Justice Moushumi Bhattacharya observed while opining on the changes brought in by the Commercial Courts Act 2015 vis-à-vis the particulars required in a 'statement of truth',

"The changes brought into the CPC in 2015 in the form of Order VI Rule 15A relate to verification of pleadings in a commercial dispute. The requirements introduced under Rule 15A is that every pleading in a Commercial Dispute shall be verified by an affidavit as prescribed in the Appendix to the Schedule to the 2015 Act. Appendix I to the Schedule contains the "Statement of Truth" – a lofty directive – which has been made applicable not only to Order VI Rule 15A but also to the amendments to Order XI Rule 3 introduced by the 2015 Act"

It was further noted that Rule 15A read with Appendix I to the Schedule had been implemented with the motive to expedite disposal of commercial disputes and effectively circumvent procedural barriers that could result in delay in the disposal of a commercial dispute. This is also evident from Order XI Rule 3 as amended by the 2015 Act, under which it has been directed that the plaint must contain a declaration on oath from the petitioner that all documents in his possession have been disclosed and annexed with the plaint, the Court further explained.

Legislative intent  

Enumerating further on the legislative intent behind the specifications accompanying a 'statement of truth' as adopted vide the 2015 Act, the Court observed further,

"The contents of Appendix I - Statement of Truth – read with some of the provisions introduced by the 2015 Act, for instance, Order VIII Rule 3A (Denial by the defendant in suits before the Commercial Division of the High Court or the Commercial Court), Order XIX Rule 4(1) (Court may control evidence), Order XIX Rule 6 (Format and guidelines of affidavit of evidence) are further indicators of the legislative intention to expedite the process of trial in commercial disputes by minimising the evidence at the stage of trial. The introduction of fixed forms of affirmation of pleadings, case management hearings and empowering a court to regulate the evidence as to the issues, reinforces the object of the Commercial Courts Act, which is to provide for speedy disposal of high-value commercial disputes involving complex facts and questions of law."

Apparent inconsistency between Order VI Rule 15A Sub-Rules (4) and (5)

In the instant case, the concerned parties had submitted that there lies a conflict between two provisions i.e. Sub-Rules (4) and (5) of Order VI Rule 15A of the CPC.

The two provisions have been enumerated below for reference,

"Order VI. 15. Verification of pleadings in a Commercial Dispute—

(4) Where a pleading is not verified in the manner provided under sub-rule (1), the party shall not be permitted to rely on such pleading as evidence or any of the matters set out therein.

(5) The Court may strike out a pleading which is not verified by a Statement of Truth, namely, the affidavit set out in the Appendix to this Schedule."

The petitioner had placed reliance on the word 'shall' as contained under sub-rule (4) while the defendant had placed emphasis on the word 'may' as enumerated in sub-rule (5).

Opining that there does not exist any real conflict between the two provisions, the Court clarified,

"The apparent conflict in the mandatory nature of Sub-rule (4) and the directory tenor of Sub-rule (5), on a proper construction thereof, does not admit of any real clash of purpose. Sub-rule (4) curtails the power of the court to receive a pleading as evidence if it is improperly verified, the prohibition essentially being on the party who is prevented from relying on a pleading as evidence. Sub-rule (4) however does not say that the defect in the pleading cannot be cured. Sub-rule (5) empowers the court to strike out a pleading which is not verified by a Statement of Truth where the word "may" clearly indicates that the court is vested with the discretion to allow a party to rectify or cure the defect."

It was further held that in case it was the intention of the legislature to non-suit a litigant in the absence of a 'statement of truth', a specific provision to this effect would have been adopted. Thus pursuant to Rule 15A a party cannot be deprived of its claim or defence in a commercial dispute by reason of improper verification of its pleading, the Court opined further.

"Use of the words 'shall' or 'may' are not indicators of whether a particular provision in a statute is mandatory or directory. A more definitive marker would be the purpose of the provision set against the overall scheme of the statute and the context in which the words are used.", the Court elucidated further.

Reliance was further placed on the Supreme Court judgment in Vidyawati Gupta v. Bhakti Hari Nayak wherein it had been held that amendments to Order VI Rule 15 are directory in nature and non-compliance therewith would not render the plaint non-est.

Further opining that procedural necessities cannot defeat the substantive rights of the parties, the Court held,

"The above discussion may be seen in addition to the general inclination of a court to treat procedural lapses with kindness unless a party disentitles itself to such benevolence by reason of its conduct or by operation of law. Without taking the avowed object of quick resolution of commercial disputes away from the 2015 Act, rules of procedure cannot be given precedence in a manner so as to defeat the substantive rights of the parties unless specifically prohibited by law. In the present case, Sub-rule (5) of Order VI Rule 15A can be pressed into service in aid of the defendant. If a purposive interpretation is given to the various provisions contained therein, the discretion conferred on a court in the matter of striking out a pleading which is not verified by a Statement of Truth cannot be seen as a speed-breaker in the momentum of the Act."

Accordingly, the Court dismissed the petitioner's plea to strike off the defence of the respondent for non-filing of a 'statement of truth'. However, the Court granted leave to the respondent to file such a 'statement of truth' along with the written statement within 3 weeks.

Case Title: Harji Engineering Works Pvt. Ltd v. Hindustan Steelworks Construction Ltd

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