Oku Tech Private Limited vs Sangeet Agarwal & Ors.
2016 Latest Caselaw 5293 Del

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI
12.
+                          CS (OS) 3390/2015

        OKU TECH PRIVATE LIMITED                         ..... Plaintiff
                     Through: Mr. Rajat Kumar, Advocate.

                           versus

        SANGEET AGARWAL & ORS.                       ..... Defendants
                    Through: Mr. Neel Mason with Ms. Sauyma
                    Bhatnagar, Advocates for Defendant Nos. 1, 3 and
                    5.

        CORAM: JUSTICE S. MURALIDHAR

                           ORDER

% 11.08.2016

IA No. 5853/2016 (for condonation of delay in filing the written statement)

1. This is an application filed by Defendants 1, 3 and 5 seeking condonation of delay in filing the written statement.

2. The application has been opposed by learned counsel for the Plaintiff by drawing attention of the Court to Section 16 read with the Schedule to The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 („Act‟) in terms of which the second proviso to Order V Rule 1 as well as the proviso to Order VIII Rule 1 have both been substituted by the following proviso:

"Provided further that where the defendant fails to file the written statement within the said period of thirty days, he

shall be allowed to file the written statement on such other day, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record."

3. He also drew attention to the amendment to the CPC in terms of Section 16 of the Act read with Schedule thereof whereby a proviso has been inserted after Order VIII Rule 10 to the following effect:

"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."

4. The submission of Mr. Rajat Kumar, learned counsel for the Plaintiff, is that the present suit being in the nature of a commercial dispute within the meaning of Section 2(1)(c) of the Act and with the suit having been filed on 21st November 2015, four days after the directions were issued by this Court creating the Commercial Division and Commercial Appellate Division of the Court, the present suit is a commercial suit to which the provisions of the Act apply. He also points out that under Section 21 of the Act, its provisions shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. It is submitted that with the Defendants 1, 2 and 3 having accepted noticed in the Court on 27 th November 2015, the time limit for filing the written statement began to run from that date. The outer limit of 120 days expired on 26 th March 2016 and the written statement was filed by Defendants 1, 3 and 5 on 7th May 2016.

5. Mr. Rajat Kumar further points out that the written statement was filed even beyond the period of four weeks granted by the Joint Registrar (JR) by the order dated 23rd March 2016. He refers to the proviso to Order VIII Rule 10 inserted by the Schedule to the Act which precludes the Court from granting any further time beyond the aforementioned period.

6. Mr. Neel Mason, learned counsel for the Defendants 1, 3 and 5, on the other hand refers to Section 15 occurring in Chapter V of the Act which pertains to "transfer of pending cases". He submits that with the transfer of the present suit to the commercial division, a new time limit can be prescribed by the Court to which the suit has been transferred in terms of the proviso to Section 15(4) of the Act, without recourse to the amended second proviso to Order V Rule 1 CPC. He accordingly submitted that the Court can in its discretion condone the delay in filing the written statement.

7. The above submissions have been considered. The Supreme Court had in Kailash v. Nankhu JT 2005 (4) SC 204 interpreted the proviso to Order VIII Rule 1 CPC as still giving discretion to the Court to extend the time for filing a written statement. The proviso to Order VIII Rule 1 CPC in its original form was held by the Supreme Court as not specifying any consequences for non-compliance with the time line envisaged thereunder. Therefore the time line under Order VIII Rule 1 CPC was held to be directory. It is observed that the power of the Court to extend beyond the time schedule provided by Order VIII Rule 1 CPC "is not completely taken away."

8. The amendments to the CPC brought out by the Schedule to the Act seek to fill the above gap, as it were, in the CPC. The substituted second proviso to Order V Rule 1 and the substituted proviso to Order VIII Rule 1 place an outer limit of 120 days from the date of service of summons up to which the Court can grant time to file written statement. It categorically states that "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." This is re-emphasised by inserting a proviso to Order VIII Rule 10 CPC, which after such insertion, reads as under:

"10. Procedure when party falls 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 is relating 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."

9. Therefore, it is plain that the above amendment reflects the legislative intent to take away the discretion of the Court in extending the time for filing the written statement.

10. In the present case, as the order sheets reveal, on 27 th November 2015 learned counsel appearing on behalf of Defendants 1 to 5 accepted "the summons and notice." Therefore, that was the starting day for the purposes

of calculating the period within which the written statement had to be filed by Defendants 1 to 5.

11. Secondly, this suit was filed four days after the Commercial Division was created. It was, therefore, admittedly a commercial dispute even when it was filed. The order dated 27th November 2015 itself records: "The parties admit that this is a commercial dispute." Consequently, the question of this suit being 'transferred' to the commercial division does not arise. Section 15 of the Act deals with of "transfer of pending cases". Section 15 (1) of the Act states that all suits and applications pending in a High Court where a commercial division has been constituted shall be transferred to the commercial division. This, therefore, envisages suits that were filed and were already pending in the High Court prior to the creation of the commercial division of the High Court. Such suits are required to be transferred to the commercial division. However, the present suit was filed in the commercial division, after its creation. The question of transferring this suit to the commercial division did not arise at all. In that view of the matter, Section 15 of the Act has no application to the instant case. The submission on behalf of Defendants 1, 3 and 5 that in terms of the proviso to Section 15(4), the Court has the discretion to fix a new time line after the transfer of the suit to the commercial division is misconceived.

12. Mr Mason appearing for Defendants 1, 3 and 5 pointed out that the parties were seeking to arrive at a settlement and, therefore, the failure to file written statement was for bona fide reasons and that the Court should exercise its discretion to condone the delay of 14 days, which according to

him is insubstantial. The Court is unable to accept the above plea for the simple reason that the discretion of the Court to extend the time for filing written statement beyond 120 days after service of summons no longer survives in view of the amendments to the CPC brought about by the Schedule to the Act. The outer limit for filing written statement is now 120 days from the date of service of the summons.

13. For the aforementioned reasons, the Court declines the prayer for condonation of delay in Defendants 1, 3 and 5 filing their written statement.

14. The application is dismissed.

CS (OS) 3390/2015

15. With the dismissal of I. A. No. 5853 of 2016, the written statement by Defendants 1, 3 and 5 is directed to be taken off the record.

16. Learned counsel for the Plaintiff states that he will take steps to file the amended memo of parties and amended plaint in terms of the order dated 14th July 2016 passed by the JR within one week. Subject to the Plaintiff doing so, summons will issue in the suit to Defendant No.7. Summons will additionally be served through learned counsel who appeared for Defendant No.7 before the JR on 14th July 2016.

17. Learned counsel for the Defendants 1, 3 and 5 submitted that they should also be given some time to file written statement to the amended plaint when filed by the Plaintiff. The Court is unable to accede to this prayer. The amendment to the plaint has been occasioned by Defendant No. 6 being

deleted and Defendant No. 7 being impleaded as party to the suit by the order dated 14th July 2016 of the JR. Learned counsel for the Plaintiff states that there is otherwise no change whatsoever to the plaint and in any event the above change does not in any manner alter the suit as far as Defendants 1, 3 and 5 are concerned. With the right of the Defendants 1, 3 and 5 of to file a written statement having been closed, the question of Defendants 1, 3 and 5 filing a written statement to the amended plaint does not arise.

18. List before the JR on 17th October 2016.

19. List before the Court on 22nd November 2016.

S. MURALIDHAR, J AUGUST 11, 2016 dn