Time Limit For Filing Written Statement Not Mandatory If Suit Was Instituted Before Civil Court & Transferred To Commercial Court After Expiry Of 120 Days: Supreme Court

The Supreme Court observed that the time period for filing written statement is not mandatory if the suit was instituted in a civil court and transferred to a Commercial Court after the expiry of 120 days.

The plaintiffs filed a suit for recovery of damages on the file of the Civil Court Senior Division Jalgaon in December, 2017. As two among the defendants failed to file written statement within prescribed period, the Trial Court ordered that the suit be proceeded without their written statement. As the other two had not even entered appearance, it passed an order directing the proceeding to go on ex parte against them.

Later, this suit was transferred to a Commercial Court. The defendants filed applications respectively for (i) condonation of delay; (ii) recalling the order of 'no written statement' passed against defendant Nos.1 and 2; and (iii) setting aside the order directing the proceeding to go on ex-parte against defendant Nos.3 and 4. This application was rejected by the Court on the basis of the proviso to Order VIII Rule 1 CPC. The High Court upheld this order of the Trial Court by referring to the decision in SCG Contracts India Private Limited v. K.S.Chamankar Infrastructure Limited (2019) 12 SCC 210, wherein it was held that the time-line prescribed under the second proviso to sub-rule (1) of Rule 1 of Order V CPC is mandatory.

In appeal, the Apex Court bench noted that when the suit was filed and at the time when the order dated 03.07.2018 was passed, the court before which the suit was pending was a normal Civil Court. The bench disagreed with the High Court view relying on the judgment in SCG Contracts (supra) and observed:

The suit that became the subject matter of dispute in SCG Contracts India Private Limited, appears to have been filed before the Commercial Court and not before the normal Civil Court. Insofar as the normal Civil Courts are concerned, it is the proviso to Order VIII Rule 1 CPC which applies. In Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344, this Court held that the proviso to Rule 1 of Order VIII CPC is directory and not mandatory. An exception was carved out in SCG Contracts India Private Limited to this Rule, by this Court insofar as the commercial disputes are concerned by invoking the second proviso to sub-rule (1) of Rule 1 of Order V. Therefore, to apply the same principle to a matter where the suit was instituted before the normal Civil Court and transferred to a Commercial Court after the expiry of 120 days would be to give a complete twist to the interpretation given by the 3-member Bench in Salem Advocate Bar Association, to the proviso to Order VIII Rule 1 CPC.

...In fact the decision in SCG Contracts India Private Limited is by a 2-member Bench, which was dealing with the second proviso to sub-rule (1) of Rule 1 of Order V. Therefore, when the decision of the 3-member Bench in Salem Advocate Bar Association was cited before this Court in SCG Contracts India Private Limited, this Court held in paragraph 11 that the earlier law on Order VIII Rule 1 has now been set at naught. Therefore, what is to be applied to normal Civil Courts is Order VIII Rule 1 and the interpretation given to the same in Salem Advocate Bar Association.

Allowing the appeal, the bench directed the Commercial Court to take on record the written statements filed by the appellants and proceed with the hearing of the suit on merits.

Case details

Raj Process Equipments And Systems vs Honest Derivatives Pvt. Ltd. | 2022 LiveLaw (SC) 928 | CA 8089 OF 2022 | 3 November 2022 | Justices S. Abdul Nazeer and V. Ramasubramanian

For Petitioner(s) Mr. Shyam Divan,Sr.Adv. Mr. Sandeep Sudhakar Deshmukh, AOR

For Respondent(s) Mr. Ravindra Keshavrao Adsure, AOR Mr. Sandeep Gorde Patil,Adv. Mr. Yash Prashant Sonavane,Adv.

Headnotes

Code of Civil Procedure, 1908 ; Order VIII Rule 1 proviso and Order V Rule 1(1) second proviso - Time limit for filing written statement not mandatory when the suit was instituted before the normal Civil Court and transferred to a Commercial Court after the expiry of 120 days - Referred to Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344 and SCG Contracts India Private Limited v. K.S.Chamankar Infrastructure Limited (2019) 12 SCC 210. 

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