2025 (7) TMI 917 - HC - Indian Laws

Appellant loses right to defend after missing mandatory 120-day deadline for written statement under Order VIII Rule 10

M/s. GS Marbles Versus M/s. Shree Granites.

The Delhi HC dismissed an appeal challenging an ex-parte judgment in a commercial dispute involving failure to supply granite slabs. The appellant failed ... Recovery of amount due from other party - Closure of right of the Appellant to file the Written Statement - Appellant was proceeded ex-parte - failure to supply the granite slabs to the Respondent as per the Purchase Order - principles of natural justice - Allegation of GST Fraud / Saving of GST - HELD THAT:- The statutory scheme establishes an absolute bar beyond 120 days from the date of service of summons, whereafter the defendant shall forfeit the right to file a written statement, and the Court shall be precluded from allowing such written statement to be taken on record. This statutory prohibition is further reinforced by the proviso to Order VIII Rule 10 of the CPC, which categorically divests the Court of any jurisdiction to extend time beyond the period of 120 days, thereby creating an inflexible statutory limitation. Order VIII Rule 10 of the CPC empowers a Civil Court to pass a judgment / order in the event the Defendant fails to file the written statement in accordance with Order VIII Rule 1 of the CPC - It is a settled position of law that Order VIII Rule 10 of the CPC is a permissive rule that provides the Court with two alternatives in case the defendant fails to file the written statement. Firstly, the Court can pronounce the judgment in favour of the plaintiff if the Court for reasons to be recorded is fully satisfied that there is no fact that needs to be proved in view of the deemed admission by the defendant by not filing the written statement. Secondly, the Court may direct the parties to prove their case by adducing evidence. Thus, a mere failure on the part of the defendant to file the written statement does not relieve the plaintiff of its obligation to prove the case as the Court cannot pass a judgment in a mechanical manner by invoking Order VIII Rule 10 of the CPC. There were no disputed questions of fact and the Respondent’s case was unimpeachable. Therefore, the view taken by the learned Trial Court does not warrant interference by this Court. The present Appeal is hereby dismissed, and the impugned judgment and decree is upheld. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court were:Whether the Appellant forfeited its right to file a Written Statement by failing to do so within the statutory period of 120 days as prescribed under Order VIII Rule 1 of the Code of Civil Procedure, 1908 (CPC).Whether the Trial Court was justified in proceeding ex-parte against the Appellant and decreeing the Suit in favour of the Respondent under Order VIII Rule 10 of the CPC due to the Appellant's failure to file the Written Statement.Whether the Respondent had established a prima facie unimpeachable case entitling it to a decree without the necessity of trial, given the deemed admission arising from the Appellant's failure to file the Written Statement.Whether the Appellant's defence based on alleged fraud and non-receipt of advance payment by the Proprietor was credible and required adjudication through trial or could be rejected on the basis of documentary evidence.The scope and application of the statutory bar under Order VIII Rule 1 and Rule 10 of the CPC, including the Court's discretion and limitations in extending the time to file the Written Statement.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Forfeiture of the right to file Written Statement beyond 120 daysLegal Framework and Precedents: Order VIII Rule 1 of the CPC mandates that a Defendant must file a Written Statement within 30 days of service of summons, with a possible extension up to 90 additional days at the Court's discretion, but not beyond 120 days in total. The proviso to Order VIII Rule 10 expressly prohibits any extension beyond 120 days. The Supreme Court in M/s SCG Contracts India Pvt. Ltd. v. KS Chamankar Infrastructure Pvt. Ltd. emphasized the mandatory nature of this limitation and the forfeiture of the right to file thereafter.Court's Interpretation and Reasoning: The Court noted that the Appellant was served summons on 12.02.2022 and had 120 days to file the Written Statement. The Appellant failed to do so within this period despite appearing through Counsel. Although the Trial Court initially proceeded ex-parte on 11.07.2022, it later set aside that order on 23.09.2022 but held that the statutory period had expired, and the right to file the Written Statement was closed.Application of Law to Facts: The Court held that the statutory bar under Order VIII Rule 1 was absolute and could not be circumvented. The Appellant's failure to file the Written Statement within 120 days resulted in forfeiture of the right, and the Trial Court correctly applied the law in closing the defence.Treatment of Competing Arguments: The Appellant's plea of illness of its Counsel and other reasons were considered but found insufficient to extend the statutory period. The Court relied on precedents that strictly enforce the 120-day limit to prevent dilatory tactics.Conclusion: The Appellant's right to file the Written Statement was forfeited by operation of law, and the Trial Court's closure of that right was justified.Issue 2: Justification for passing decree under Order VIII Rule 10 CPC without trialLegal Framework and Precedents: Order VIII Rule 10 permits the Court to pronounce judgment against a Defendant who fails to file a Written Statement within the prescribed time. However, as held in C.N. Ramappa Gowda v. C.C. Chandregowda, such judgment should not be mechanical or penal but must be based on a satisfaction that no material fact requires adjudication and the Plaintiff's case is prima facie unimpeachable.Court's Interpretation and Reasoning: The Trial Court examined the plaint and accompanying documents, including the Purchase Order, Bank Statements, Demand Letter, and Reply Letter. It found that the documents were clear and unambiguous, showing receipt of advance payment by the Appellant and non-supply of goods. The Appellant's denial was considered an afterthought without documentary support.Key Evidence and Findings: The Purchase Order bore the signature of the Appellant's Proprietor, Mr. Manoj Saini. Bank statements confirmed credit of advance payment to the Appellant's account. The Reply Letter did not dispute non-supply of goods but denied receipt of advance money, a claim unsupported by evidence. No FIR or official documents regarding the alleged fraud or GST investigation were produced.Application of Law to Facts: Given the deemed admission due to non-filing of Written Statement and unimpeachable documentary evidence, the Court was satisfied that no disputed factual issues required trial. Hence, the decree was rightly granted under Order VIII Rule 10.Treatment of Competing Arguments: The Appellant's claim of being a victim of fraud and non-involvement was rejected as an afterthought, unsupported by evidence. The Court emphasized that mere assertions without proof cannot delay or defeat the Respondent's claim.Conclusion: The Trial Court rightly exercised its discretion to decree the Suit without trial under Order VIII Rule 10, as the Respondent's case was prima facie established and no material facts required adjudication.Issue 3: Credibility and sufficiency of Appellant's defence based on alleged fraud and GST evasionLegal Framework and Precedents: Defences based on fraud require cogent evidence, including FIRs, official investigation reports, or cancellation orders, to be considered valid. Mere allegations or claims of victimhood without documentary proof do not suffice to create triable issues.Court's Interpretation and Reasoning: The Court noted that the Appellant failed to produce any official documents substantiating its claims of fraud by Mr. Rajaram Agarwal or cancellation of GST registration. The Appellant's own Reply Letter admitted non-supply despite receipt of advance. The Court found the defence to be an afterthought and not credible.Key Evidence and Findings: Absence of FIR, no official cancellation order on record, and the signature of the Proprietor on the Purchase Order contradicted the Appellant's claim of non-involvement. The bank statements confirmed receipt of advance payment.Application of Law to Facts: The Court held that the Appellant's defence lacked evidentiary foundation and did not raise any triable issue. The Respondent's claim was established on the basis of documentary evidence.Treatment of Competing Arguments: The Appellant's narrative of being a mere workman used to perpetrate fraud was rejected as an afterthought and insufficient to defeat the Respondent's claim.Conclusion: The Appellant's defence was found to be hollow and did not warrant trial or delay of the Suit.Issue 4: Scope of Court's discretion under Order VIII Rule 10 CPC and inherent powersLegal Framework and Precedents: The Court's discretion under Order VIII Rule 10 is limited to either passing judgment when no material fact requires proof or directing trial where disputed facts exist. The statutory bar on filing Written Statement beyond 120 days is mandatory and cannot be bypassed by inherent powers under Section 151 CPC, as held in M/s SCG Contracts India Pvt. Ltd.Court's Interpretation and Reasoning: The Court emphasized that the statutory provisions are mandatory and designed to curb dilatory tactics. The Trial Court correctly applied these provisions and did not err in refusing to allow the Written Statement or extend time.Application of Law to Facts: The Appellant failed to comply with the statutory timeline, and the Court had no jurisdiction to extend time beyond 120 days. The Trial Court's exercise of discretion was in accordance with law.Conclusion: The Court's discretion under Order VIII Rule 10 was rightly exercised, and inherent powers could not override the statutory bar.3. SIGNIFICANT HOLDINGSThe Court upheld the Trial Court's decision dismissing the Appellant's defence and decreeing the Suit in favour of the Respondent, holding as follows:'The statutory scheme establishes an absolute bar beyond 120 days from the date of service of summons, whereafter the defendant shall forfeit the right to file a written statement, and the Court shall be precluded from allowing such written statement to be taken on record.''Order VIII Rule 10 of the CPC is a permissive rule that provides the Court with two alternatives in case the defendant fails to file the written statement. Firstly, the Court can pronounce the judgment in favour of the plaintiff if the Court for reasons to be recorded is fully satisfied that there is no fact that needs to be proved in view of the deemed admission by the defendant by not filing the written statement. Secondly, the Court may direct the parties to prove their case by adducing evidence.''The Court cannot pass a judgment in a mechanical manner by invoking Order VIII Rule 10 of the CPC. It must ensure that even if the facts set out in the plaint are treated to have been admitted, a judgment and decree could not possibly be passed without requiring the plaintiff to prove the facts pleaded in the plaint.''The stand taken by the Appellant was hollow as there was no document produced regarding FIR against Mr. Rajaram Agarwal. Even the cancellation of registration of M/s GS Marbles was not placed on record.''Admittedly, the advance money was received by the Appellant and since no supply was made against the advance payment received by the Appellant, there was no question of fact to be determined for recovery of advance amount.'The Court concluded that the Respondent's case was unimpeachable and no triable issues existed, thus affirming the Trial Court's decree and dismissing the Appeal.