In order to ensure speedy disposal of cases, especially relating to commercial disputes, the Supreme Court held that commercial courts do not have the power to grant more than 120 days to defendants to file written statements.
The Supreme Court, in its judgment in the SCG Contracts India Pvt Ltd v KS Chamankar Infrastructure Pvt Ltd & Ors case, considered the scope of the recently added second proviso to order V rule 1 of the Code of Civil Procedure, 1908, along with the special amendment to order VIII rule 1, read with the newly added proviso to rule 10.
The issue involved was whether the provisions are mandatory or directory, as they were earlier held to be directory in the case of Salem Advocate Bar Association v Union of India.
The second proviso to order-V rule-1 says that if the defendant fails to file a written statement within thirty days, they shall be allowed to file it on a date specified by the court, for which the reasons are to be recorded in writing. But the date but shall not be later than ninety days from the date of the service of summons.
Special amendment to order-VIII rule-1 says that if the defendant fails to file the written statement within the thirty days, they shall be allowed to file the written statement on another day specified by the court, for which the reasons are to be recorded in writing, and on payment of costs as the court deems fit, but it shall not be later than 120 days from the date of service of summons. And after 120 days from the date of the service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.
The proviso added to order-VIII rule-10 says that no court shall make an order to extend the time provided under rule 1 of this order for the filing of the written statement.
The Supreme Court, after considering the amended provisions, held that when there is a special provision in the Code of Civil Procedure that deals with a specific procedure, it cannot be circumvented by taking recourse to the inherent powers of the court. And the consequences arising out of it cannot be dodged by taking recourse to the inherent powers of the court to do the oppposite of what is stated there.
The Supreme Court held that the written statement is to be filed within 30 days from the date of service of summons and a grace period of 90 days may be granted, in which case a court can allow a written statement to be filed only after recording the reasons for the delay and the imposition of appropriate costs.
In the event that the written statement is not filed within 120 days from the service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow it to be taken on record.
It also held that that the proceedings carried out under order VII rule 11 are independent of the filing of a written statement once a suit has been filed. It was also held that the pendency of an application filed under order VII rule 11 cannot be used as a ruse for retrieving the lost chance to file the written statement.
The Supreme Court held that the provisions were mandatory and directed, “the clear, definite and mandatory provisions of order V read with order VIII rules 1 and 10 cannot be circumvented by recourse to the inherent power under the section-151, to do the opposite of what is stated therein.”
“In view of the fact that the consequence of forfeiting a right to file the written statement, non-extension of any further time, and the fact that the court shall not allow the written statement to be taken on record, all points to the fact that the earlier law on the filing of written statement under order VIII rule 1 has now been set at naught.”
Since the decision by the Supreme Court makes the provisions mandatory, companies will have to devise a strategy and ensure that the written statement in the cases defended by them is filed within a maximum of 120 days from the date of the service of summons. If they fail to do this, their right to file the written statement shall be forfeited and the court shall be entitled to pronounce a judgment against them.
Deepak Sabharwal is the managing partner of Deepak Sabharwal & Associates.
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