Bombay High Court
Hindustan Construction Company ... vs Vidharbha Irrigation Development ... on 10 June, 2024
Author: Abhay Ahuja
Bench: Abhay Ahuja
2024:BHC-OS:9025
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION (COMMERCIAL DIVISION) NO.648 OF 2017
IN
COMMERCIAL SUIT NO.177 OF 2016
1. Vidharbha Irrigation Development
Corporation, represented by
Executive Director, a body corporate
constituted under the Maharashtra Act
XXVI of 1997 and having its head office
at Sinchan Seva Bhavan,
Civil Lines, Nagpur-400001.
2. Executive Engineer,
Vidharbha Irrigation Development
Corporation, Goshikurd Dam
Division, Washi (Pauni)-441910,
Dist: Bhandara, Maharashtra.
3. The Chief Engineer
(Water Supply Dept.)
Goshikurd projects and
having its head office
at Vidharbha Irrigation Development
Corporation, Sinchan Seva Bhavan,
Civil Lines, Nagpur-400001.
4. The Superintending Engineer,
Goshikurd Project Circle
having its head office
at VIDC Sinchan Seva Bhavan,
Civil Lines, Nagpur-400001. ... Applicants
In the matter between:
Hindustan Construction Company Limited
An existing company incorporated
under the Companies Act, 1913 and
governed by the Companies Act, 1956
and 2013 (to the extend as applicable)
and having its registered office at
Hincon House, 11th floor, 247 Parl,
Lal Bahadur Shashtri Marg,
Vikhroli (East), Mumbai 400083. ... Plaintiffs
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::: Uploaded on - 22/06/2024 ::: Downloaded on - 23/06/2024 23:36:03 :::
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Vs.
1. Vidharbha Irrigation Development
Corporation, represented by
Executive Director, a body corporate
constituted under the Maharashtra Act
XXVI of 1997 and having its head office
at Sinchan Seva Bhavan,
Civil Lines, Nagpur-400001.
2. Executive Engineer,
Vidharbha Irrigation Development
Corporation, Goshikurd Dam
Division, Washi (Pauni)-441910,
Dist: Bhandara, Maharashtra.
3. The Chief Engineer
(Water Supply Dept.)
Goshikurd projects and
having its head office
at Vidharbha Irrigation Development
Corporation, Sinchan Seva Bhavan,
Civil Lines, Nagpur-400001.
4. The Superintending Engineer,
Goshikurd Project Circle
having its head office
at VIDC Sinchan Seva Bhavan,
Civil Lines, Nagpur-400001. ... Defendants
Mr. P. M. Palshikar with Mr. A. C. Mahimkar, Advocates for the
Applicants in NMCD No.648 of 2017.
Mr. Ativ Patel i/by M/s AVP Partners, Advocate for the Respondent in
NMCD No.648 of 2017.
CORAM : ABHAY AHUJA, J.
DATE : 10 JUNE, 2024.
ORAL JUDGMENT :
1. This Notice of Motion seeks quashing and setting aside of
orders passed by the learned Prothonotary and Senior Master
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transferring the suit with respect to the Applicants herein viz. the
Defendants therein to the list of undefended suits as the Defendants
failed to file written statement within time and and to condone the
delay of 231 days in filing written statement of the Defendants and
thereafter to take the written statement on their behalf on record.
2. Mr. Palshikar, learned counsel for the Applicants would submit
that the Writ of Summons was served upon the Defendants on 2 nd
November, 2016. That since the Applicants are based in Vidharbha,
they immediately approached their panel Advocates who are based in
Nagpur as the Applicants do not have a panel of Advocates for
Mumbai. That therefore, the Applicants depended on their panel of
Advocates at Nagpur for appointment of Advocate to defend the suit
in Mumbai. That accordingly on the suggestion of their panel
Advocates they appointed a panel Advocate from Mumbai for
representing them in the suit before this Court who filed Vakalatnama
on 15th November, 2016. Mr. Palshikar would further submit that the
Applicants were coordinating with their Panel Advocate at Nagpur who
in turn was coordinating with their panel Advocate at Mumbai. The
Applicants were called upon to give parawise remarks for preparation
of their written statement. Mr.Palshikar would submit that the
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Defendant No.1 is specifically constituted under the Maharashtra Act
No.XXV of 1997 for the purpose of the irrigation project set up in
District Bhandara. That the offices of the Applicants No.1, 3 and 4 are
situated at Nagpur while that of Applicant No.2 is at Pauni, District
Bhandara. It is further submitted that the plaint filed by the Plaintiff
was voluminous having various Exhibits which needed to be verified
and countered. It is submitted that the documents in respect of the
disputes lying in different branch offices of the Applicants had to be
collected and details from various employees stationed at the sites had
to be obtained which took considerable time to give appropriate and
parawise instructions for preparation of the written statement to their
Advocate in Mumbai.
3. It is submitted that the commercial suit came up before the
learned Prothonotary and Senior Master on 3 rd February, 2017 for
directions and the Prothonotary passed a conditional order directing
the Applicants to file their written statement on or before 8 th March,
2017.
4. Mr. Palshikar would submit that the Applicants had been taking
all efforts to procure instructions and documents from the relevant
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officers and employees, however, due to workload and pressure to
attend the day to day affairs there was delay in obtaining the same.
That, therefore, a request was made to the learned Prothonotary and
Senior Master to grant time, but despite request, the Prothonotary and
Senior Master transferred the suit to the list of undefended suits on 8 th
March, 2017 for want of written statement of the Defendants.
5. It is submitted that the Applicants were advised to initiate
appropriate proceedings seeking condonation of delay for filing
written statement. Therefore, it is submitted that upon advice of their
Advocate, the Applicants, on 7th April 2017, filed Chamber Order (L)
No.869 of 2017 alongwith the supporting affidavit setting out their
case before the Prothonotary and Senior Master. Mr. Palshikar, learned
counsel for the Applicants would submit that the said Chamber Order
had been pending hearing and final disposal before the Prothonotary
and Senior Master since then. That in the meantime, the panel
Advocates for the Applicant No.1 were changed and hence their
Advocate in Mumbai requested to take back the case from him. It is
submitted that, therefore, the Applicants had to once again search for
an Advocate in Mumbai. That accordingly the present Advocate was
approached and the contest with respect to the Chamber Order was
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pursued. It is submitted that finally by order dated 14 th August, 2017,
the Prothonotary and Senior Master dismissed the Chamber Order,
although the same was not uploaded at the time of filing the Notice of
Motion and came to be uploaded only on 18 th January, 2018, whereas
the Notice of Motion has been filed on 11 th October, 2017. Mr.
Palshikar would submit that the written statement of the Applicants
was ready and affirmed on the date of filing of the Notice of Motion
and there is only a delay of 231 days of which 122 days have been
spent in contesting the Chamber Order before the Prothonotary and
Senior Master.
6. Mr. Palshikar would submit that Defendants had been diligently
following up the matter but due to locations of various departments at
various places, they could not gather the entire information within time
and the written statement could not be filed before 90 days. It is
submitted that the Applicants being a Government Corporation and
public money being involved, the delay be condoned and the written
statement be taken on record for free and fair trial of the suit. It is
submitted that the Applicants have a very good case on merits and
that grave and irreparable harm and injury would be caused not only
to the Defendants but also public money would be lost if they are not
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allowed to contest the suit by filing their written statement. That no
harm or prejudice would be caused to the Plaintiff if the Notice of
Motion is allowed and the written statement be taken on record for the
suit to be decided on merits. That, the balance of convenience lies
heavily in favour of the Applicants and therefore, the Notice of Motion
be allowed.
7. Mr. Palshikar relies upon the decision of this Court in the case
of Iridium India Telecom Limited Bombay Vs. Motorola INC and anr. 1
as well as the decision of the Hon'ble Supreme Court pursuant to the
Special Leave Petition2 against the order of this Court in the said
matter to submit that this Court as well as the Hon'ble Supreme Court
affirming the decision of this Court, in view of Rule 129 of the High
Court Original Side Rules, 1980 has observed that the amended
provisions of Order VIII Rule 1 of the Code of Civil Procedure, 1908
("CPC") would not apply to the suits on the original side and such
suits would continue to be governed by the Original Side Rules which
empower the Judge in Chambers to enlarge the time for filing of the
written statement under Rule 265. That in the event of a conflict
between special law and general law, special law will always prevail
the Bombay High Court Original Side Rules, which regulate the
1 2004 (1) Mh.L.J. 532
2 AIR 2005 SC 514
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procedure to be followed by the Original Side of the Chartered High
Court pursuant to clause 37 of the Letters Patent being a Special Law,
in view of the principle elucidated by the Hon'ble Supreme Court in the
case of Iridium India Telecom Limited Bombay Vs. Motorola INC and
anr. (supra), will prevail over the Commercial Courts Act, 2015 (the
"Commercial Courts Act") which like the CPC is a general law
applicable to all Courts.
8. Mr. Palshikar would submit that the order dated 4 th September,
2017 also applied to the said principles, but erroneously, to treat the
Commercial Courts Act, 2015 as a Special Act in contradistinction to
the High Court Original Side Rules which in view of the law elucidated
in the decision of this Court as the Hon'ble Supreme Court in Iridium
India Telecom Limited Bombay Vs. Motorola INC and anr. (supra)
would prevail over the Commercial Courts Act. Mr. Palshikar would
further submit that on the date of the passing of the order rejecting the
Chamber Order viz. 4th September, 2017, Rule 91 of the High Court
Original Side Rules pursuant to which written statement could be filed
beyond the period of limitation with the leave of the Judge in
Chambers upon such terms as to the filing of the written statement as
the Chamber Judge may think proper was deleted much later i.e. only
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on 24th March 2022, whereas the order has been passed on 4 th
September, 2017, when the written statement could be filed after the
period fixed under Order VIII Rule 1 of the CPC with the leave of the
Judge in Chambers. That the Chamber Order had also been filed prior
to the deletion of the said Rule. Referring to the decision of the
Hon'ble Supreme Court in the case of SCG Contracts (India) Private
Limited Vs. K.S. Chamankar Infrastructure Private Limited and ors. 3,
Mr. Palshikar would submit that the said decision is effective only from
12th February, 2019 and would not apply with respect to the orders
prior to that and would therefore not apply to the facts of this case as
the delay pertains to a prior period and even the order on the Chamber
order is dated 4th September 2019 which is prior to the date of the said
decision. Mr. Palshikar would further submit that the said decision
arises from a decision of Delhi High Court and does not consider the
impact of the Letters Patent and Bombay High Court Original Side
Rules and the fact that the Bombay High Court is a Chartered High
Court constituted pursuant to the Letters Patent and that the Letters
Patent is a special statute and that, therefore, the said decision would
not also apply to the case at hand. Mr. Palshikar would therefore,
submit that the Notice of Motion be allowed as prayed for.
3 (2019) 12 Supreme Court Cases 210
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9. On the other hand, Mr. Ativ Patel, learned counsel appearing for
the Plaintiff would at the outset submit that the Applicants had
incorrectly calculated the number of days for condonation of delay as
231 days whereas the same should be 313 days. Learned Counsel
would submit that even otherwise for the last six years the Defendants
had not taken any steps to move the Notice of Motion or even annex a
copy of the notarized written statement to their application
demonstrating their bonafides that the same is ready. It is also
submitted that the reasons furnished by the Applicants to justify the
delay are also without substance in the context of the time limit
stipulated pursuant to the Section 16 of the Commercial Courts Act
amending inter alia Rule 1 of Order VIII of the CPC in its application to
the commercial disputes and in particular the proviso to Rule 1 in
Order VIII of the CPC.
10. Learned Counsel further submits that the Commercial Courts Act,
is a Special Act and the proviso which has been substituted pursuant
thereto with effect from 23rd October 2015 in Order VIII Rule 1 of the
CPC with respect to commercial suits, clearly provides that where the
Defendant fails to file the written statement within the period of 30
days, he shall be allowed to file the written statement on such other
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date 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 120 days from the date of service of summons
and on the expiry of 120 days from the date of service of summons, the
Defendant shall forfeit the right to file written statement and the
Court shall not allow the written statement to be taken on record. Mr.
Patel would submit that this amendment has been brought into effect
from the year 2015 and in its application to Commercial disputes and
that the order rejecting the Chamber Order is dated 4 th September,
2017. That therefore, in view of the interpretation of Order VIII Rule 1
of the CPC as applicable to Commercial disputes by the Hon'ble
Supreme Court in the case of SCG Contracts (India) Private Limited Vs.
K.S. Chamankar Infrastructure Private Limited and ors. (supra) which
clearly holds that on expiry of 120 days from the date of service of
summons on the Defendants, the Defendants shall forfeit the right to
file written statement and the Court must not allow the written
statement to be taken on record, the Notice of Motion be dismissed as
admittedly there is a delay of 231 days. Learned counsel would
further submit that the judgment of this Court as well as of the Hon'ble
Supreme Court in the case of Iridium India Telecom Limited Bombay
Vs. Motorola INC and anr. (supra) are of the years 2011 and 2014
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respectively in the context of the CPC and not in the context of the
Commercial Courts Act, 2015 which is a special statute as compared to
the Bombay High Court Original Side Rules and the Letters Patent and
that keeping in mind settled law, that a special statute has to prevail
over a general statute, the Commercial Courts Act being a special
statute would prevail over the general provisions of the High Court
Original Side Rules and the Letters Patent. The learned counsel
submits that moreover Rule 91 enabling filing of written statement
after the limitation with the leave of the Chamber Judge is also not
available to the Applicant as the said Rule clearly provides that the
stage at which the leave of the Judge in Chambers can be obtained is if
the suit has not been set down as undefended against him which is
not the case here, as the suit had already been transferred to the list of
undefended suits on 8th March 2017. The learned counsel therefore,
submits that the Notice of Motion be dismissed.
11. I have heard the learned counsel and considered the rival
contentions. The basic facts are not in dispute. Admittedly, there is a
delay of 231 days in filing the written statement. The Commercial
Courts Act amended Rule 1 of Order VIII of the CPC by adding a
proviso with retrospective effect from 23rd October, 2015 as under :-
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"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 late 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."
(Emphasis supplied)
12. The said proviso clearly provides that after the period of 30
days within which the Defendant is permitted to file written statement,
he shall be allowed to file written statement after that period on
another date as specified by the Court for reasons to be recorded in
writing and on payment of such costs as the Court may deem fit
which shall not be later than 120 days from the date of the service of
summons and on the expiry of the 120 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. As can be seen, there is a clear prohibition after a
period of 120 days from permitting filing of written statement by
the Defendant as the Defendant forfeits such right upon the end of the
120 days period from the date of service of summons. The decision of
the Hon'ble Supreme Court in the case of SCG Contracts (India)
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Private Limited Vs. K.S. Chamankar Infrastructure Private Limited and
ors. (supra) has considered the impact of this proviso and concluded
that although ordinarily the written statement is to be filed within a
period of 30 days, however, grace period of further 90 days is
granted which the Court may employ for reasons to be recorded in
writing and on payment of such costs as it deems fit to allow such
written statement to come on record. That, it is of great importance
that beyond 120 days from the date of service of summons, the
Defendant shall forfeit the right to file written statement and the
Court shall not allow the written statement to be taken on record. That
the proviso in Order VIII Rule 10 of the CPC also adds that the Court
has no power to extend the time beyond this period of 120 days.
Paragraph No.8 of the said decision is usefully quoted as under:
"8. The Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015
came into force on 23-10-2015 bringing in their wake
certain amendments to the Code of Civil Procedure. In
Order 5 Rule 1, sub-rule (1), for the second proviso, the
following proviso was substituted:
"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 and
twenty days from the date of service of summons, the
defendant shall forfeit the right to file the written
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statement and the court shall not allow the written
statement to be taken on record."
Equally, in Order 8 Rule 1, a new proviso was
substituted as follows:
"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 and twenty days from the date of service
of summons and on expiry of one hundred and 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."
This was re-emphasized by re-inserting yet another
proviso in Order 8 Rule 10 CPC, which reads as under:
"10. Procedure when party fails to present written
statement called for by court.--Where any party from
whom a written statement is required under Rule 1 or
Rule 9 fails to present the same within the time
permitted or fixed by the court, as the case may be, the
court shall pronounce judgment against him, or make
such order in relation to the suit as it thinks fit and on
the pronouncement of such judgment a decree shall be
drawn up:
Provided further that no court shall make an order to
extend the time provided under Rule 1 of this Order for
filing of the written statement."
A perusal of these provisions would show that
ordinarily a written statement is to be filed within a
period of 30 days. However, grace period of a further 90
days is granted which the Court may employ for reasons
to be recorded in writing and payment of such costs as
it deems fit to allow such written statement to come on
record. What is of great importance is the fact that
beyond 120 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
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statement to be taken on record. This is further
buttressed by the proviso in Order 8 Rule 10 also
adding that the court has no further power to extend
the time beyond this period of 120 days."
13. The decisions of this Court and the Hon'ble Supreme Court in
the case of Iridium India Telecom Limited Bombay Vs. Motorola INC
and anr. (supra) which have been relied upon by the learned counsel
for the Defendants which clearly deal with the Bombay High Court
Original Sides Rules in contradistinction to the CPC observe that Rule
265 referred to in the High Court Original Side Rules, in view of the
Letters Patent prevails over the CPC in view of Section 129 of the CPC
which reads as under :
"129. Power of High Courts to make rules as to their
original civil procedure. - Notwithstanding anything in this
Code, any High Court not being the Court of a Judicial
Commissioner, may make such rules not inconsistent with the
Letters Patent or order or other law establishing it, to regulate
its own procedure in the exercise of its original civil
jurisdiction as it shall think fit, and nothing herein contained
shall affect the validity of any such rules in force at the
commencement of this Code."
14. The said Rule empowers the Chartered High Courts to make
Rules as to their original civil procedure and it clearly provides that
notwithstanding anything in the CPC, the High Court may make such
rules not inconsistent with the Letters Patent or order or any other law
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establishing it, to regulate its own procedure in exercise of its original
civil jurisdiction and nothing in the CPC shall affect the validity of any
such rules in force at the commencement of the CPC.
15. In the case of Iridium Indian Telecom Limited Bombay Vs.
Motorola INC (supra) a Division Bench of this Court had while
considering the provisions of Order VIII Rules 1 and 10 as amended
by the Code of Civil Procedure (Amendment) Act, 2002 observed that
in view of Section 129 of the CPC read with Rule 265 of the Bombay
High Court Original side Rules, 1980, the amended provisions of Order
VIII Rule 1 of the CPC would not apply to suits on the original side
and such suits would continue to be governed by the Original Side
Rules.
16. It is to be noted that the amended Rules 1 and 10 of Order VIII
of the CPC as considered by the Division Bench of this Court in the
case of Iridium Indian Telecom Limited Bombay Vs. Motorola INC-
Bom H.C. (supra) read as under :
"1. Written statement - The defendant shall, within
thirty days from the date of service of summons on
him, present a written statement of his defence:
Provided that where the defendant fails to file the
written statement within the said period of thirty
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days, he shall be allowed to file the same on such other
day, 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.
10. Procedure when party fails to present written
statement called for by Court- Where any party from
whom a written statement is required under rule 1 or
rule 9 fails to present the same within the time
permitted or fixed by the Court, as the case may be,
the Court shall pronounce judgment against him, or
make such order in relation to the suit as it thinks fit
and on the pronouncement of such judgment a decree
shall be drawn up."
17. By the said amendment, the legislature prescribed an outer limit
for filing the written statement expressly limiting the power of a
Court to extend time by 90 days.
18. Rule 265 of the Bombay High Court (Original Side) Rules, which
empowers a Chamber Judge or a Court to enlarge or abridge the time
for doing any Act under the Rules reads as under :
"265. Power of Court or judge to enlarge or abridge
time
The Court or the Judge in chambers shall have power
to enlarge or abridge the time appointed by these Rules
or fixed by any order for doing any act, or taking any
proceedings, upon such terms (if any) as the justice of
the case may require and any such enlargement may
be ordered although the application for the same is not
made and until after expiration of the time appointed
or allotted."
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19. Section 129 of the CPC as noted above is a non obstante
provision empowering a Chartered High Court to make Rules and it
clearly provides that nothing contained in the section shall affect the
validity of the Rules even if they are inconsistent with the CPC but not
inconsistent with the laws establishing the Chartered High Courts
that is the Letters Patent. The Division Bench of this Court therefore
observed that where a Rule has been made by a High Court under this
section the provisions of the Code of Civil Procedure do not apply. It is
considering the above provisions that the Division Bench of this Court
after considering the rival contentions came to a conclusion that
under Rule 265 the power to extend the time was very wide and that
the Original Side Rules would prevail over the amended provisions of
Order VIII Rules 1 and 10 and the Chamber Judge could condone the
delay in filing written statement beyond 120 days pursuant to the
said Rule 265.
20. The Bombay High Court decision was carried to the Supreme
Court by way of an SLP and the Hon'ble Supreme Court after
recounting the genesis of the Bombay High Court Original Side Rules,
1980 to the Letters Patent or Charter establishing the High Courts of
Calcutta, Bombay and Madras in contradistinction to the CPC as well
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as the purpose of retention of Section 129 in the CPC, treating the
Letters Patent to be a special law for the concerned High Court and
the CPC as a general law applicable to all Courts held that in view of
the settled principle that in the event of a conflict between a special
law and general law, the special law must always prevail, and that no
fault could be found with the judgment of the Division Bench of the
High Court and refused to interfere with the order of the Single Bench
extending the time for the first Respondent to file its written
statement beyond the period of 90 days permitted under Order VIII
Rule 1 of the CPC after the expiry of the original period of 30 days
from the date of service of summons.
21. Paragraphs No.7,8,9,12,13 to 23, 25, 26, 37, 42, 46 to 48 of the
said decision of the Hon'ble Supreme Court are usefully quoted as
under :
"7. The Code of Civil Procedure, 1908 is an Act to
consolidate and amend the law relating to the
procedure of the Courts of Civil Judicature. It would,
therefore, govern all actions of civil nature, unless
otherwise provided for in the CPC. Some of the
provisions of the CPC, however, do make some
exceptions, and it is necessary to notice them.
Section 4(1) provides as follows:
"4. Savings: (1) In the absence of any specific provision
to the contrary, nothing in this Code shall be deemed to
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limit or otherwise affect any special or local law now in
force or any special jurisdiction or power conferred, or
any special form of procedure prescribed, by or under
any other law for the time being in force.
8. Apart from this section, Part IX of the CPC
contains the fasciculus of Sections 116 to Section 120
delineating the manner of application of the CPC to the
High Courts. Section 116 declares that Part IX applies
only to High Courts not being the Court of a Judicial
Commissioner. Section 117 provides that save as
provided in Parts IX or X or in the rules, the provisions
of the Code would apply to such High Courts. Section
120 provides that Sections 16, 17 and 20, which deal
with the pecuniary and territorial jurisdictions, shall
not apply to the High Court in the exercise of its
original civil jurisdiction.
9. Then comes Part X, which deals with the rule
making power. By Section 121 the rules prescribed in
the First Schedule, being rules prescribed by the
Legislature itself, have been declared to have the same
effect as if enacted in the body of the Code until and or
altered in accordance with the provisions of Part X.
Section 122 confers power on a High Court, other than
the Court of a Judicial Commissioner, to annul, alter or
add to all or any of the rules in the First Schedule. This
power is conferred with regard to rules regulating their
own procedure and the procedure of the Civil Courts
subject to their superintendence, but is subject to the
condition of previous publication. Section 123
contemplates the constitution of Rule Committees in
each of the High Courts as prescribed therein. Such a
Committee makes its report to the High Court under
Section 124 formulating and forwarding proposals with
regard to annulment, alteration or addition in the First
Schedule or for making new rules. Section 126 requires
that the rules made by the High Court shall be subject
to the previous approval of the State Government
concerned. Section 127 requires previous publication of
the rules so made in the Official Gazette. Section 128
enumerates a number of matters with regard to which
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rules may be framed by the High Courts. Then comes to
Section 129, which is crucial for the present discussion.
Section 129 reads as under:
"129. Power of High Courts to make rules as to their
original civil procedure - Notwithstanding anything in
this Code, any High Court not being the Court of a
Judicial Commissioner, may make such rules not
inconsistent with the Letters Patent or order or other
law establishing it to regulate its own procedure in the
exercise of its original civil jurisdiction as it shall think
fit, and nothing herein contained shall affect the
validity of any such rules in force at the
commencement of this Code."
12. The CPC has been amended from time to time in
order to meet with the changing situations. The
historical developments as to the application of the CPC
to the proceedings in the Chartered High Courts are
illuminating. In order to appreciate the merit of the
contention so strongly urged by the learned counsel for
the appellant, it would be necessary to take a
chronological perspective of the law.
Chronological Perspective:
13. Prior to the establishing of the Chartered High
Courts by the British Government in 1862, the Civil
Courts in the Presidency of Bombay were governed by
the Code of Civil Procedure, 1859 (Act No. VIII of
1859, which received the assent of the Governor
General on 22-3-1859). This Act, as its preamble
suggests, was 'an Act for simplifying the procedure of
the Courts of Civil Judicature not established by Royal
Charter' and was not intended to apply to High Courts
established by Royal Charter.
14. The First Letters Patent or Charter establishing
High Courts were accompanied by a Despatch from the
Secretary of State on 14-5-1862, and were in force till
revoked by a further Letters Patent on 28-12-1865. The
learned counsel drew our attention to paragraph 36 of
the Despatch, which explains the purpose of Clause 37
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in the First Letters Patent. The said paragraph 36 of the
Despatch reads as under:
"36. Clause 37 is a very important one, and there is
little doubt, will prove a very salutary provision. It has,
therefore, been inserted, although the change
introduced is somewhat greater and more substantial
than is generally aimed at in this Charter. It extends to
the High Court the Code of Civil Procedure enacted by
the Legislature of India for the Court, not established
by Royal Charter, and thus accomplishes the object so
long contemplated of substituting one simple Code of
Procedure for the various systems (corresponding to its
common law, equity and admiralty jurisdiction) which
have been in operation in the Supreme CourtSC519
since the date of its establishment."
15. It is therefore seen that clause 37 of the Letters
Patent was intended to extend to the High Courts the
Code of Civil Procedure enacted by the Legislature of
India for the Courts other than the Courts established
by the Royal Charter. The intention was to substitute
one simple Code of Procedure for the various systems
which had been in operation in the Supreme Court
since the date of its establishment.
16. Clause 37 of the Letters Patent of 1865, which
deals with "civil procedure and regulation of
proceedings", reads as follows:
"37. And we do further ordain that it shall be lawful for
the said High Court of Judicature at Fort William in
Bengal, from time to time, to make rules and orders for
the purpose of regulating all proceedings in civil cases
which may be brought before the said High Court,
including proceedings in its Admiralty, Vice-Admiralty,
Testamentary, Intestate and Matrimonial Jurisdictions,
respectively: Provided that the said High Court shall be
guided in making such rules and orders as far as
possible, by the provisions of the Code of Civil
Procedure, being an Act passed by the Governor-
General in Council, and being Act No. VIII of 1859, and
the provisions of any law which has been made
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amending or altering the same, by competent
legislative authority for India.
"(Letters Patent of the three High Courts, namely,
Calcutta, Bombay and Madras are identically worded).
17. The Code of Civil Procedure, 1877 (Act No. X of
1877), which received the assent of the Governor
General on 30-3-1877, and was thereafter brought into
force with effect from 1-10-1877, was "an Act to
consolidate and amend the laws relating to the
procedure of the Court of Civil Judicature". Part IX of
this Act contained special rules relating to the
Chartered High Courts. Chapter XL-VIII of the Act
applied only to the Chartered High Courts. Section 632
of the Civil Procedure Code of 1877, in express words,
provided: "except as provided in this Chapter the
provisions of this Court apply to such High Courts."
Section 638 was the exception to the general rule and
provided as under:
"The following portions of this Code shall not apply to
the High Court in the exercise of its ordinary or extra-
ordinary original civil jurisdiction, namely Sections 16
and 17, Sections 54, clauses (a) and (b), 57, 119, 160,
182 to 185 (both inclusive), 187, 189, 190, 191, 192
(so far as relates to the manner of taking evidence),
198 to 206 (both inclusive), 261, and so much of
Section 409 as relates to the making of a
memorandum; and Section 579 shall not apply to the
High Court in the exercise of its appellate jurisdiction.
Nothing in this Code shall extend or apply to any High
Court in the exercise of its jurisdiction as an Insolvent
Court."
18. The Legislature recognized the special role
assigned to the Chartered High Courts and exempted
them from the application of several provisions of the
Code in the exercise of their ordinary or extra-ordinary
civil jurisdiction for the simple reason that those
jurisdictions were governed by the procedure
prescribed by the rules made in exercise of the powers
of the Chartered High Courts under clause 37 of the
Letters Patent. Interestingly, Section 652 of this Act
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itself empowered the High Courts to make rules
"consistent with this Code to regulate any matter
connected with the procedure of the Courts of Civil
Judicature subject to its superintendence", suggesting
that consistency with the Code was a sine qua non only
when making rules for the subordinate courts.
19. The Code of Civil Procedure, 1882 (Act No. XIV
of 1882) received the assent of the Governor General
on 17-3-1882. It also contained Part IX dealing with
special rules relating to the Chartered High Courts.
Section 638 of this Code also exempted the Chartered
High Courts in the exercise of their ordinary or
extraordinary original civil jurisdiction from the
application of the Code. Section 652 invested with the
High Courts with power to make rules "consistent with
this Code to regulate any matter connected with its
own procedure or the procedure of the Courts of Civil
Judicature subject to its superintendence."
(Emphasis ours).
20. By an amendment made by Act No. XIII of 1895,
Sections 632 and 652 of the Code of Civil Procedure,
1882, were amended. Section 632, as amended by this
Act, reads as under :Except as provided in this chapter
and in Section 652 the provisions of this Code
SC520 apply to such High Courts"
The amendment made in Section 652 provides an
apercu to the controversy. Section 652 was amended by
adding the following "Notwithstanding anything in this
Code contained, any High Court established under the
said Act for establishing High Courts of Judicature in
India may make such Rules consistent with the Letters
Patent establishing it to regulate its own procedure in
the exercise of its original civil jurisdiction as it shall
think fit" "All such rules shall be published in the local
official Gazette, and shall thereupon have the force of
law."
21. The reason for making this amendment is
clarified in the Statement of Objects and Reasons
accompanying the relevant Bill No. 13 of 1895 in the
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following words : "Section 652 of the Code of Civil
Procedure, as it now stands, purports to require that
any rules to regulate its own procedure made by the
High Court, even although it be established by Royal
Charter, shall be consistent with that Code. The Letters
Patent of the High Courts at Fort William, Madras and
Bombay, appear, however, to recognize the practical
expediency of leaving such High Courts some latitude
in the direction of adapting the provisions of the
ordinary law to meet their requirements. It has been
found by experience that these provisions are not in all
respects convenient in the case of original proceedings
in those Courts, and the object of this Bill is, by an
amendment of Section 652 and, an ancillary
amendment of Section 632, to bring the Code into
perfect harmony with the provisions of those Letters
Patent and to enable the High Courts referred to
regulate the exercise of their original civil jurisdiction
accordingly."
22. Then we come to the 1908 Act, which made a
drastic departure from the hitherto pattern of the Code.
The Code was now divided into a fascicle of substantive
sections and a Schedule containing Rules, which by
force of Section 121 were declared to have effect as if
enacted in the body of the Code until and or altered in
accordance with the provisions of Part X of the CPC.
23. Despite the sweeping change made by the 1908
Act, interestingly, the amendment introduced in the
Code of Civil Procedure, 1882 by the Act No. XIII of
1895, which we have quoted above was retained in a
slightly modified form in section 129.The Arguments:
25. The learned counsel for the respondent,
however, justifiably contends that the purpose of
retaining Section 129 in the present form is exactly the
purpose for which it was inserted, in the first place, in
the CPC of 1882 by amending Act No. XIII of 1895,
namely, "to recognize the practical expediency of
leaving such High Courts some latitude in the direction
of adapting the provisions of the ordinary law to meet
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their requirements", and further, "it had been found by
experience that these provisions were not in all respects
convenient in the case of original proceedings in those
Courts." The amendment, therefore, became necessary
"to bring the Code into perfect harmony with the
provisions of the Letters Patent and to enable the High
Courts referred to to regulate the exercise of their
original civil jurisdiction accordingly."
26. It appears to us that this was the real reason why
a distinction was drawn between the proceedings in
original jurisdiction before the Chartered High Court
and those in other Courts. For historical reasons this
distinction was maintained right from the time the
Letters Patent was issued, and has not been disturbed
by the Code of Civil Procedure, 1908, despite the
amendments made in the CPC from 1976 to 2002.
37. Taking into account the extrinsic evidence, i.e.
the historical circumstances in which the precursor of
Section 129 was introduced into the 1882 Code by a
specific amendment made in 1895, we are of the view
that the non obstante clause used in Section 129 is not
merely declaratory, but indicative of Parliament's
intention to prevent the application of the CPC in
respect of civil proceedings on the Original Side of the
High Courts.
42. The Full Bench of the High Court of Calcutta in
Manikchand v. Pratabmull AIR 1961 Cal 483 para 13
had occasion to consider this very contention with
regard to clause 37 of the Letters Patent and observed:
".....The restriction upon the power of the Court as
contained in the proviso to cl. 37 of the Letters Patent is
that the rules framed under that clause should, "as far
as possible" be in conformity with the provisions of the
Code of Civil Procedure. This restriction as the phrase
"as far as possible" indicates is merely directory. The
provisions of the Code of Civil Procedure are intended
for the purpose of guidance of this Court in framing
rules under Cl. 37 of the Letters Patent. Consequently, if
any rule framed by the High Court under cl. 37 be
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inconsistent with or confers any additional power
besides what is granted by the Code of Civiil Procedure
SC524 the rule framed under cl. 37 will prevail over
the corresponding provisions of the Code of Civil
Procedure. This we think is the correct view to be taken
in interpreting the words "as far as possible" in clause
37 of the Letters Patent. This interpretation would be
consistent with the amplitude of the words used in
Section 129 of the CPC by which the High Court is
empowered to make rules "not inconsistent with the
Letters Patent to regulate its own procedure in the
exercise of its original jurisdiction as it shall think fit."
46. Finally, it was argued SC525 Mr. Jethmalani that
the Letters Patent, and the rules made thereunder by
the High Court for regulating its procedure on the
Original Side, were subordinate legislation and,
therefore, must give way to the superior legislation,
namely, the substantive provisions of the Code of Civil
Procedure. There are two difficulties in accepting this
argument. In the first place, Section 2(18) of the CPC
defines "rules" to mean "rules and forms contained in
the First Schedule or made under section 122 or section
125". The conspicuous absence of reference to the rules
regulating the procedure to be followed on the Original
Side of a Chartered High Court makes it clear that
those rules are not "rules as defined in the Code of Civil
Procedure, 1908. Secondly, it is not possible to accept
the contention that the Letters Patent and rules made
thereunder, which are recognized and specifically
protected by section 129, are relegated to a subordinate
status, as contended by the learned counsel. We might
usefully refer to the observations of the Constitutional
Bench of this Court in P. S. Santhappan (Dead) by L.Rs.
v. Andhra Bank Ltd. and Ors. JT 2004(8) SC 464. With
reference to Letters Patent, this is what the Constitution
Bench said:
148. It was next submitted that Clause 44 of the Letters
Patent showed that Letters Patent were subject to
amendment and alteration. It was submitted that this
showed that a Letters Patent was a subordinate or
subservient piece of law. Undoubtedly, Clause 44
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permits amendment or alteration of Letters Patent but
then which legislation is not subject to amendment or
alteration. CPC is also subject to amendments and
alterations. In fact it has been amended on a number of
occasions. The only unalterable provisions are the basic
structure of our Constitution. Merely because there is a
provision for amendment does not mean that, in the
absence of an amendment or a contrary provision, the
Letters Patent is to be ignored. To submit that a Letters
Patent is a subordinate piece of legislation is to not
understand the true nature of a Letters patent. As has
been held in Vinita Khanolkar's case JT 1997 (9) SC
490 and Sharda Devi's case JT 2002 (3) SC 43 a Letters
Patent is the charter of the High Court. As held in Shah
Babulal Khimaji's case 1982 (1) SCR 187 a Letters
Patent is the specific law under which a High Court
derives its powers. It is not any subordinate piece of
legislation. As set out in aforementioned two cases a
Letters Patent cannot be excluded by implication.
Further it is settled law that between a special law and
a general law the special law will always prevail. A
Letters Patent is a special law for the concerned High
Court. Civil Procedure Code is a general law applicable
to all Courts. It is well settled law, that in the event of a
conflict between a special law and a general law, the
special law must always prevail. We see no conflict
between Letters Patent and Section 104 but if there was
any conflict between a Letters Patent and the Civil
Procedure Code then the provisions of Letters Patent
would always prevail unless there was a specific
exclusion. This is also clear from Section 4 Civil
Procedure Code which provides that nothing in the
Code shall limit or affect any special law. As set out in
Section 4 C.P.C. only a specific provision to the contrary
can exclude the special law. The specific provision
would be a provision like Section 100A."
47. Far from doing away with the Letters Patent, the
amending Act of 2002 has left unscathed the provisions
of section 129 and what follows therefrom. The
contention must, therefore, fail.
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48. In the result, we are of the view that no fault can
be found with the impugned judgment of the High
Court under appeal. There is no merit in the appeal and
it is hereby dismissed. However, there shall be no order
as to costs."
22. No doubt as observed in the decision quoted above, that as far
as the CPC is concerned, the Letters Patent pursuant to which the
Bombay High Court Rules, 1980 have been made, is a special law for
the concerned High Court and the CPC is a general law applicable to
all Courts and that the provisions of the Bombay High Court Original
Side Rules would prevail over the CPC. However what is firstly
pertinent to note is that Section 129 of the CPC refers only to the Rules
under Letters Patent and the CPC but not to the Commercial Court's
Act, 2015.
23. The Commercial Courts Act which was Act 4 of 2016 received the
assent of the President on 31.12.2015 and was published in the Gazette
of India Extraordinary, Pt-II, S.1 dated 01.01.2016. Thereafter it was
amended by act 28 of 2018, S.3 and became the Commercial Courts,
Commercial Division and Commercial Appellate Division of the High
Courts Act, 2015 with retrospective effect from 3 rd May, 2018. As its
preamble suggests the Commercial Courts Act is an Act for the
constitution of commercial courts, commercial appellate courts,
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commercial division and commercial appellate division in the high
courts for adjudicating commercial disputes of specified value and for
matters connected therewith or incidental thereto.
24. The Statement of Objects and Reasons of the initial Act 4 of
2016 and the Amendment Act 28 of 2018 suggests that the Commercial
Courts Act was enacted to accelerate economic growth, improve the
international image of the Indian justice delivery system and the faith
of the investor world in the legal culture of the nation keeping in mind
the increasingly competitive global economic environment and to
attract business at the international level India, to further improve its
ranking in the World Bank "Doing Business" Report which considered
the dispute resolution environment in the country as one of the
parameters for doing business and for speedy settlement of commercial
disputes by widening the scope of the courts to deal with commercial
disputes as tremendous economic development had ushered in
enormous commercial activities in the country including foreign direct
investments, public private partnership etc. prompting initiation of
legislative measures and to facilitate ease of doing business to create a
positive image amongst the investors about the strong and responsive
legal system so that there is an early resolution of commercial disputes.
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25. For the above purpose, the Commercial Courts Act inter alia
provides for the following:
(a) constitution of Commercial Divisions in the High Courts exercis-
ing Ordinary Original Civil Jurisdiction having territorial jurisdiction
over such areas on which it has original jurisdiction to hear commercial
disputes of a specified value of not less than Rs.3 lakh.
(b) constitution of Commercial Appellate Division in all the High
Courts to hear the appeals against the Orders of the Commercial Courts
and the Orders of the Commercial Division of the High Court.
(c) constitution of Commercial Courts at District Judge level to hear
commercial disputes of a specified value of not less than Rs.3 lakh and
not more than the pecuniary jurisdiction of the said court.
(d) designation of Commercial Appellate Courts at District Judge
level to exercise appellate jurisdiction over Commercial Courts below
the District Judge level.
(e) to provide for compulsory mediation before institution of a suit,
where no urgent interim relief is contemplated and for this purpose, to
introduce the Pre-Institution Mediation and Settlement Mechanism.
(f) to amend the Code of Civil Procedure, 1908 as applicable to the
Commercial Courts and Commercial Divisions which shall prevail over
the existing High Courts Rules and other provisions of the Code of Civil
Procedure, 1908 so as to improve the efficiency and reduce delays in
disposal of commercial cases."
26. The text of the Statement of Objects and Reasons of Act 4 of
2016 as well as of the Amendment Act of 2018 is usefully quoted as
under:
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"Statement of Objects and Reasons - The proposal to provide
for speedy disposal of high value commercial disputes has
been under consideration of the Government for quite
some time. The high value commercial disputes involve
complex facts and question of law. Therefore, there is a need
to provide for an independent mechanism for their early
resolution. Early resolution of commercial disputes shall
create a positive image to the investor world about the
independent and responsive Indian legal system.
2. The Law Commissioner of India in its 188th Report
had recommended the constitution of the Commercial
Division in each High Court. Accordingly, the Commercial
Division of High Courts Bill, 2009 was introduced and
passed by the Lok Sabha. However, during the discussion of
the aforesaid Bill in the Rajya Sabha, some Members raised
certain issues and in view thereof, the matter was again
referred to the Law Commission of India for its examination.
The Law Commissioner of India, in its 253 rd Report, has
recommended for the establishment of the Commercial
Courts, the Commercial Division and the Commercial
Appellate Divisions in the High Courts for disposal of
commercial disputes of special value.
3. Based on the recommendations of the Law
Commission made in its 253rd Report, a Bill namely, the
Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Bill, 2015 was introduced
in the Rajya Sabha on 24th April, 2015 and the same is at
present under the consideration of the Department related
Parliamentary Standing Committee on Personnel, Public
Grievances, Law and Justice. As provided in the said Bill,
2015, all the suits, appeals or applications related to
commercial disputes of specified value, i.e., one crore or
above, are to be dealt with by the Commercial Courts or the
Commercial Division of the High Court.
4. By way of the Delhi High Court (Amendment) Act,
2015, the ordinary original jurisdiction of the Delhi High
Court has been increased from rupees twenty lakhs to
rupees two crore and there is a provision for transfer of
pending case from the Delhi High Court to District Courts.
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On the enactment of Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts
Bill, 2015, some fo the Commercial Disputes which are to be
transferred to the District Courts from the Delhi High Court
may again be required to be transferred to the Commercial
Division of the High Court of Delhi. It would cause delay in
the disposal of cases as well as inconvenience to the parties
and counsels and may also result in confusion. Therefore, it
became necessary that provisions of the Delhi High Court
(Amendment) Act, 2015 and establishment of the
Commercial Courts and Commercial Division of the High
Courts maybe brought into force simultaneously.
5. As Parliament was not in session and urgent steps
were needed to be taken,t he Commercial Courts,
Commercial Division and Commercial Appellate Division in
High Courts Ordinance, 2015 was promulgated on 23 rd
October, 2015.
6. It is proposed to introduce the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts Bill, 2015 to rep;ace the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts Ordinance, 2015 which inter alia, provides for
the following namely:-
(i) constitution of the Commercial Courts at District level
except for the territory over which any High Court is having
ordinary original civil jurisdiction;
(ii) constitution of the Commercial Divisions in those High
Courts which are already exercising ordinary civil
jurisdiction and they shall have territorial jurisdiction over
such areas on which it has original jurisdiction;
(iii) constitution of the Commercial Appellate Division in
all the High Courts to hear the appeals against the Orders
of the Commercial Courts and the Orders of the Commercial
Division of the High Court;
(iv) the minimum pecuniary jurisdiction of such
Commercial Courts and Commercial Division is proposed as
one crore rupees; and
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(v) to amend the Code of Civil Procedure, 1908 as
applicable to the commercial Courts and Commercial
Divisions which shall prevail over the existing High Court
Rules and other provisions of the code of Civil Procedure,
1908 so as to improve the efficiency and reduce delays in
disposal of commercial cases.
7. The proposed Bill shall accelerate economic growth,
improve the international image of the Indian Justice
delivery system, and the faith of the investor world in the
legal culture of the nation.
8. The Bill seeks to replace the aforesaid Ordinance.
Amendment Act 28 of 2018 - Statement of Objects and
Reasons-
The Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015
was enacted for the constitution of Commercial Courts,
Commercial Division and Commercial Appellate Division in
the High Courts for adjudicating commercial disputes of
specified value and for matters connected therewith or
incidental thereto.
2. The global economic environment has since become
increasingly competitive and to attract business at
international level, India needs to further improve its
ranking in the World Bank "Doing Business Report" which,
inter alia, considers the dispute resolution environment in
the country as one of the parameters for doing business.
Further the tremendous economic development has ushered
in enormous commercial activities in the county including
foreign direct investments, pubic private partnership, etc.
which has prompted initiating legislative measures for
speedy settlement of commercial disputes, widen the scope
of the Courts to deal with commercial disputes and facilitate
ease of doing business. Needless to say that early resolution
of commercial disputes of even lesser value creates a
positive image amongst the investors about the strong and
responsive Indian legal system. It is, therefore, proposed to
amend the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015.
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3. As Parliament was not in session and immediate
action was required to be taken to make necessary
amendments in the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts
Act, 2015, to further improve India's ranking in the "Doing
Business Report", the President promulgated the
Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts (Amendment) Ordinance,
2018 on 3rd May, 2018.
4. It is proposed to introduce the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts (Amendment) Bill, 2018 to replace the
Commercial Courts, Commercial Division and Commercial
Appellate Division of High Court (Amendment) Ordinance,
2018, which inter alia, provides for the following namely:-
(i) to reduce the specified value of commercial disputes
from the existing one crore rupees to three lakh rupees, and
to enable the parties to approach the lowest level of
subordinate Courts fro speedy resolution of commercial
disputes;
(ii) to enable the State Governments, with respect to the
High Courts having ordinary original civil jurisdiction, to
constitute commercial courts at District Judge level and to
specify such pecuniary value of commercial disputes which
shall not be less than three lakh rupees and not more than
the pecuniary jurisdiction of the district courts;
(iii) to enable the Sate Governments, except the territories
over which the High Courts have ordinary original civil
jurisdiction, to designate such number of Commercial
Appellate Courts at district judge level to exercise the
appellate jurisdiction over the commercial courts below the
district judge level;
(iv) to enable the Sate Governments to specify such
pecuniary value of a commercial dispute which shall not be
less than three lakh rupees or such higher value, for the
whole or part of the State; and
(v) to provide fro compulsory mediation before institution
of a suit, where no urgent interim relief is contemplated and
for this purpose, to introduce the Pre-Institution Mediation
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and Settlement Mechanism and to enable the Central
Government to authorise the authorities constituted under
the Legal Services Authorities Act, 1987 for this purpose.
5. The Bill seeks to achieve the above objectives."
27. Pursuant to the aforesaid, Chapter VI of the Commercial Courts
Act entitled amendments to the provisions of the CPC which contains
Section 16 providing for amendments to the CPC in its application to
commercial disputes provides that the provisions of the CPC shall in
their application to any suit in respect of a commercial dispute of a
specified value, stand amended in the manner as specified in the
Schedule and that the Commercial Division of the High Court and the
Commercial Courts of the districts shall follow the provisions of the
Code of Civil Procedure, 1908 as amended by the Commercial Courts
Act in the trial of a suit in respect of a commercial dispute of a specified
value. It is also provided in the said section that where any provision of
any rule of the jurisdictional High Court or any amendment to the CPC
by the State Government is in conflict with the provisions of the CPC as
amended by the Commercial Courts Act, the provisions of the CPC as
amended by the Commercial Courts Act shall prevail. Section 16 of the
Commercial Courts Act is usefully quoted as under:"
"16. Amendments to the Code of Civil Procedure,
1908 in its application to commercial
disputes.-- (1) The provisions of the Code of Civil
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Procedure, 1908 (5 of 1908) shall, in their
application to any suit in respect of a commercial
dispute of a Specified Value, stand amended in the
manner as specified in the Schedule.
(2) The Commercial Division and Commercial
Court shall follow the provisions of the Code of Civil
Procedure, 1908 (5 of 1908), as amended by this
Act, in the trial of a suit in respect of a commercial
dispute of a Specified Value.
(3) Where any provision of any Rule of the
jurisdictional High Court or any amendment to the
Code of Civil Procedure, 1908 (5 of 1908), by the
State Government is in conflict with the provisions
of the Code of Civil Procedure, 1908 (5 of 1908), as
amended by this Act, the provisions of the Code of
Civil Procedure as amended by this Act shall
prevail."
28. It is therefore clear that in accordance with Section 16 of the
Commercial Courts Act, the provisions of the CPC as amended by the
Commercial Courts Act shall prevail over any rule of the jurisdictional
High Court, which in my view includes the Bombay High Court Original
Side Rules and the Letters Patent.
29. From the above elucidation it emerges that as far as the High
Courts are concerned, Commercial Divisions are courts in the High
Courts having Ordinary Original Civil Jurisdiction and are designated
as such to try any suit in respect of a commercial dispute of a specified
value. The Statement of Objects and Reasons as quoted above as well
as Section 16 clearly provides that the provisions of the CPC shall in
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their application to any suit in respect of a commercial dispute of a
specified value, stand amended in the manner as specified in the
Schedule. Clause IV (D) of the Schedule amends Order VIII in the First
Schedule of the CPC by substituting the proviso in Rule I as under:
"(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
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."
30. As noted above, the proviso clearly provides that if the Defendant
has failed to file Written Statement within the 30 day period 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 120 days from the date of service of Summons and that on
the expiry of 120 days from the date of such service, the Defendant
shall not only forfeit the right to file Written Statement but the Court
shall also not allow the Written Statement to be taken on record.
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31. The aforementioned provision as can be seen from the decision of
the Hon'ble Supreme Court in the case of M/s SCG Contracts India Pvt.
Ltd. Vs. K. S. Chamankar Infrastructure Pvt. Ltd. And Ors.(supra) is
mandatory and there is no way out of it. The proviso as applicable to
Commercial Courts clearly mandates that no more than 90 days delay
can be condoned by the Commercial Court and that too for reasons to
be recorded in writing and on payment of costs and that there is a
prohibition from allowing the Written Statement to be taken on record
beyond such period as the Defendant forfeits the right to file the
Written Statement upon the expiry of such period. In contradistinction
to this, the proviso contained in the CPC as amended by Act 22 of 2002
but not amended pursuant to Section 16 of the Commercial Courts Act
is the proviso as applicable to any Suit not in respect of a commercial
dispute of a specified value but simply provides that if the Defendant
fails to file the Written Statement within the period of 30 days he shall
be allowed to file the same on a day as may be specified by the Court
for reasons to be recorded in writing but which shall not be later than
90 days from the date of service of Summons. As can be seen that the
mandatory and prohibitory language introduced in the proviso to Rule
1 of Order VIII as applicable to Suits in respect of a commercial dispute
of a specified value pursuant to Section 16 of the Commercial Courts
Act is not there.
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32. Therefore if the Suit is not a Suit in respect of a commercial
dispute of a specified value filed on the Original Side of the High Court
having Ordinary Original Civil Jurisdiction then the proviso to Rule 1 of
Order VIII of the CPC as amended by Act 22 of 2002 would apply with
respect to the time limit for filing Written Statement and in respect
whereof the Hon'ble Supreme Court in the case of Kailash v. Nankhu
and Others4 (supra) has held that the provision is directory and not
mandatory. That in respect of such a Suit in view of the decision of this
Court and the Hon'ble Supreme Court in the case of Iridium India
Telecom Ltd. Vs. Motorola INC (supra), Rule 265 of the Bombay High
Court Original Side Rules would be available to seek leave of the Court
of the Judge in Chambers to file Written Statement beyond the
limitation period.
33. However, since as noted above sub-section (3) of Section 16 of
the Commercial Courts Act clearly provides that the provisions of the
CPC as amended by the Commercial Courts Act will prevail over any
rule of the jurisdictional High Court, in my view the proviso in Rule I of
Order VIII of the CPC as amended pursuant to Section 16(1) of the
Commercial Courts Act clearly forfeiting the right of the Defendant to
file Written Statement beyond the period of 120 days from the date of
4 (2005) 4 SCC 480.
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service of Summons and prohibiting filing of Written Statement beyond
that period making the proviso in Rule I of Order VIII of the CPC as
amended pursuant to Section 16(1) of the Commercial Courts Act as
applicable to a Suit in respect of a commercial dispute of a specified
value mandatory in nature, thereby to prevail even over the Bombay
High Court Original Side Rules including Rule 265, the High Court at
such time not merely exercising ordinary civil jurisdiction but acting as
a commercial court to which the specially amended provisions of the
CPC pursuant to Section 16 of the Commercial Courts Act apply. It does
not mean that the Letters Patent or the Bombay High Court Original
Side Rules would not apply, but in the event of a conflict with any rule
under the Original Side Rules, the provisions of the CPC as amended
pursuant to the Commercial Courts Act would prevail.
34. Further, Section 21 of the Commercial Courts Act provides that
the Commercial Courts Act has an overriding effect notwithstanding
anything inconsistent contained in any other law. Section 21 of the
Commercial Courts Act is usefully quoted as under :
"21. Act to have overriding effect - Save as otherwise
provided, the provisions of this Act shall have effect,
notwithstanding anything inconsistent therewith
contained in any other law for the time being in force
or in any instrument having effect by virtue of any law
for the time being in force other than this Act."
(Emphasis supplied)
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35. It is clear from the above that notwithstanding anything
inconsistent between the Commercial Courts Act and any other law, the
Commercial Courts Act shall have an overriding effect.
36. Even the decisions in the case of Iridium India Telecom Ltd. Vs.
Motorola INC (supra) were concerned with the CPC Amendment of
2002, amending Order 8 Rule 1 and 10 and not with respect to the
amendment to the CPC in its application to commercial disputes vide
Act 4 of 2016 in its application to any suit in respect of a commercial
dispute of a specified value where the amended proviso in
contradistinction to the amendment of 2002, clearly provides that
where the Defendant fails to file the written statement within a said
period of 30 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 120 days from the date of service of
summons and on expiry of 120 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. Therefore although there can be no doubt about the
principles laid down in Iridium India Telecom Ltd. Vs. Motorola INC
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(supra), in my view the decision would not be applicable to the facts of
this case as this is a suit in respect of a commercial dispute of specified
value, which fact has not been disputed.
37. Therefore, the Commercial Courts Act is a special statute for the
purpose of providing for adjudicating commercial disputes of a
specified value and the matters connected therewith and/or incidental
thereto and applicable only to commercial disputes and commercial
courts but not general law applicable to all disputes or all Courts.
38. Ergo, considering settled law that between the special law and
the general law, the special law will always prevail, I am of the view
that the Commercial Courts Act will prevail over the Letters Patent
and the High Court Original Side Rules, 1980 which prescribes the
procedure for the original side of the High Court but not for
Commercial Courts which is governed by the Commercial Courts Act.
39. It has been argued that Rule 91 of the Bombay High Court
(Original Side) Rules which permits, with the leave of the Court and
Judge in Chambers, filing of written statement where the Defendant
has failed to file written statement within the time fixed in the writ of
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summons has been deleted only on 23 rd March, 2022, whereas the 120
days' period ended much prior to that and even the chamber order was
filed prior to that and even the decision on the chamber order is prior
to the said deletion and therefore, this Court condone the delay and
after setting aside orders dated 3 rd February, 2017 and 8th March, 2017
as well as order dated 4th September, 2017 rejecting the Chamber Order
seeking setting aside of the transfer of the suit to the list of undefended
Suits, allow the filing of the written statement by the Defendant. I am
afraid that the said argument of the Applicants does not hold any
water. At the outset, the said Rule would not apply to the case of the
Applicants in as much as the said Rule is clearly applicable to the case if
the suit has not been set down as an undefended suit against the
Defendant. The suit had already been transferred to the list of
undefended Suits on 8th March, 2017. Therefore Rule 91 in my view
would not be applicable to the facts of this case. Even the chamber
order for setting aside the order dated 8 th March, 2017 has been
dismissed on 4th September, 2017, and the notice of motion had been
filed on 11th October, 2017. Even otherwise, the amended proviso to
Rule 1 of Order VIII has been inserted with retrospective effect from
23rd October, 2015, which is much prior to these dates and would apply
to the facts of this case. Therefore, in my view, Rule 91 would not
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apply to the case of the Applicants. That therefore, the fact that the said
Rule came to be deleted only on 24 th March, 2022 would not be of any
relevance or consequence. Moreover, Section 21 of the Commercial
Courts Act clearly provides that the Commercial Courts Act has an
overriding effect and it is by virtue of Section 16 of the Commercial
Courts Act that the provisions of the CPC apply to the suit in respect of
a commercial dispute of specified value, it not being disputed that the
suit in question is a suit in respect of a commercial dispute of a
specified value. Also as observed the Commercial Courts Act being a
special statute would prevail over the High Court (Original Side)
Rules / Letters Patent. Therefore, also not only Rule 91 would not apply
but even Rule 265 of the Bombay High Court (Original Side) Rules
which empowers the Court or a Judge in Chambers to enlarge or
abridge the time will not be available to the Applicants.
40. As noted above, in the case of M/s SCG Contracts India Pvt. Ltd.
Vs. K. S. Chamankar Infrastructure Pvt. Ltd. And Ors.(supra), the
Hon'ble Supreme Court while considering the amended proviso to
Order 8 Rule 1 and 10 as applicable to suits relating to commercial
disputes of a specified value under the Commercial Courts Act, has
clearly observed that on expiry of 120 days from the date of service of
summons on the Defendant, the Defendant shall forfeit the right to file
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the written statement and the Court must not allow the written
statement to be taken on record and that as a consequence the written
statement of the Defendant cannot be taken on record beyond this
period. Proviso to Rule 1 of Order VIII clearly prohibits any
enlargement of time for filing of written statement beyond 120 days
and the same being a special provision applying to Commercial Courts
will prevail over the Bombay High Court Original Side Rules, 1980 as
well as the Letters Patent, which as observed earlier would be
overridden by the provisions of the Commercial Courts Act.
41. Further in view of the above discussion, the arguments of Mr.
Palshikar, that the decision of the Hon'ble Supreme Court in the case of
M/s SCG Contracts India Pvt. Ltd. Vs. K. S. Chamankar Infrastructure
Pvt. Ltd. And Ors.(supra), arises from the decision of the Delhi High
Court and does not consider the impact of the Letters Patent and the
Bombay High Court (Original Side) Rules would not be relevant.
42. Also the argument that the decision of the Hon'ble Supreme
Court in the case of M/s SCG Contracts India Pvt. Ltd. Vs. K. S.
Chamankar Infrastructure Pvt. Ltd. And Ors.(supra) has been rendered
on 12th February, 2019 and that since the limitation and orders under
consideration are prior to that date, the said decision would not apply
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to the facts of this case is only stated to be rejected as being without
any substance as it is settled law that any decision of the Supreme
Court, unless stated in the decision itself to be effective from a
particular date, is effective as if it had always been the law of the land.
43. It is not in dispute that the suit is a Commercial Summary Suit
and the Commercial Courts Act is applicable to the suit. That being the
case, in accordance with Section 16 of the Commercial Courts Act, the
amended proviso to Rule 1 of Order VIII of the CPC which clearly
provides that where the defendant fails to file the written statement
within the said period of thirty days, he shall be allowed to file the
same 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 120 days from the date of
service of summons and on the expiry of 120 days from the date of
service of summons, the Defendant shall forfeit the right to file written
statement and the Court shall not allow the written statement to be
taken on record and the said interpretation having been settled by the
Hon'ble Supreme Court in the case of M/s SCG Contracts India Pvt. Ltd.
Vs. K. S. Chamankar Infrastructure Pvt. Ltd. And Ors.(supra) , it would
not be possible to condone the delay of 231 days or 313 days in filing
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the Written Statement on behalf of the Applicants who are the
Defendants in the Commercial Suit.
44. Once it has been held that the period of 120 days from the date of
service of writ of summons is sacrosanct in the sense that this Court
does not have power to extend the delay beyond 90 days from the
service of writ of summons and the Court cannot allow the written
statement to be taken on record, then it is not necessary to consider
any argument on sufficient cause or on any explanation proffered by
the Applicants explaining the reason for the admitted delay beyond this
period or on the bonafides of the Applicants and obviously it would not
matter if the Applicants are the State or the constituents of the State or
performing functions or duties relating to public projects such as the
irrigation project as in the facts of this case.
45. No fault can therefore be found with the order dated 3 rd February
2017, and the order dated 8th March 2017 transferring the suit against
Defendants No.1 to 4 to the list of undefended suits for want of written
statement as well as order dated 4 th September 2017 of the learned
Prothonotary and Senior Master rejecting the Chamber Order taken out
for setting aside order dated 8th March 2017.
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46. Accordingly, Notice of Motion is hereby dismissed. The
commercial suit to proceed as an undefended suit.
47. It is made clear that if any observation(s) have been made herein
on the merits of the suit, the same is only to decide the present Notice
of Motion and not intended to influence the decision on the merits of
the suit which shall be decided without being influenced by any such
observation(s) on merit(s).
(ABHAY AHUJA, J.)
PRIYA
RAJESH
SOPARKAR
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