failure to file written statements within the statutory time period of 120 days for filing written statements in a commercial suit will result in the forfeiture of the right of the defendant to file a written statement

The Hon'ble Supreme Court of India (Supreme Court) in its judgment, in M/s SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors. [Civil Appeal No. 1638 Of 2019] held that the failure to file written statements within the statutory time period of 120 days for filing written statements in a commercial suit will result in the forfeiture of the right of the defendant to file a written statement.

BACKGROUND

M/s SCG Contracts India Private Limited (Petitioner) filed a commercial suit (Suit) on 10 March 2017 against K S Chamankar Infrastructure Private Limited (Respondent) before the Hon'ble High Court of Delhi. The summons in the suit were served upon the Respondent on 14 July 2017 and they filed their written statement on 15 December 2017 which was beyond the statutory time period of 120 days for filing the written statement. The Petitioner filed an application for striking the Respondent's written statement off the record for being time barred under Order VIII Rule 10 of the Code of Civil Procedure, 1908 (CPC) as amended by the Commercial Courts Act, 2015 (Act). However, the said application of the Petitioner, despite falling within the provisions of the Act was not allowed, and the written statement was taken on record.

Accordingly, the Petitioner filed a Special Leave Petition (SLP) before the Supreme Court on the ground that the provisions of Order VIII Rules 1 and 10 of the CPC as amended by the Act, no longer gives discretion to courts to allow written statements to be filed beyond 120 days from receipt of summons and therefore a written statement filed beyond the said time period cannot be allowed.

Prior to the said amendment of CPC by way of the Act, there was no demarcation between commercial suits and other suits, and the provisions of the CPC as applicable to other suits were applied to commercial disputes as well, wherein, the court had the discretion to allow written statements to be filed, even after the statutory time period of 30 days extendable by up to 90 days, had expired.

JUDGMENT

The bench of the Supreme Court held as follows:

• Mandatory filing of written statement within 120 days from receipt of summons
  
  The Supreme Court reviewed the provisions of Order V Rule 1 (1), Order VIII Rules 1 and 10 of the CPC, as amended by the Act, and held that under the aforesaid provisions a party is granted 30 days' time to file its written statement and a grace period of 90 days is provided, wherein, a court can, after recording the reasons for delay in filing and after imposing costs, allow a written statement to be taken on record. However, if the written statement is filed after 120 days from receipt of summons, the Defendant will be considered to have forfeited its right to file its written statement and the court will have no power to take the same on record in light of the amended provisions laid down in Order VIII Rule 10 of the CPC for commercial disputes.
• Pendency of Order VII Rule 11 Application filed by the Respondent Infrastructure is not a valid ground for delay in filing written statement
  
  The Supreme Court held that an application for rejection of plaint is independent of filing of the written statement and the filing of such an application cannot be used as an opportunity to retrieve the lost right to file a written statement, which was upheld in R K Roja v U S Rayudu & Ors ,[ (2016) 14 SCC 275], as cited by the Respondent.
• A court cannot use its inherent powers to avoid the consequences ensuing from a procedural provision.
  
  The Supreme Court by relying on Manohar Lal Chopra v Rai Bahadur Rao Raja Seth Hiralal, [(1962) Supp 1 SCR 450], held that where there is a special provision in the CPC that deals with a particular procedure, the same cannot be simply overlooked by taking recourse to the inherent powers of the court and hence the written statement cannot be ordered to be placed on record by exercising the inherent powers of the court.

COMMENT

The Supreme Court, through this judgment has cleared the position of law in relation to filing of written statements in commercial suits. Despite the amendments made by the Commercial Court Act, 2015 to Order VIII Rules 1 and 10 of the CPC, a few benches on the original side were taking the liberty to allow written statements filed beyond 120 days in commercial suits. However, now with the Supreme Court clearly stating the law, this matter ceases to be an arguable one.

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Limitation Act 

Introduction

A prescriptive right is essentially one that is created by uncontested assertion of the right for a given period of time. The principle is based in many ways on a sort of estoppel in rem.

Provision of the Act

In India, the Limitation Act, 1963 is the legislation that governs the period within which suits are to be filed, with relevant provisions for delay, condonation thereof etc. The principle that pervades statutes of limitation at common law is that ‘limitation extinguishes the remedy, but not the right' this means that the legal right itself is not defeated, but only the right to claim it in a court of law is extinguished. An exception to this general rule is the law of prescriptive rights, whereby the right itself is destroyed. Section 27 of the limitation Act, 1963 proclaims:“Section 27: Extinguishment of Right to Property at the determination of the period hereby limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished.”

This provision, in Articles 64 and 65 of the Limitation Act, 1963 establishes the law of adverse possession as it stands in India today. These two Articles both prescribe a period of twelve years within which the right to claim a particular property is extinguished, but the two differ in so far as the date on which such period of limitation begins to run.Article 64 deals with cases where the dispute is over possession not necessarily based title, and in such cases the period of limitation runs from the time when the plaintiff was dispossessed of the property.Article 65 deals with cases where the dispute is over title as such also, and in such cases the period of limitation runs from the time when the defendant becomes adverse to that of plaintiff.

Elements of the Act

One must note that the law of adverse possession is no longer what it used to be, a tool of a powerful squatter buttressed by the lack of awareness on part of the true owner and an ancient law. Today, the law of adverse possession is viewed with great circumspection by the judiciary, and this is a trend that commenced abroad.The Act created exceptions to the normal statute of limitations in addition to the previous ones of fraud and mistake. It introduced an exception if for example; the permission of the court had been gained to bring a case or the "material facts" of the case included "facts of a decisive character" which the claimant was not aware of until after the expiry of the statute of limitations.

Where these two requirements were fulfilled, a case could be brought as long as it was within twelve months of the claimant finding out the "facts of a decisive character". The same principles applied if the injured parties were dead and the claim was being brought on behalf of his estate or dependants.

Procedure to get litigation from the Act

The Limitation Act, 1963, prescribed limitation with a view to see that a litigant does not drag on the litigation. Section 5 gives an opportunity to a litigant to file applications beyond the prescribed period of limitation provided; he is able to establish that he was prevented by sufficient cause from approaching the Court within the said period. Even though explanation for day- to-day delay is not being insisted by the Courts, the litigant has to nevertheless furnish the satisfactory explanation for filing the application beyond the prescribed period of limitation. This responsibility on the part of the litigant is much more in cases of abnormal delays, for by such delays right came to be vested in his adversary and such a right cannot be easily taken away by making unduly liberal approach by the Court.

Conclusion

Limitation and compensation of Delay are two effective implementations in the quick disposal of cases and effective litigation. The law on limitation keeps a check on pulling of cases and prescribes time period  within which the suit can be filed and the time available within which the person can get the remedy conveniently. The law of compensation of delay keeps a check on the pulling of cases and prescribes a time period within which the suit can be filed and the time available within which the person can get the remedy conveniently. The law compensation of delay keeps the principle of natural justice alive and also states the fact that different people might have different problem as and the same sentence or a singular rule may not apply to all of them in the same way. Thus it is essential to hear them and decide accordingly whether they fit in the criteria of the judgment or whether they deserve a second chance.