Karnataka High Court
M/S. Satchmo Holdings Limited vs M/S. Masters Management Consultants ... on 1 July, 2024
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NC: 2024:KHC:24463
WP No. 13182 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 1ST DAY OF JULY, 2024
BEFORE
THE HON'BLE MR JUSTICE M.I.ARUN
WRIT PETITION NO. 13182 OF 2024 (GM-CPC)
BETWEEN:
1. M/S. SATCHMO HOLDINGS LIMITED,
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT 1956,
FORMERLY KNOWN AS
NITESH ESTATES LIMITED,
HAVING ITS REGISTERED OFFICE AT
NITESH TIME SQAURE,
7TH FLOOR, NO.8,
M.G. ROAD,
BANGALORE 560 001,
REPRESENTED BY ITS GENERAL MANAGER LEGAL,
AND AUTHORIZED SIGNATORY ITS
K.B. SWAMY.
Digitally 2. M/S. NITESH RESIDENCY HOTELS PRIVATE LIMITED,
signed by V
MANJUSHA A COMPANY INCORPORATED UNDER THE
BAI PROVISIONS OF THE COMPANIES ACT 1956,
Location: HAVING ITS REGISTERED OFFICE AT
High Court
of Karnataka 25A, 2ND FLOOR,
IMPERIAL COURT,
CUNNIGHAM ROAD,
BANGALORE 560 052,
REPRESENTED BY ITS SPECIAL OFFICER
MANAGER LEGAL, AND AUTHORISED SIGNATORY
MR. PRADEEP K.P.
...PETITIONERS
(BY SRI. S.S. NAGANAND, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE)
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NC: 2024:KHC:24463
WP No. 13182 of 2024
AND:
M/S. MASTERS MANAGEMENT
CONSULTANTS INDIA PRIVATE LIMITED
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT 1956,
HAVING ITS REGISTERED OFFICE AT
NO, 70,
NAGINDAS MASTERS ROAD, FORT,
MUMBAI 400 023
AND ITS ADMINISTRATIVE OFFICE AT
NEW UDYOG MANDIR NO. 2,
KAMANAWALA CHAMBERS,
UNIT 7, MOGUL LANE,
MAHIM (W),
MUMBAI 400 016,
REP. BY ITS REGIONAL MANAGER,
MR. VISHNU PRASADA RAO.
...RESPONDENT
(BY SRI. ANIKETH B.C., ADVOCATE)
THIS WP IS FILED UNDER ARTICLE 227 OF THE
CONSTITUTION OF INDIA PRAYING TO CALL FOR THE ENTIRE
RECORDS IN COM OS NO. 9055/2013 ON THE FILE OF THE
LXXXII ADDL CITY CIVIL AND SESSIONS JUDGE BANGALORE
(CCH-NO. 83) AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
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NC: 2024:KHC:24463
WP No. 13182 of 2024
ORDER
Aggrieved by the order dated 07.03.2024 passed in Com. O.S.No.9045/2013 on IA No.IV filed under Section 151 of CPC, the defendants therein have preferred this writ petition.
2. The respondent herein is the plaintiff in Com. O.S.No.9055/2013. The said suit was filed as regular Original Suit before the City Civil Court, Bengaluru. The defendants on the ground that there is an arbitration agreement between the parties, filed an application under Section 8 of the Arbitration and Conciliation Act r/w Order VII Rule 11 (d) of CPC with a prayer to refer the matter to arbitration. The said application came to be allowed and it was challenged by the respondent herein by filing W.P.No.12297/2016, which also came to be allowed by dismissing the application filed by the petitioners under Section 8 of the Arbitration and Conciliation Act and the orders of this Court has attained finality. The said order was passed on 01.07.2022. Thereafter, inspite of granting time to the petitioners herein, they did not file necessary written statement before the trial Court in the original suit. Thereafter, after coming into force of the Commercial Courts Act, 2015, the -4- NC: 2024:KHC:24463 WP No. 13182 of 2024 original suit stood transferred to the Commercial Court and the parties were directed to appear before the Commercial Court on 10.07.2023. Thereafter, the petitioners prayed the trial Court that all the relevant documents produced along with the plaint by the plaintiff/respondent herein should be made available to them and the Commercial Court directed the plaintiff to supply the said documents to the defendants/petitioners herein.
3. It is submitted that the petitioners received all the relevant documents on 31.07.2023. Even thereafter, the petitioners did not file the written statement within a period of 30 days and on 06.10.2023. The petitioners made necessary application by way of IA No.IV to file written statement. Same has been dismissed by way of the impugned order and the case is posted for plaintiff's evidence. Aggrieved by the same, the present writ petition is filed.
4. The case of the petitioners is that the strict rule of 30 days with a grace period of another 90 days is not applicable to the regular Original Suit filed before the Civil Court. It is submitted that the same is applicable only to the Commercial Courts. It is pleaded that under the circumstances -5- NC: 2024:KHC:24463 WP No. 13182 of 2024 when the Original Suit has been transferred to the Commercial Court, the period of 120 days should not be calculated from the date of service of suit summons to the defendants in the regular Original Suit, but the Commercial Court ought to have considered the said period from the date of appearance of parties before the Commercial Court and after the defendant was supplied with the entire set of plaint copy along with the documents as required in accordance with law.
5. It is submitted that the trial Court erred in not properly appreciating the above facts and has unjustly denied an opportunity for the petitioners to file written statement and to contest the Commercial Original Suit. For that reason, it is prayed that the impugned order be set aside and the application filed before the Commercial Court be allowed.
6. Per contra, learned counsel for the respondent justifies the order passed in the Commercial Original Suit and prays for dismissal of the writ petition. He further submits that even presuming that the petitioners are entitled to pray for 120 days time to file written statement, they ought to have made an application on the very next date of hearing after expiry of -6- NC: 2024:KHC:24463 WP No. 13182 of 2024 30 days, which they failed to do so in the instant case. On the said ground, it is prayed that the writ petition be dismissed.
7. No doubt, the amendments made to the Code of Civil Procedure by virtue of Commercial Courts Act mandate that the defendant has to ordinarily file the written statement within a period of 30 days after service of suit summons with a grace period of 90 more days and it cannot be more than 120 days, which is reiterated by the Hon'ble Apex Court in Raj Process Equipments and Systems Pvt. Ltd. & Ors. Vs. Honest Derivatives Pvt. Ltd.1. The Hon'ble Apex Court while examining the matter which was transferred from regular Civil Court to the Commercial Court, in paragraph Nos.9, 11, 12, 13, 14 and 16 held as under;
"9. There is no dispute about the fact that at the time when the suit was filed and at the time when the order dated 03.07.2018 was passed, the court before which the suit was pending was a normal Civil Court. It was only after the order dated 03.07.2018 was passed directing the matter to proceed ex-parte that the matter got transferred to a Commercial Court.
10. It is also an admitted fact that the period of 120 days as stipulated in the second proviso to sub-rule (1) of 1 2022 SCC OnLine SC 1877 -7- NC: 2024:KHC:24463 WP No. 13182 of 2024 Rule 1 of Order V CPC and the proviso to Rule 1 of Order VIII expired on 18.06.2018.
11. In other words, the time that was available, if a strict interpretation is given to the aforesaid provisions, was nothing because the time of 120 days had expired even when the matter was pending before the normal Civil Court.
12. Reliance was placed by the High Court on the judgment of this Court in SCG Contracts India Private Limited v. K.S. Chamankar Infrastructure Limited (2019) 12 SCC 210, in support of the contention that the time-line prescribed under the second proviso to sub-rule (1) of Rule 1 of Order V CPC is mandatory and that the appellants have forfeited their right to file written statements.
13. But we do not agree. The suit that became the subject matter of dispute in SCG Contracts India Private Limited, appears to have been filed before the Commercial Court and not before the normal Civil Court. Insofar as the normal Civil Courts are concerned, it is the proviso to Order VIII Rule 1 CPC which applies. In Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344, this Court held that the proviso to Rule 1 of Order VIII CPC is directory and not mandatory. An exception was carved out in SCG Contracts India Private Limited to this Rule, by this Court insofar as the commercial disputes are concerned by invoking the second proviso to sub-rule (1) of Rule 1 of Order V. Therefore, to apply the same principle to a matter where the suit was instituted before the normal Civil Court and transferred to a Commercial Court after the expiry of 120 days would be to give a complete twist to the interpretation given by the 3-member Bench in Salem -8- NC: 2024:KHC:24463 WP No. 13182 of 2024 Advocate Bar Association, to the proviso to Order VIII Rule 1 CPC.
14. In fact the decision in SCG Contracts India Private Limited is by a 2-member Bench, which was dealing with the second proviso to sub-rule (1) of Rule 1 of Order V. Therefore, when the decision of the 3-member Bench in Salem Advocate Bar Association was cited before this Court in SCG Contracts India Private Limited, this Court held in paragraph 11 that the earlier law on Order VIII Rule 1 has now been set at naught. Therefore, what is to be applied to normal Civil Courts is Order VIII Rule 1 and the interpretation given to the same in Salem Advocate Bar Association.
16. Therefore, the appeal is allowed, the impugned order passed by the High Court and the order of the Commercial Court are set aside. The applications filed by the appellants are allowed and the Commercial Court is directed to take on record the written statements filed by the appellants and proceed with the hearing of the suit on merits."
8. The reading of the aforesaid judgment clarifies that in the cases of original suit which was pending before the regular Civil Courts, when they get transferred to Commercial Courts, the time spent before the regular Civil Court need not necessarily be considered while deciding as to the time limit within which, the defendant has to file his written statement. -9-
NC: 2024:KHC:24463 WP No. 13182 of 2024
9. In the instant case, taking into consideration that the parties who were required to appear before the Commercial Court on 10.07.2023 and that the entire set of plaint along with necessary documents were delivered to the petitioners/defendants on 31.07.2023 and that the petitioners made necessary application on 06.10.2023 to file necessary written statement on the same day, it has to be considered that the petitioners have sought to file the written statement within a period of 120 days from the relevant date.
10. The next question that would arise for consideration is, whether the defendants ought to have made necessary application before the Commercial Court immediately on the next date of hearing after expiry of 30 days given for filing the written statement.
11. Section 4 of Schedule to the Commercial Courts Act reads as under;
"4. 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
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NC: 2024:KHC:24463 WP No. 13182 of 2024 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."
Bare reading of the aforementioned provision indicates that after expiry of 30 days, before expiry of 120 days, any time, the defendant is entitled to make necessary application to file his written statement and the trial Court is bound to consider the same.
12. The next aspect that is required to be considered under the given facts and circumstances of the case is, whether the trial Court was justified in denying the opportunity for the petitioners to file written statement.
13. The reasons for denial are summed up in paragraph No.15 of the impugned order of the trial Court, which reads as under;
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NC: 2024:KHC:24463 WP No. 13182 of 2024 "15. The contention of the Defendant that he has received plaint document on 30.07.2023. So, seeking the permission to file written statement as within a 90 days from receipt of documents. It is admittedly, this is not a fresh case instituted by the Plaintiff before this court. This suit was instituted prior to the Commercial Court Act coming into force. It is also admitted fact that even after restoration of the suit also the Defendant has not made any submission before the City Civil Court regarding supply of the copies of the document filed by the Plaintiff to the Defendant. Till 20.04.2023 the Defendant has not made any submission regarding non receipt of documents. Only after the transfer of this suit to this court the Defendant has made submission and received the document from the Plaintiff."
14. In my opinion, under the given facts and circumstances, the conclusion arrived at by the trial court is harsh on the petitioners herein. Admittedly, after service of summons in the regular Original Suit, the petitioners made an application under Section 8 of the Arbitration and Conciliation Act for referring the matter to arbitration, which was allowed by the trial Court. Thereafter, this Court in the writ petition has reversed the same and this was in the year 2022. The petitioners were required to file the written statement subsequent to it. Thereafter, the matter was transferred to
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NC: 2024:KHC:24463 WP No. 13182 of 2024 Commercial Court and within 120 days, the petitioners/defendants have kept the written statement ready and they made necessary application. Under the given facts and circumstances, this Court is of the considered opinion that interest of justice would be met, if the petitioners/defendants are permitted to file the written statement by imposing cost of Rs.25,000/- (Rupees Twenty Five Thousand Only) payable by the petitioners to the respondent herein. Hence, the following;
ORDER i. The impugned order dated 07.03.2024 passed on IA No.IV in Com. O.S.No.9055/2013 by the learned LXXXII Additional City Civil and Sessions Judge, Bengaluru (CCH No.83), is hereby set aside.
ii. The application IA No.IV filed by the petitioners/defendants under Section 151 of CPC is hereby allowed by imposing cost of Rs.25,000/- (Rupees Twenty Five Thousand Only) payable by the petitioners to the respondent on the very next date of hearing before the trial Court.
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NC: 2024:KHC:24463 WP No. 13182 of 2024 iii. The trial Court shall accept the written statement that has already been filed by the petitioners before it and proceed with the matter in accordance with law.
SD/-
JUDGE PN CT: SNN List No.: 1 Sl No.: 33