The Bench has clarified that the Order VIII Rule 1 of Civil Procedure Code, 1908 (hereinafter referred to as “CPC”) is only directory and applicable to the Civil Courts. It was observed that when the suit is transferred from the Civil Court to the Commercial Court after the expiry of 120 days then the time cannot be made mandatory.
Brief Facts:
The suit for recovery of damages was filed by the Respondent in the present case. Pursuant to this, the suit summons was served on the Appellants (who were Defendants in the suit). However, the Appellants No.1 and 2 (respectively Defendants No.1 and 2 in the suit) did not file their written statements, and Defendants No.3 and 4 did not even appear.
The suit was filed in the Civil Court but was later transferred to the Commercial Court. Subsequently, three applications were filed by the Appellants herein (Defendants No.1, 2, 3, and 4). The three applications were for condonation of delay, recalling the order of no written statement, and setting aside an order of proceeding ex-parte.
All three applications were rejected by the Commercial Court and the same was affirmed by the High Court. Therefore, the preset appeal was preferred.
Observations of the Court:
The Bench observed that it was after the order directing proceedings to proceed ex-parte that the matter was transferred to the Commercial Court. It was pointed out that the time of 120 days for filing the written statement had expired even when the matter was pending before the civil court.
The Apex Court opined that Order VIII Rule 1 of the CPC is applicable when Civil Courts are concerned, and the said provision is merely directory and not mandatory. The Court observed that in the case of SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Ltd. [(2019) 12 SCC 210] an exception was carved out for the commercial disputes by invoking a second proviso to Order V Rule 1(1) of the CPC.
It was further remarked that if the same principle would be applied to cases where the suit is transferred from the Civil Court to the Commercial Court after the expiry of 120 days then it would violate what was held in the case of Salem Advocate Bar Association v. Union of India [(2005) 6 SCC 344]that dealt with Order VIII Rule 1 of CPC that has to be applied to normal Civil Courts.
The decision of the Court:
The Supreme Court noted that the Appellants could not be deprived of the opportunity to contest and therefore, keeping in view the above clarifications, the appeal was allowed.
Cause Title: Raj Process Equipments and Systems Pvt. Ltd. & Ors. V. Honest Derivatives Pvt. Ltd.
Bench: Hon’ble Mr. Justice S. Abdul Nazeer, Hon’ble Mr. Justice V. Ramasubramanian
Decided on: November 3rd, 2022
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