2021 (2) TMI 1363 - HC - Companies Law

Court denies extension for filing written statements in commercial suit, emphasizes 120-day deadline.

IL And FS Financial Services Ltd Versus Aditya Khaitan & Ors.

The court dismissed the defendants' applications for an extension of time to file written statements in a commercial suit, emphasizing the mandatory ... Suspension of the period of limitation to file written statement - denial Order V Rule 1 and Order VIII Rule 1 of the Code of Civil Procedure 1908 - HELD THAT:- In the facts of the present case, the prescribed time to file written statement by the applying defendants had expired on March 8, 2020 or thereabouts, at least way before the order dated March 23, 2020 passed by the Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 [2020 (5) TMI 418 - SC ORDER] came into being. The order dated March 23, 2020 has prescribed that the same is to be construed to be effective from March 15, 2020. The original period of 30 days to file written statement by the applying defendants had expired much before March 15, 2020. The order dated March 23, 2020 of the Hon’ble Supreme Court and the subsequent orders with regard to the period of limitation has been explained by the Hon’ble Supreme Court in Sagufa Ahmed and others [2020 (9) TMI 713 - SUPREME COURT] by stating that, “what was extended by the above order of this Court was only ‘a period of limitation’ and not the period of limitation up to which delay can be condoned in exercise of discretion conferred by this statute”. Section 16 of the Act of 2015 has laid down that, the provisions of the Code of Civil Procedure, 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. In sub-section (2) thereof it has specified that, the Commercial Division and the Commercial Court shall follow the provisions of the Code of Civil Procedure, 1908, as amended by the Act of 2015 in the trial of a suit in respect of a commercial dispute of a Specified Value. The second proviso to Order V Rule 1 and the proviso to Order VIII Rule 1 as have been amended by the Act of 2015, has prescribed an outer limit of 120 days for filing of written statement by a defendant, from the date of service of the writ of summons on such defendant. This period of 120 days has been divided into two parts. The first part is of 30 days from the date of service of the writ summons on the defendant. In this period of 30 days, the defendant is entitled to file written statement in the suit, unquestionably - The original period of limitation for filing written statement has been prescribed to be 30 days with a condonable period of 90 days thereafter being available to the Court to condone the delay in filing the written statement within 30 days, provided the Court records the reasons for doing so and the defendant pays such costs at the Court may deem fit. The object of the Act of 2015 has been stated to provide for speedy disposal of high value commercial disputes. The applying defendants have not ascribed any reason as to why the applying defendants could not file written statement within the period of 30 days from the date of service of the writ of summons on them. In the facts of the present case, it is found that the applications of the applying defendants for extension of time to file written statement to be bereft of material particulars. The applying defendants have not exhibited any promptness in having the written statements prepared and filed. Application dismissed. Issues Involved:1. Extension of time to file written statements by defendants in a commercial suit.2. Applicability of the Supreme Court's orders on the suspension of limitation periods due to the COVID-19 pandemic.3. Interpretation of the provisions of the Commercial Courts Act, 2015, and the Code of Civil Procedure, 1908 regarding the filing of written statements.4. Consideration of previous judgments and their applicability to the current case.Issue-wise Detailed Analysis:1. Extension of Time to File Written Statements:Eight defendants in a commercial suit pending in the Commercial Division of the High Court applied for an extension of time to file their written statements. The suit was filed on August 30, 2019, and the writ of summons was issued on February 6, 2020. The defendants received the summons on February 7, 2020. According to Order V Rule 1 and Order VIII Rule 1 of the Code of Civil Procedure, 1908, as applicable to commercial suits, the initial 30-day period to file written statements expired on March 8, 2020, and the 120-day period expired on June 6, 2020. The defendants did not file their written statements within these periods and later applied for an extension in January 2021.2. Applicability of the Supreme Court's Orders on Suspension of Limitation Periods:The defendants argued that the period of limitation was suspended due to the Supreme Court's order dated March 23, 2020, in Suo Motu Writ Petition (C) No. 3 of 2020, which suspended the limitation period from March 15, 2020, due to the COVID-19 pandemic. They contended that this suspension should apply to their case, allowing them to file their written statements beyond the prescribed period.3. Interpretation of the Provisions of the Commercial Courts Act, 2015, and the Code of Civil Procedure, 1908:The second proviso to Order V Rule 1 and the proviso to Order VIII Rule 1, as amended by the Commercial Courts Act, 2015, prescribe an outer limit of 120 days for filing written statements from the date of service of summons. The court emphasized that this period is mandatory, and beyond 120 days, the defendant forfeits the right to file the written statement. The court referred to previous judgments, including SCG Contracts India Private Limited v. K.S. Chamankar Infrastructure Private Limited, which reinforced the mandatory nature of this period.4. Consideration of Previous Judgments and Their Applicability:The court considered several previous judgments to determine the applicability of the Supreme Court's orders and the mandatory nature of the 120-day period. The judgment in Siddha Real Estate Development Private Limited v. Golden Goenka Credit Private Limited was noted, which dealt with a similar issue and held that the 90-day period beyond the initial 30 days is an additional period, not an extension of the limitation period. The court also referred to Sagufa Ahmed v. Upper Assam Plywood Products Private Limited, which clarified that the Supreme Court's order dated March 23, 2020, extended only the period of limitation and not the period up to which delay can be condoned. The court further cited New India Assurance Company Limited v. Hilli Multipurpose Cold Storage Private Limited, which reiterated that the 120-day period for filing written statements in commercial suits is mandatory.Conclusion:The court concluded that the applications for extension of time to file written statements were not supported by sufficient grounds. The defendants did not exhibit promptness or provide adequate reasons for their delay. The court emphasized the mandatory nature of the 120-day period for filing written statements in commercial suits and dismissed the applications for extension of time without any order as to costs.