TaxTMI 
TaxTMI 
2018 (10) TMI 662
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....after which the respondents instituted Commercial Civil Suit No. 152 of 2017 against the Bank and prayed that the Bank may be directed to pay a sum of Rs. 30 Crores by way of damages and loss caused to the plaintiffs and a further sum of Rs. 10 Crores for loss of reputation. In the plaint, the plaintiffs have averred that the Bank had instituted proceedings for recovery of a sum of Rs. 18,89,05,602/= under the SARFESI Act and symbolic possession of the properties of the plaintiffs has been taken on 11th May 2017. According to the plaintiffs, there was non cooperation from the Bank which led to caused damage to the plaintiffs on account of non sanctioning and non disbursing further working capital, and loss of reputation on account of such non advances. It is further averred that the plaintiffs had written series of letters to the Bank, despite which the Bank refused to release further working capital which severely affected the operations of the plaintiffs' factory for which the Bank is directly responsible. The summons of this suit was served on the Bank on 9th August 2017. As per the provisions of the Code of Civil Procedure ["CPC" for short], as amended by the Commercial Courts,....
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....en statement within time. Learned Judge of the Commercial Court should have considered such explanation and condoned the delay, failing which enormous damage would be caused to the Bank. In support of his contentions, counsel relied upon the following judgments : [i] In case of Kalpesh R Jain & Ors. vs. Mandev Tubes Private Limited, reported in MANU/MH/1967/2017, in which the Division Bench of Bombay High Court in the context of delay in filing the appeal, held that Section 5 of the Limitation Act, 1963 could be invoked and applied while requesting the Commercial Appellate Court to condone delay beyond sixty days in presenting the appeal, provided sufficient cause is shown. [ii] In case of Shri Balaji Industrial Products Limited v. AIA Engineering Limited [Judgment dated 2nd July 2018], the Division Bench of Rajasthan High Court permitted the written statement to be taken on the record belatedly by awarding cost of Rs. 50,000/=. [iii] In case of Sunil Alagh v. Shivraj Puri & Anr., [Civil Suit [Comm] No. 1495 of 2016 :: Dated 14/12/2017], the learned Single Judge of Delhi High Court held that service of the defendant in a suit cannot be said to be compl....
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....cord, upon which writ petition came to be filed before the High Court challenging the order of the Commercial Court. In context of this controversy, the Division Bench observed as under :- "13. On conjoint reading of second proviso to subrule [1] of Order V; proviso to Rule 1 Order VIII and proviso to Rule 10 of Order VIII CPC, a defendant is required to file the written statement within a period of thirty days from the date of service of summons of the suit. However, he shall be allowed to file written statement on such other day; as may be specified by the Court, for the reasons to be recorded in writing and on payment of such cost as the Court deems fit, but which shall not be later than 120 days from the date of service of summons. It also further provides that on expiry of 120 days from the date of service of summons, the defendant shall forfeit the right to file written statement and the Court shall not allow the written statement to be taken on record. Proviso to Order VIII Rule 10 CPC provides that no Court shall make an order to extend the time provided under rule-1 of Order VIII for filing of the written statement. Thus, taking on record the written statement bey....
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.... defendant to place on record the written statement, the necessary consequences of non filing of written statement shall follow which would be very drastic and would simultaneously cause undue hardship to the defendant. It is also the case on behalf of the petitioner that by the aforesaid proviso High Court's powers under Article 226 of the Constitution are not taken away and still the High Court can in exercise of power under Article 226 of the Constitution to do substantial justice can permit the defendant to place on record written statement. It is also the case on behalf of the petitioner that as such the aforesaid provision is procedural law, and therefore, the procedural law may not be construed very strictly and as such the procedure law cannot take away substantial right of a party to defend the suit/proceedings. 13.2 Now so far as submission/request on behalf of the petitioner to exercise power under Article 226 of the Constitution and to permit the petitioner herein-original defendant to place on record the written statement to do substantial justice is concerned, at the outset, it is required to be noted that as such there is no such prayer in the petition. ....
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.....N v. Union of India [Supra] relied upon by the learned counsel for the petitioner referred to hereinabove and which are relied upon in his submission that the time limit prescribed under the CPC to file written statement in a particular time limit is directory and not mandatory shall not be applicable to the facts of the case on hand more particularly while dealing with the amended provisions of CPC; more particularly Order V Rule 1; Order VIII Rule 1 and Order VIII Rule 10 CPC which as such are exclusively and specifically amended for commercial dispute to which Commercial Courts Act, 2015 shall be applicable. The earlier language used in CPC providing the time limit for filing the written statement which fell for consideration before the Apex Court in the aforesaid two decisions are altogether different than that of the amended CPC, which is exclusively applicable to the commercial disputes. 16. As observed hereinabove, now as per second proviso to sub-rule [1] of Order V and substituted proviso of Rule 1 of Order VIII CPC, the written statement is required to be filed within a period of thirty days and the Court can allow the defendant to file written statement on such....
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....ent within a particular time limit is directory and not mandatory shall not be applicable to the facts of the case on hand, more particularly with respect to the aforesaid provisions viz., Order V Rule 1; Order VIII Rule 1 and Order VIII Rule 10 CPC which shall be applicable to the commercial disputes only. Even the observations made by the Hon'ble Supreme Court in the case of Kailash v. Nanhku [Supra] that the rules of procedure are the handmaid of justice, the provisions of CPC or any other procedural enactment ought not to have been construed in a manner which shall leave the Court helpless to meeting extraordinary situations in the ends of justice, also shall not be applicable while construing and/or considering the time limit prescribed under the amended provisions, more particularly Order V Rule 1; Order VIII Rule 1 and Order VIII Rule 10 CPC more particularly while considering the object and purpose for which the Commercial Courts Act, 2015 has been enacted and the aforesaid provisions are made applicable only to the commercial disputes to which the Commercial Courts Act, 2015 shall be applicable." The issue therefore should ordinarily rest here, without further ado. ....
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....l Court shall follow the provisions of the Code of Civil Procedure, 1908 [5 of 1908], as amended by this Act, in the trial of a suit in respect of a commercial dispute of a Specified Value. [3] Where any provision of any rule of the jurisdictional High Court or any amendment to the Code of Civil Procedure, 1908 [5 of 1908], by the State Government is in conflict with the provisions of the Code of Civil Procedure, 1908 [5 of 1908], as amended by this Act, the provisions of the Code of Civil Procedure as amended by this Act shall prevail." As per this section, thus, the provisions of the CPC, in their application to any suit in respect of a commercial dispute of specified value would stand amended in the manner specified in the Schedule. As per sub-section [2] of Section 16, the Commercial Divisions and Commercial Courts would follow the provisions of CPC; as amended by the Act, in the trial of a suit in respect of a commercial dispute of a specified value. Sub-section [3] of Section 16 further clarifies that in case of any conflict between any rule of the concerned High Court or an amendment in the CPC by the State Government, the provisions of the CPC; as amended by the....
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....esent written statement called for by Court - Where any party from whom a written statement is required under rule 1 or rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on the pronouncement of such judgment, a decree shall be drawn up." By virtue of Clause 4 [D] (iv), the following proviso is added to Rule 10 : "Provided further that no Court shall make an order to extend the time provided under rule 1 of this Order for filing of the written statement." As noted, the Act of 2015 has been enacted providing separate Commercial Courts and Commercial Divisions for dealing with commercial disputes of specified value in order to achieve timely disposal thereof. In furtherance of such objective, various provisions have been made in the Act of 2015; including making some significant amendments in the CPC. We may recall, the CPC was amended extensively by the Act of 2002 which included imposition of time limit for filing the written statement. As per the amended Rule 1 of Order VIII, a defendant would have thir....
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....r make such other order in relation to the suit as it thinks fit. On failure to file written statement under this provision, the court has been given the discretion either to pronounce judgment against the defendant or make such other order in relation to the suit as it thinks fit. In the context of the provision, despite use the word "shall", the Court has been given the discretion to pronounce or not to pronounce the judgment against the defendant even if the written statement is not filed and instead pass such order as it may think fit in relation to the suit. In construing the provision of Order 8 Rule 1 and Rule 10, the doctrine of harmonious construction is required to be applied. The effect would be under Rule 10 Order 8, the Court in its discretion would have the power to allow the defendant to file written statement even after expiry of the period of 90 days provided in Order 8 Rule 1. There is no restriction in Order 8 Rule 10 that after expiry of ninety days, further time cannot be granted. The court has wide power to "make such order in relation to the suit as it thinks fit." Clearly, therefore, the provision of Order 8 Rule 1 providing for the upper limit of 90 days to....
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....er VIII CPC by inserting a proviso which; as noted above, provides further that no court shall make an order to extend the time limit provided under Rule 1 of Order VIII CPC for filing the written statement. Combined effect of these amendments is clear and precise. All the powers of a Court dealing with the commercial disputes of a specified value for extending time for filing the written statement beyond the period of 120 days of service of summons are taken away. The language of the proviso to Rule 1 of Order VIII CPC has been materially altered. In addition to providing for extension beyond 30 days [but not beyond 120 days from service of summons] on payment of cost; as may be specified by the Court, two more significant changes have been made namely, that on expiry of 120 days from the date of service of summons, the defendant shall forfeit the right to file written statement and that the Court shall not allow the written statement to be taken on record. In addition to providing with the maximum time permissible for filing written statement upto 120 days from the date of service of summons, these two additional elements inserted in the proviso to Rule 1 make the legislative ....
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.... of the legislative intention. Often times, the courts have even in face of the use of such expression held a proviso to be directory instead of mandatory. However, in the present case, from all angles, the legislative intent which emerges is that the prescription of time limit for filing the written statement applicable to a Commercial Court is mandatory. Such an interpretation would also be in consonance with the scheme of the Act of 2015 and the objects for enactment of the said act. We may now refer to the judgments cited by learned counsel for the petitioner. In case of Kalpesh R. Jain [Supra], the Bombay High Court was dealing with different situation. It was a case in which an appeal was filed before the Commercial Appellate Court set up under the Act of 2015. Such appeal was filed beyond the period of limitation prescribed. The Court held that applicability of Section 5 of the Limitation Act, 1963 is not ruled out and delay can be condoned on sufficient ground being made out. The Rajasthan High Court in case of Shri Balaji Industrial Products Ltd [Supra] has not dealt with the question of powers of a Commercial Court to extend the time limit for filing written stat....