Il And Fs Financial Services Ltd vs Aditya Khaitan & Ors
2021 Latest Caselaw 220 Cal/2

                                         1




                                IA GA 3 of 2021
                                IA GA 4 of 2021
                                IA GA 5 of 2021
                                IA GA 6 of 2021
                                IA GA 7 of 2021
                                IA GA 8 of 2021
                                IA GA 9 of 2021
                               IA GA 10 of 2021
                                      In
                                CS 177 of 2019

                      IN THE HIGH COURT AT CALCUTTA
                       Ordinary Original Civil Jurisdiction
                            COMMERCIAL DIVISION
                       IL And FS Financial Services Ltd.
                                       v.
                             Aditya Khaitan & Ors.

  For the Plaintiff            : Mr. Rishad Medora, Advocate
                                 Mr. Soumava Mukherjee, Advocate
                                 Mr. Ramya Hariharan, Advocate


  For the Defendants           : Mr.   S.N. Mookherjee, Sr. Advocate
                                 Mr.   Padam Khaitan, Advocate
                                 Mr.   Samik Chakraborty, Advocate
                                 Mr.   Srinjoy Bhattacharya

  Hearing concluded on         : February 18, 2021

  Judgment on                  : February 26, 2021


DEBANGSU BASAK, J. :-

1.

Eight applications for extension of time to file written statements have

been heard analogously. Out of nine defendants, in a suit pending in the

Commercial Division of this Hon'ble Court, eight of the defendants have

applied for extension of time to file written statements.

2. Learned senior advocate appearing for the defendant No. 9 has

submitted that, the suit was filed on August 30, 2019. Although the

defendant No. 9 is not aware of the date when the writ of summons for the

suit was lodged, the defendant No. 9 is aware that, the writ of summons

had been issued on February 6, 2020. The defendant No. 9 had received

the writ of summons on February 7, 2020. In terms of the provisions of

Order V Rule 1 and Order VIII Rule 1 of the

Code of Civil Procedure 1908 as applicable to a suit in the Commercial

Division governed by the provisions of the Commercial Courts Act, 2015,

30 days to file written statement in the suit had expired on March 8, 2020

and 120 days had expired on June 6, 2020.

3. Learned senior advocate appearing for the defendant No. 9 has referred

to the order dated March 23, 2020 passed by the Hon'ble Supreme

Court in the Suo Motu Writ Petition (C) No. 3 of 2020 and contended

that, the period of limitation, stands suspended with effect from March 15,

2020. He has referred to further orders of the Hon'ble Supreme Court

including the order dated December 17, 2020 passed in such writ petition.

He has submitted that, the order of suspension of the period of limitation,

remains effective till date.

4. Learned senior advocate appearing for the defendant No. 9 has referred

to Section 16 of the Act of 2015 and Section 21 thereof. He has submitted

that, the provisions of the Act of 2015 have overriding effect by virtue of

Section 21 thereof. He has referred to the Schedule to the Act of 2015 and

to paragraphs 4(A), (D), (i) (iv) of the Schedule of the Act of 2014. He has

submitted that, the second proviso to Order V Rule 1 of the Code of Civil

Procedure, 1908 has been substituted so far as suits governed by the Act

of 2015 are concerned. According to him, the second proviso has allowed

the defendant to file written statement within a period of 30 days.

Thereafter, according to him, the defendant shall be allowed to file written

statement not later than 120 days from the date of service of writ of

summons. The period of 90 days after the period of 30 days initially

allowed for filing written statement, according to him, is a grace period.

The Court shall allow filing of the written statement within a period of 120

days from the date of service of the summons. According to him, the

second proviso to Order V Rule 1 enjoins recording of reasons for allowing

the defendant to file written statement beyond 30 days but within 120

days from the date of service of summons.

5. Learned senior advocate appearing for the defendant No. 9 has relied

upon 2019 Volume 12 Supreme Court Cases 210 (SCG Contract

(India) Private Limited v. K. S. Chamankar Infrastructure Private

Limited and others) and submitted that, the Supreme Court has

recognized that a grace period of a further 90 days has been granted to file

written statement to a defendant, which the Court may employ for reasons

to be recorded in writing and payment of such costs as it deem fit to allow

the written statement to come on record. Referring to the order dated

March 23, 2020 passed by the Hon'ble Supreme Court in Suo Motu Writ

Petition (C) No. 3 of 2020 (In Re: cognizance for extension of

limitation) he has submitted, that the period of limitation in all

proceedings, irrespective of the limitation prescribed under the general law

or special laws whether condonable or not shall stand extended with effect

from March 15, 2020 till further orders to be passed by the Court. He has

pointed out that, such order had been passed in exercise of powers under

Article 142 read with Article 141 of the Constitution of India. He has

referred to the next order passed in Suo Motu Writ Petition (C) No. 3 of

2020 dated July 10, 2020 and submitted that, the period of limitation

remains suspended.

6. Relying upon 2020 Volume 5 Supreme Court Cases 757 (New India

Assurance Company Limited. V. Hilli Multipurpose Cold Storage

Private Limited) learned senior advocated appearing for the defendant

No. 9 has submitted that SCG Contract (India) Private Limited (supra)

has been noticed therein. He has drawn the attention of the Court to the

provisions of the Consumer Protection Act, 1986 particularly Section 38

thereof.

7. Referring to the order dated December 17, 2020 passed by the Hon'ble

Supreme Court in Civil Appeal No. 4085 of 2020 (M/s. SS Group

Private Ltd. V. Aditya J. Garg and another) learned senior advocated

appearing for the defendant No. 9 has submitted that, the Supreme Court

had allowed the written statement to be filed therein. On the strength of

the same analogy, the applying defendants herein be allowed to file written

statement.

8. Learned senior advocate appearing for the defendant No. 9 has referred

to Section 421(3) of the Companies Act, 2013. He has submitted that, the

proviso to Section 421(3) uses the word "may". He has submitted that, the

provisions of Section 421(3) of the Companies Act, 2013 are not pari

materia with that of the provisions of the Act of 2015 so far as the

prescribed period of limitation and the condonation of delay are concerned

for filing a written statement.

9. Learned senior advocated appearing for the defendant No. 9 has

referred to the order dated September 18, 2020 passed by the Hon'ble

Supreme of India in Civil Appeal Nos. 3007- 3008 of 2020 (Sagufa

Ahmed and other v. Upper Assam Plywood Products Private Limited

and others). He has submitted that, in Supreme Court in the facts of that

case, considered the period of limitation prescribed under the provisions of

section 421(3) of the Act of 2013. In such context, the Supreme Court has

held that, the order dated March 23, 2020 passed in the Suo Motu

Writ Petition (C) No. 3 of 2020 has extended the period of limitation and

not the period up to which delay can be condoned in exercise of discretion

conferred by the statute.

10. Referring to the order dated December 24, 2020 passed by a co-

ordinate bench in IA GA No. 2 of 2020 in CS No. 246 of 2019 (Siddha

Real Estate Development Private Limited v. Golden Goenka Credit

Private Limited) learned senior advocate appearing for the defendant No.

9 has submitted that, the attention of the Court was not drawn to SCG

Contracts India Private Limited (supra). New India assurance

Company Limited (supra) has not been dealt with by the Court. He has

submitted that, although, the decision of the co-ordinate bench is binding

upon this bench, nonetheless, the defendant No. 9 can persuade the Court

to take a different view. In the event the Court takes a different view then,

the matter can be referred to a larger bench for decision.

11. Learned senior advocate appearing for the defendant No. 9 has

submitted that the defendants who have applied for extension of time to

file written statement should be allowed to do so, more particularly since

such written statements are ready for filing.

12. Learned advocate appearing for the plaintiff has submitted that

Siddha Real Estate Development Limited(Supra) has dealt with the

aspect of extension of time to file written statement in a commercial suit

pending in the Commercial Division of the High Court. He has submitted

that, such decision has taken note of in the order dated March 3, 2020

passed by the Hon'ble Supreme Court in Suo Motu Writ Petition (C)

No. 3 of 2020 as well as the subsequent orders passed therein. He has

referred to the provisions of Order V Rule 1 and Order VIII Rule 1 of the

Code of Civil Procedure, 1908 so far as they are applicable to a commercial

suit pending in the Commercial Division of a High Court. He has

submitted that, the initial period of 30 days is the period of limitation

prescribed by statute. The next 90 days after the expiry of the period of 30

days is the period during which, the Court can exercise discretion of

extension of time to file the written statement. In the facts of the present

case, none of the applying defendants have been vigilant or prompt in

applying extension of time to file written statement. He has submitted

that, the 120 days to file written statement from the date of service of the

writ of summons expired on June 6, 2020. It is after more than eight

months that the applying defendants have applied for extension of time to

file written statement. He has submitted that the application for extension

of time to file written statement does not contain any ground for

extension. He has referred to the conduct of the applying defendants. He

has submitted that, the applying defendants have contested other

proceedings in diverse forai Therefore, the plea of the applying defendants

for extension of time to file written statement cannot be sustained.

13. Learned senior advocate appearing for defendant No. 9 has submitted

that, the filing of written statement by a defendant in a suit cannot be

equated with that of such defendants contesting interlocutory applications

in any forum. He has submitted that the filing of a written statement

requires analysis of evidence and documents to be collated, amongst

others. It is a time consuming affair and it requires more time and effort

than to contest an interlocutory application. Therefore, the applying

defendants should not be denied the opportunity to file written statements

solely on the ground that they contested other proceedings during this

period of time.

14. In a suit filed on August 30, 2019, pending in the Commercial Division

of this Hon'ble Court, and governed by the provisions of the Act of 2015,

eight of the defendants in the suit have applied for extension of time to file

written statements.

15. The second proviso to Order V Rule 1 (1) of the Code of Civil

Procedure, 1908 is applicable to a suit pending in the Commercial

Division of High Court, allows filing of a written statement, on the failure

of the defendant to file a written statement within a period of 30 days from

the date of service of summons, not later than 120 days from the date of

service of summons. It has provided that, on expiry of 120 days from the

date of service of summons, the defendant forfeits the right to file written

statement and the Court shall not allow the written statement to be taken

on record.

16. The facts relating to the defendant No. 9 has been alluded herein for

the sake of convenience. The Court has been informed that the other

applying defendants are similarly situated as that of the defendant No. 9.

17. The writ of summons in the suit had been issued on February 7, 2020

and the same had been served on the defendant No. 9 on February 7,

2020. 30 days from February 7, 2020 had expired on March 8, 2020 for

defendant No. 9 to file its written statement within the prescribed time.

120 days from the date of service of the writ of summons on the defendant

No. 9 had expired on June 6, 2020 and again within such period, the

defendant No. 9 did not file written statement. The defendant No. 9 had

applied for extension of time to file written, by way of an application made

by a master summons dated January 20, 2021. As has been noted above,

the other applying defendants are more or less similarly situated so far as

the service of writ of summons, and the expiry of 120 days from the date

of service of the summons on them as also the date on which they have

applied for extension of time to file written statements.

18. The decision of the co-ordinate bench rendered in Siddha Real

Estate Development Private Limitted(supra) has been in respect of an

application for extension of time to file written statement by a defendant in

a commercial suit pending before the Commercial Division of the High

Court. It has considered the issue whether the initial period of 30 days is

the prescribed period for the purpose of limitation and whether the

defendant can take refuge under the order dated March 3, 2020 passed

by the Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020. It

has held that, the 90 days period beyond the prescribed period of

limitation of 30 days, in Order VIII Rule 1, is the additional period and not

the prescribed period of limitation. With regard to the second issue, it has

held that, the order dated March 23, 2020 has to be read with the order of

September 18, 2020. It has held that, the Supreme Court had clarified the

order dated March 23, 2020 on September 18, 2020 by stating that, the

extension given was only confined to the prescribed period of limitation

and cannot be construed to mean that the period beyond prescribed

period which allowed the Court to exercise discretion on whether to allow

or refuse the period in addition to the prescribed period had been

extended. On facts, it had found that, the defendant therein did not show

promptness in pursuing its rights of filing the written statement.

19. The Supreme Court in Sagufa Ahmed and others (supra) has

considered the order dated March 23, 2020 passed by the Hon'ble

Supreme Court in the context of an appeal under Section 421 of the

Companies Act, 2013. It has held that, the order dated March 23, 2020

of the Hon'ble Supreme Court had extended only the period of limitation

and not the period up to which delay can be condoned in exercise of

discretion conferred by the statute. It has held as follows:-

"19. But we do not think that the appellants can take refuge under the above order. What was extended by the above order of this Court was only "the period of limitation" and not the period upto which delay can be condoned in exercise of discretion conferred by the statute. The above order passed by this Court was intended to benefit vigilant litigants who were prevented due to the pandemic and the lockdown, from initiating proceedings within the period of limitation prescribed by general or special law. It is needless to point out that the law of limitation finds its root in two latin maxims, one of which is Vigilantibus Non Dormientibus Jura Subveniunt which means that the law will assist only those who are vigilant about their rights and not those who sleep over them."

20. The Supreme Court in SCG Contracts India Private Limited

(supra) has considered the provisions relating to filing of the written

statement in a commercial suit. It has considered the issue as to whether

written statement can be allowed to be filed in a commercial suit beyond

120 days from the date of service of the writ on summons on the

defendant. It has held as follows:-

"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 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-emphasised 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 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."

21. SCG Contracts India Private Limited (supra) has noticed that,

various High Courts have consistently held that, the provisions of the

Code of Civil Procedure, 1908 so far as it applies to commercial suits

governed by the provisions by the Act of 2015 are mandatory.

22. In New India Assurance Company Limited (supra), the Supreme

Court has considered the provisions of the Consumer Protection Act,

1986, in the context of limitation period for filing reply/response to the

complaint by the respondent/opposite party. It has noticed SCG

Contracts India Private Limited (supra). It has held that, there was no

scope for enlarging the time for filing written statement in a commercial

suit, beyond a period of 120 days as the provisions with regard to such are

mandatory and not directory.

23. In SS Group Private Limited (supra), the Supreme Court has

considered the order dated March 23, 2020 passed in Suo Motu Writ

Petition No. 3 of 2020 in the context of Section 38(2)(a), of the Consumer

Protection Act , 2019. In the facts of that case, the period of limitation of

30 days to file written statement had expired on August 12, 2020 during

which, the order dated March 23, 2020 was operating. Since, the original

period of limitation expired during period of time when, the order dated

March 20, 2020 was in operation, the Supreme Court had allowed filing of

the written statement therein. The facts scenario in the present case are

different from that as has been obtaining in SS Group Private Limited

(supra). The period of 30 days to file written statement in the present suit,

had expired on March 8, 2020 way prior to the order dated March 23,

2020 coming into effect from March 15, 2020.

24. In the facts of the present case, the prescribed time to file written

statement by the applying defendants had expired on March 8, 2020 or

thereabouts, at least way before the order dated March 23, 2020 passed

by the Hon'ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of

2020 came into being. The order dated March 23, 2020 has prescribed

that the same is to be construed to be effective from March 15, 2020. The

original period of 30 days to file written statement by the applying

defendants had expired much before March 15, 2020. The order dated

March 23, 2020 of the Hon'ble Supreme Court and the subsequent orders

with regard to the period of limitation has been explained by the Hon'ble

Supreme Court in Sagufa Ahmed and others (supra) by stating that,

"what was extended by the above order of this Court was only 'a period of

limitation' and not the period of limitation up to which delay can be

condoned in exercise of discretion conferred by this statute".

25. Section 16 of the Act of 2015 has laid down that, the provisions of

the Code of Civil Procedure, 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. In sub-section (2) thereof it has

specified that, the Commercial Division and the Commercial Court shall

follow the provisions of the Code of Civil Procedure, 1908, as amended by

the Act of 2015 in the trial of a suit in respect of a commercial dispute of a

Specified Value. The Schedule to the Act of 2015 in paragraph 4 (A) has

amended Order V Rule 1 (1) second proviso and in paragraph 4 (D) Order

the proviso to VIII Rule 1. The amendments that have been incorporated

by the Act of 2015 to the Code of Civil Procedure, 1908, to the extent of

prescribing the time limit for filing written statement in a suit governed by

the Act of 2015 has been consistently held by different High Courts to be

mandatory in nature. This view has been noted by the Supreme Court in

SCG Contracts India Private Limited (supra).

26. The second proviso to Order V Rule 1 and the proviso to Order VIII

Rule 1 as have been amended by the Act of 2015, has prescribed an outer

limit of 120 days for filing of written statement by a defendant, from the

date of service of the writ of summons on such defendant. This period of

120 days has been divided into two parts. The first part is of 30 days from

the date of service of the writ summons on the defendant. In this period of

30 days, the defendant is entitled to file written statement in the suit,

unquestionably. In the period beyond 30 days, with the maximum limit of

120 days from the date of service of the writ of summons, the Court shall

allow the defendant to file written statement on the Court recording the

reasons in writing for the same and on payment of such costs by the

defendant as the Court may deem fit. The original period of limitation for

filing written statement has been prescribed to be 30 days with a

condonable period of 90 days thereafter being available to the Court to

condone the delay in filing the written statement within 30 days, provided

the Court records the reasons for doing so and the defendant pays such

costs at the Court may deem fit. The object of the Act of 2015 has been

stated to provide for speedy disposal of high value commercial disputes. In

such context, where speedy disposal is one of the objects of the Act of

2015, then, the period of limitation as has been prescribed in the Act of

2015 has to be understood to be mandatory rather than directory. The

provisions of the Act of 2015 are required to be strictly construed.

27. In the application for extension of time to file written statement, the

applying defendant have taken shelter under the ongoing pandemic, the

declaration of lockdown, the shutdown of the offices of the applying

defendants as well as that of the advocate on record due to the lockdown

guidelines and thereafter, the functioning of the applying defendants as

well as the office of the advocate on record of the applying defendants on a

skeleton basis due to the ongoing pandemic. The applying defendants

have not stated the dates on which, the applying defendants had obtained

the necessary documents for preparing the written statement, the date on

which they had instructed their advocate on record to take steps for filing

the written statement and the dates during which the applying defendants

had suffered inability to file the written statement within the prescribed

period of limitation. The applying defendants have not ascribed any reason

as to why the applying defendants could not file written statement within

the period of 30 days from the date of service of the writ of summons on

them. In the facts of the present case, I find that the applications of the

applying defendants for extension of time to file written statement to be

bereft of material particulars. The applying defendants have not exhibited

any promptness in having the written statements prepared and filed.

28. In such circumstances, I am not in a position to allow the applications

of the applying defendants. IA GA 3 of 2021, IA GA 4 of 2021, IA GA 5 of

2021, IA GA 6 of 2021, IA GA 7 of 2021, IA GA 8 of 2021, IA GA 9 of 2021

and IA GA 10 of 2021 are dismissed without any order as to costs.

[DEBANGSU BASAK, J.]