Commercial Courts Act| Delay In Written Statement Filed Within 120 Days Can Be Explained Beyond That Period: Andhra Pradesh High Court

The Court was hearing a civil revision petition challenging an order striking off a written statement filed within 120 days but beyond 30 days, without an accompanying application for condonation of delay.

A Division Bench of Justice Ravi Nath Tilhari and Justice Maheswara Rao Kuncheam observed:“Order VIII Rule 1 C.P.C even in its applicability to the Commercial Courts Act as amended, is a procedural law and even if couched in a mandatory language, is still procedural in nature, and in dealing with the matter of procedure, the old adage of procedural law being handmaid of justice shall be kept in mind.”

“It cannot be that such an application cannot be filed beyond 120 days. We make it clear that the written statement cannot be filed beyond 120 days. But for the written statement filed within 120 days, the delay can be explained showing sufficient cause by filing an appropriate application even beyond 120 days”, the Bench added.

Advocate Gnani Vivek Karra appeared for the petitioner, while Advocate D.S. Sivadarshan appeared for the respondent.

Background

The dispute arose from a commercial suit filed seeking monetary and declaratory relief. The defendant received a summons but filed its written statement beyond the initial period of 30 days but within the outer limit of 120 days.

The plaintiff filed an application seeking the striking off of the written statement on the ground that no application for condonation of delay had been filed along with the written statement, nor were reasons for delay stated.

The trial court accepted this contention and struck off the written statement, holding that compliance with procedural requirements under Order VIII Rule 1 CPC, as amended for Commercial Courts, was mandatory.

The defendant challenged this order, contending that the written statement having been filed within 120 days, procedural lapses should not defeat substantive rights, and that an opportunity ought to have been granted to explain the delay.

Court’s Observation

The High Court examined the scheme of Order VIII Rule 1 CPC as applicable to commercial disputes and reiterated that while the provision prescribes strict timelines, its nature remains procedural.

It clarified that although the Court is required to record reasons while accepting a written statement filed beyond 30 days but within 120 days, such a requirement presupposes that reasons are placed before the Court by the defendant.

The Court observed that “the written statement filed after 30 days but within 120 days must accompany the prayer to condone the delay… or the reasons may be stated in the written statement itself…”

At the same time, the Court rejected the rigid interpretation adopted by the trial court and held that the absence of such an application at the time of filing does not permanently foreclose the defendant’s right.

“The provision of Order VIII, as amended for Commercial Courts, still retains the character of the procedural provisions. We are not saying that the time limit is not to be adhered nor that the object with which the Act has been brought into force to decide expeditiously the commercial disputes should be ignored, or that it should be construed to defeat the object; but we say that, the nature of the amended C.P.C applicable to the Commercial Courts Act is still a procedural law, which cannot be allowed to override the substantive rights even in its application to the Commercial Courts”, the Bench added.

The Court emphasised the distinction between the outer limit for filing a written statement and the stage at which reasons for delay may be furnished. While the former is strictly capped at 120 days, the latter is not subject to such rigid limitation.

“It is not that, on expiry of 120 days, an application cannot be filed seeking condonation of delay in filing the written statement beyond 30 days but within 120 days. If any such application has not been filed, there is no mandate that the application cannot be filed later on. The mandate is that the written statement cannot be filed after 120 days, nor can it be permitted, but such a mandate cannot be read for filing an application for condonation of delay for a written statement already filed within 120 days. So, where an application for condonation of delay has not been filed, the court shall allow an opportunity to file such an application even beyond 120 days, provided the written statement has already been filed within 120 days”, the Bench elaborated.

Relying on settled principles, the Court reiterated that procedural law is intended to facilitate justice and not to obstruct it. It was observed that striking off a written statement has serious civil consequences as it deprives a party of the right to contest the case on the merits.

The Court further held that where no prejudice is caused to the opposing party, a liberal approach should be adopted in permitting the defendant to explain the delay, especially when the written statement has been filed within the statutory limit.

It found that the trial court failed to exercise its discretion judiciously by not granting an opportunity to the defendant to explain the delay before striking off the written statement.

The Court also noted that the earlier order recording the filing of the written statement may have created a bona fide impression that it had been accepted, and in such circumstances, denial of opportunity would result in injustice.

Conclusion

The Court set aside the order striking off the written statement and granted the defendant an opportunity to file an application explaining the delay in filing the written statement beyond 30 days. The petition was allowed with directions to consider such an application in accordance with the law.

Cause Title: Bunge India Private Limited v. M/s Sree Mahalakshmi Oil Mills

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