Delhi High Court, in the case of Nitin Gupta v Texmaco Infrastructure & Holding, has once again sent a signal that the courts are determined to ensure ease of doing business in India by faster disposal of commercial suits.
The court dismissed an application under order XI rule 1(5) & 1(6) of the Code of Civil Procedure, 1908 (CPC), filed to put on record additional documents after the framing of issues, which can be used as a dilatory tactic by the parties to delay the suits.
In the Texmaco Infrastructure case, the plaintiff’s application seeking permission to file a letter, purportedly to have been exchanged between the parties, was opposed on the grounds that this suit was a commercial suit. Order XI rule 1(5), as applicable to commercial suits, provides that the plaintiff shall not be allowed to rely on documents that were in the plaintiff’s power, possession, control or custody but not disclosed with the plaint or within the extended period, if granted, except by leave of court, which is to be granted only after establishing a reasonable cause for non-disclosure.
Also, order XI rule 1(6) requires the plaintiff in a commercial suit to set out in detail the documents and order XI rules 1(2) and (3) require a declaration of documents to be made on oath. Not only did the plaintiff not disclose while filing the suit that there was any such document addressed by the defendant to the plaintiff that was not immediately available to him, the plaintiff, in fact, declared that there was no document other than those filed.
The court held that under order XI, the document can be filed if the party “establishes reasonable cause for nondisclosure (of the document now sought to be filed) along with the plaint”.
Though a document can be filed if the plaintiff establishes reasonable cause for non-disclosure, the court held that the plaintiff did nothing of the sort and pleaded a case contrary to what emerged from the document that they sought to file.
It was further held by the court that the story set up by the plaintiff that his advocate had asked him to bring all papers for drafting proposed issues did not inspire confidence because, for drafting proposed issues, there is no need to call for documents that are not already on record.
The court, held that, unless the commercial divisions of the courts start enforcing rules legislated for them, refusing to show leniency and dismissing arguments such as “interest of justice” and “a litigant ought not to suffer for default of advocate”, commercial suits will suffer from the same problems that afflict ordinary suits.
The court also held that the commercial division is not required to entertain or allow applications for late filing of documents without any good cause established. It further held that the form prescribed for filing affidavits of documents requires a litigant in a commercial suit to disclose a relevant document, even if not immediately possessed of it. A litigant who fails to do so and does not satisfy the court while seeking to file the document belatedly cannot be permitted to file documents.
Order XIII rules (1) and (2) of the CPC, as it existed prior to amendment from 1 July 2002, required the documents to be filed at or before the settlement of issues and no documents could be received at any subsequent stage unless “good cause was shown to the satisfaction of the court for non-production”. After the amendment of CPC, a plaintiff is required to file documents with the plaint and a defendant is required to file documents with a written statement, and documents are not permitted to be received thereafter without the leave of the court.
The court held that order XI rule (1) of the CPC, as applicable to commercial suits, brought about a radical change.
In view of the aforesaid judgment it is evident that the courts are not ready to show any leniency in belated filing of documents by parties, especially in commercial suits, and companies now need to ensure that all the documents are filed and explained in accordance with the provisions of CPC as applicable to commercial suits.
Deepak Sabharwal is the managing partner of Deepak Sabharwal & Associates.
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