2022 (1) TMI 499 - HC - Indian Laws

Court overturns late filing decision, rules against Commercial Court. Petition allowed, order quashed.

The court concluded that the Commercial Court erred in allowing the filing of the written statement beyond the permissible period. The petition was ... Suit for recovery of money against the respondent-defendant - breach of contract - seeking extension of period of limitation for filing written statement - HELD THAT:- The submission proceeds on a misconceived notion about concept of limitation. The limitation for filing written statement provided in Order VIII Rule 1 Proviso is thirty days and not one hundred twenty days. The additional period of ninety days is allowed to be utilized for filing the written statement on showing sufficient cause as grace period. It is not the limitation per se. The ninety days additional period allowed to the defendant, it comes into play, if the defendant had failed to file written statement within the prescribed period of thirty days. The ninety days are the additional window following the prescribed limitation in which the defendant may show the sufficient cause to be considered by the Court, to be allowed to file written statement. In SAGUFA AHMED & ORS. VERSUS UPPER ASSAM PLYWOOD PRODUCTS PVT. LTD. & ORS. [2020 (9) TMI 713 - SUPREME COURT], the Supreme Court explained the concept of extension in cognizance of extension of limitation, it was held that the said judgment extended the period of limitation and did not extend period upto which the delay could be condoned in exercise of discretion conferred by the statute concerned. In that case, the Supreme Court upheld the refusal of the tribunal to condone the delay in the context of Section 421(3) and Section 420(3) of the Companies Act, 2013, in respect of the application for condonation of delay and dismissal of appeal. In the facts of the present case, the written statement was not filed by the defendant within the limitation period of thirty days which expired on 28.2.2020. The benefit of extended period of limitation as per the Supreme Court order would not be available to the defendant. Petition allowed. Issues Involved:1. Challenge to the order permitting delayed filing of written statement.2. Interpretation of limitation period for filing written statements under the Commercial Courts Act.3. Impact of COVID-19 pandemic on limitation periods.4. Applicability of Supreme Court orders extending limitation periods due to the pandemic.Detailed Analysis:1. Challenge to the order permitting delayed filing of written statement:The petitioner challenged the order dated 25.6.2021 by the Commercial Court, Vadodara, which allowed the defendant to file a written statement upon payment of a delayed cost of Rs. 10,000/-. The petitioner argued that the written statement was filed beyond the permissible period.2. Interpretation of limitation period for filing written statements under the Commercial Courts Act:The Commercial Courts, Commercial Division, and Commercial Appellate Division of High Courts Act, 2015, amended the Code of Civil Procedure to specify that a written statement should be filed within 30 days from the service of summons. An additional grace period of 90 days is allowed, making it a total of 120 days. After this period, the defendant forfeits the right to file the written statement, and the court cannot accept it.3. Impact of COVID-19 pandemic on limitation periods:The Supreme Court, acknowledging the difficulties posed by the COVID-19 pandemic, extended the limitation period from 15.3.2020 till further orders. This extension was to ensure that litigants and lawyers were not disadvantaged by the pandemic.4. Applicability of Supreme Court orders extending limitation periods due to the pandemic:The Supreme Court's orders extended the limitation period but did not extend the period within which delays could be condoned. The limitation period from 15.3.2020 to 2.10.2021 was excluded from the computation of limitation periods. However, this extension applied only to periods that were still running as of 15.3.2020.Case-Specific Analysis:- The defendant was served with the summons on 30.1.2020, and the 30-day period for filing the written statement expired on 28.2.2020.- Since this date fell before the Supreme Court's extension starting on 15.3.2020, the defendant could not benefit from the extended limitation period.- The defendant filed the written statement on 20.3.2021, beyond the 120-day period allowed by the statute.- The High Court of Calcutta and the Delhi High Court clarified that the Supreme Court's extension applied only to the statutory limitation period, not to the additional grace period for filing written statements.Conclusion:The court concluded that the Commercial Court erred in allowing the filing of the written statement beyond the permissible period. The petition was allowed, and the order permitting the delayed filing of the written statement was quashed and set aside.