MEDIATION , WRITTEN STATEMENT And LIMITATION ACT The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Act , 2015 No. 4 Of 2016

MEDIATION , WRITTEN STATEMENT And LIMITATION ACT The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Act , 2015 No. 4 Of 2016

The  above Act was amended by an Ordinance No.3 of 2018, by which a provision is inserted in Code of Civil Procedure ,1908.

In the First Schedule to the Code,––

(A) in the Order V, in Rule 1, in sub-rule (1), for the second proviso, the

following proviso shall be substituted, namely:––

“Provided further that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred twenty days from the date of 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.”;

(B) in Order VI,––

(i) after Rule 3, the following Rule shall be inserted, namely:––

“3A. Forms of pleading in Commercial Courts––In a

commercial dispute, where forms of pleadings have been prescribed under the High Court Rules or Practice Directions made for the purposes of such commercial disputes, pleadings shall be in such forms.”;

(ii) after Rule 15, the following Rule shall be inserted, namely:––

‘‘15A. Verification of pleadings in a commercial dispute.—

(1) Notwithstanding anything contained in Rule 15, every pleading in a commercial dispute shall be verified by an affidavit in the manner and form prescribed in the Appendix to this Schedule.

(2) An affidavit under sub-rule (1) above shall be signed by the party or by one of the parties to the proceedings, or by any other person on behalf of such party or parties who is proved to the satisfaction of the Court to be acquainted with the facts of the case and who is duly authorized by such party or parties.

(3) Where a pleading is amended, the amendments must be verified in the form and manner referred to in sub-rule (1) unless the Court orders otherwise.

(4) Where a pleading is not verified in the manner provided under sub-rule (1), the party shall not be permitted to rely on such pleading as evidence or any of the matters set out therein.

(5) The Court may strike out a pleading which is not verified by a Statement of Truth, namely, the affidavit set out in the Appendix to this Schedule.”;

(C) in Order VII, after Rule 2, the following Rule shall be inserted, namely:—

“2A. Where interest is sought in the suit,—

(1) Where the plaintiff seeks interest, the plaint shall contain

a statement to that effect along with the details set out under subrules

(2) and (3).

(2) Where the plaintiff seeks interest, the plaint shall state whether the plaintiff is seeking interest in relation to a commercial transaction within the meaning of section 34 of the Code of Civil Procedure, 1908 and, furthermore, if the plaintiff is doing so under the terms of a contract or under an Act, in which case the Act is to be specified in the plaint; or on some other basis and shall state the basis of that.

(3) Pleadings shall also state—

(a) the rate at which interest is claimed;

(b) the date from which it is claimed;

(c) the date to which it is calculated;

(d) the total amount of interest claimed to the date of calculation; and

(e) the daily rate at which interest accrues after that

date.”;

(D) in Order VIII,––

(i) in Rule 1, for the proviso, the following proviso shall be substituted,

namely:––

“Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred twenty days from the date of 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.”;

(ii) after Rule 3, the following Rule shall be inserted, namely:––

“3A. Denial by the defendant in suits before the Commercial Division

of the High Court or the Commercial Court—

(1) Denial shall be in the manner provided in sub-rules (2),

(3), (4) and (5) of this Rule.

(2) The defendant in his written statement shall state which of the allegations in the particulars of plaint he denies, which allegations he is unable to admit or deny, but which he requires the plaintiff to prove, and which allegations he admits.

(3) Where the defendant denies an allegation of fact in a plaint, he must state his reasons for doing so and if he intends to put forward a different version of events from that given by the plaintiff, he must state his own version.

(4) If the defendant disputes the jurisdiction of the Court he must state the reasons for doing so, and if he is able, give his own statement as to which Court ought to have jurisdiction.

Prior to this Amendment Order V Rule 1 was amended in 2002 by Amendment Act of 2002 with effect from 1st July,2002, which is as under:

Summons

1[(1) When a suit has been duly instituted, a summons may issued to the defendant to appear and answer the claim and to file the writ statement of his defence, if any, within thirty days from the date of service summons on that defendant;

Provided that no such summons shall be issued when a defendant has appeal at the presentation of the plaint and admitted the plaintiff’s claim :

Provided further that where the defendant fails to file the written statement wit! the said period of thirty days, he shall be allowed to file the same on such other days as may be specified by the Court for reasons to be recorded in writing, but which shall not be later than ninety days from the date of service of summons.;”

A reference is made in Bombay High Court “ Whether in view of amendment to the Code of Civil Procedure,1908 by the Commercial Courts Act,2015 the defendant/s can be allowed to file written statement after 120 days from the date of service of Writ of Summons in a Commercial Suit?”

Order VIII Rule 1

Analysis:

This provision of 120 days is applicable to Commercial Dispute. Originally prior to amendment the time available to Defendant/s was of 90 days. Which is now extended to 120 days;

In similar way 2002amendment was challenged and matter went upto Supreme Court. In the matter of R.N.Jadi & Brothers .Vs Subhashchandra 2007 AIR(SC) 2571 : 2007 AIR(SCW) 4568 : 2008 (3) Bom.C.R. 386 : 2007 (2) G.L.H. 771 : 2007 (4) JCR 7 : 2007 (9) JT 165 : 2007 (6) MLJ 59 : 2007 (9) Scale 202: 2007 (6) SCC 420 : 2007 (5) Supreme 458 : 2007 (5) ALT 25 . It’s a three Judge Bench Judgment.

Facts of Case:

The appellants-defendants were issued summons by the trial Court. They did not file the written statement within 90 days from the date of service of summons and there was a delay of two days. The trial Court accepted the written statement which was filed beyond 90 days despite the objection raised by the plaintiff respondent. The order of the trial Court was challenged before the Karnataka High Court in a Writ Petition under Article 227 of the Constitution of India, 1950 (in short the Constitution) on the ground that the provision of Order VIII Rule 1 of the Code of Civil Procedure, 1908 (in short the CPC) was mandatory and the trial Judge could not have accepted the written statement filed beyond 90 days from the date of service. The writ petition was allowed by order dated 30.8.2004. A Writ Appeal was filed which was held to be not maintainable. It was held that ,

“A dispensation that makes Order VIII Rule 1 directory, leaving it to the courts to extend the time indiscriminately would tend to defeat the object sought to be achieved by the amendments to the Code. It is, therefore, necessary to emphasize that the grant of extension of time beyond 30 days is not automatic, that it should be exercised with caution and for adequate reasons and that an extension of time beyond 90 days of the service of summons must be granted only based on a clear satisfaction of the justification for granting such extension, the court being conscious of the fact that even the power of the court for extension inhering in Section 148 of the Code, has also been restricted by the legislature. It would be proper to encourage the belief in litigants that the imperative of Order VIII Rule 1 must be adhered to and that only in rare and exceptional cases, the breach thereof will be condoned. Such an approach by courts alone can carry forward the legislative intent of avoiding delays or at least in curtailing the delays in the disposal of suits filed in courts. The lament of Lord Denning in ALLEN vs. SIR ALFRED McALPINE & SONS [(1968) 1 All E.R. 543] that laws delays have been intolerable and last so long as to turn justice sour, is true of our legal system as well. Should that state of affairs continue for all times?”

My Views

Applying same ratio here in this case Written Statement must be filed within 30 days. There will not be automatic extension. If there is a delay Defendant needs to make an Application stating genuine reasons why there was a delay and is subject to costs determined by the Court. Usually when there is liability on defendant to pay there are several styles adopted to thwart liability to pay. It may be disputing proper service of Summons to setting aside of ex-parte decree. In such circumstances court must adhere to the stare-decisis precedent set out by Supreme Court. I feel economic offence is much serious than murder because here creditor dies each moment because his money is enjoyed by borrowers by using procedural lapses and loopholes.

Shruti Desai

31st August,2018

Leave a Reply

Your email address will not be published. Required fields are marked *