Delhi High Court
Raj Kumar Nair vs Uco Bank on 27 March, 2024
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: January 23, 2024
Judgment pronounced on: March 27, 2024
+ CM(M) 1885/2023, CM APPL. 59256/2023--stay
RAJ KUMAR NAIR ..... Petitioner
Through: Mr. Ajit Nair and Mr. Harsha,
Advocates.
versus
UCO BANK ..... Respondent
Through: Mr. Gaurav Gupta, Advocate for
UCO bank.
CORAM:
HON'BLE MS. JUSTICE SHALINDER KAUR
JUDGMENT
1. The present petition has been filed under Article 227 of the
Constitution of India impugning the orders dated 11.04.2023 and
17.10.2023 passed by the Learned District Judge (Commercial), North
West, Rohini, Delhi (in short "Commercial Court") in CS(COMM) No.
134/2020 titled as "UCO Bank vs Triveni Fashion" whereby the written
statement of the petitioner herein was not taken on record in absence of any
application for condonation of delay being filed and subsequently, the
application for condonation of delay was filed along with an application
seeking review of the order dated 11.04.2023, was dismissed with a cost of
Rs. 5,000.
2. The petitioner herein is the proprietor of the firm M/s Triveni Fashion
which was engaged in the manufacturing of garments. The firm was set up
and managed by petitioner's father but was registered in the petitioner's
name.
3. The respondent is a commercial bank and a Government of India
undertaking with its Corporate Office at 10, BTM Sarani, Kolkata 700001
and having its branch office, amongst other places, at Ayodhya Chowk,
F26/13, Sector 7, Rohini, Delhi.
4. Back in 2017, to gather funds to set-up the aforesaid business, the
Petitioner's father had approached and requested the respondent bank for
sanction of Term Loan/Demand Cash Credit for an amount of Rs. 5 Lakhs
under the Pradhan Mantri Mudra Yojana through the loan application dated
25.12.2017, wherein the petitioner stood as applicant for repayment of such
loan amount. Consequently, the respondent bank sanctioned an amount of
Rs. 5 lakhs as cash credit and through hypothecation of goods secured a
Demand Cash Credit dated 01.01.2018 and also endorsed Demand
Promissory Note & DP Note of Rs. 5 lakhs. It is stated that the amount was
also liable for an interest payable @ 8.60% per annum.
5. Thereafter, the petitioner's father and mother expired on 17.10.2019
and 25.12.2019, respectively. Thus, due to the unfortunate demises, the firm
M/s Triveni Fashion came to be closed.
6. It is the petitioner's stand that he was young and did not have any
knowledge of the business that was managed by his late father who was
party to the transactions made with the respondent. However, the petitioner
requested the respondent bank to seek redemption of dues from the Stock
and Machinery/hypothecated goods of the closed business that was lying
with him. Despite repeated requests from the petitioner, the respondent bank
did not take steps in this regard.
7. As per the mandate of Section 12A of the Commercial Courts Act,
2015, pre-mediation was instituted and it came with a non-starter report
dated 07.03.2020 passed by the DLSA, District North-West. Thereafter, the
respondent bank filed a commercial suit for recovery of Rs. 9.81 lakhs
against the petitioner on 06.08.2020. Summons of which were not received
by the petitioner as during this time, the house of the petitioner was mostly
closed due to ill health of the petitioner and his family members. Soon
thereafter, the Covid Pandemic ensued and the petitioner again could not
approach the bank to settle the subject Account with the respondent.
8. Accordingly, since none appeared for the petitioner herein on
29.09.2021, the petitioner was proceeded ex-parte in the commercial suit
9. In the meanwhile, the summons of the suit i.e. a registered envelop
from the District Court, Rohini, was received by the neighbor of the
petitioner namely Mr. Bharat, who informed the same to the petitioner only
in February, 2022. Thereafter, the petitioner took steps and engaged an
advocate and filed an application dated 09.02.2022 under Order IX Rule 7
of CPC for setting aside the ex-parte order dated 29.09.2021. The
application contained the Death certificates of his parents, Medical bills for
treatment of petitioner due to injuries to head, leg and a dog bite over the
period of time and the medical treatment record of the Sister-in-law
(brother's wife) of the Petitioner.
10. On 03.03.2022, the petitioner filed another application under Section
151 CPC seeking directions to the respondent to collect all the hypothecated
goods/machinery and belongings to realize the outstanding dues against the
petitioner. Through both the applications, the petitioner also informed the
learned Commercial Court that the respondent had not provided him with
legible documents with the plaint.
11. Subsequent thereto, the learned Commercial Court vide order dated
27.05.2022 directed the respondent to provide the petitioner with all the
documents filed along with the plaint through email and listed the suit for
filing the written statement on 28.09.2022 as well as hearing of the
application under Order IX Rule 7 CPC and application under 151 CPC.
12. On 01.06.2022, the documents of the suit are stated to be served for
the first time by the counsel for the respondent to the counsel for the
petitioner through an email on the onset of the summer vacations. It is stated
that the documents sent through email were not legible and the documents
of the respondent were only received by the petitioner upon re-opening of
the court. As the bank transactions were dealt by the father of the petitioner
and in view of his demise, the petitioner could not properly peruse the
documents of the respondent bank.
13. Consequently, the petitioner on 18.07.2022 filed the written statement
along with the Statement of truth and the affidavit of admission and denial.
14. The respondent did not file any reply to the application under Order
IX Rule 7 CPC and addressed arguments. Thereafter, vide order dated
05.12.2022, the application under Order IX Rule 7 was allowed and the ex-
parte order dated 29.09.2021 was set aside by the learned Commercial Court
and the suit was listed for 07.03.2023 for consideration of the written
statement to be taken on record.
15. The learned Commercial Court vide impugned order dated
11.04.2023 did not take on record the written statement of the petitioner in
absence of any separate application filed for condonation of delay.
16. To remedy this, the petitioner on 24.04.2023 filed its application for
condonation of delay in filing the written statement along with an
application seeking review of the order dated 11.04.2023.
17. Vide impugned order dated 17.10.2023, the learned Commercial
Court dismissed the aforesaid applications and imposed the cost of Rs.
5,000 upon the petitioner.
18. Unsettled by the impugned orders, the petitioner has preferred the
present petition before this court.
Submissions of the parties:
19. Learned counsel for the petitioner submitted that the learned
Commercial Court erred in not following the principle of law with respect to
setting aside the ex-parte proceedings and the time for filing the written
statement which was clarified in the case of Elamkunnapuzha Panchayath
v. Dinkar [AIR 2005 Kerela 263].
20. Learned counsel submitted that the learned Commercial Court did not
appreciate the judgements of this court in Rajesh Katpal vs Shubh Steel
CM(M) 991/2022 decided on 12.10.2022, whereby it was held that the
limitation period for filing written statement starts only after service of
documents by Plaintiff upon defendant even in commercial suits. Further in
the case of Red Bull AG vs Pepsico India Holdings Pvt. Ltd 2019 (177)
DRJ 398, it was held that for sufficient cause of delayed court process, the
time taken in filing written statement can be condoned in absence of a
formal application.
21. Further submitted that the learned Commercial Court has taken too
technical a view of the matter and there is a strong reason for allowing the
condonation of delay in view of petitioner having taken immediate bonafide
steps.
22. Learned counsel also submitted that the learned Commercial Court
did not take into account that the written statement mentions the reasons for
delay in defending the present suit since he had no knowledge of the subject
transactions with the respondent bank relating to period of 2017-2018, as
the same were transacted by his late father. In view of having no knowledge
of the same, preparing a proper defence took time and hence the same was
the reason for the delay of 17 days in filing the written statement.
23. Further submitted that the non-filing of application for condonation of
delay was not a patent mistake and was only a curative defect which in the
interest of justice could have been allowed to be cured. The learned
Commercial Court also erred in interpreting the provision which provides
for a total of 120 days for the written statement to be taken on record subject
to payment of costs and recording reasons of such delay. However, in the
present case, there was only a delay of 17 days above 30 days happened
which could have been condoned in view of the provision provided under
the CPC as amended by the Commercial Courts Act.
24. Reliance was also placed on Suo Moto Writ Petition (Civil) No.
03/2020 and SCG Contracts India Pvt. Ltd. & Ors. vs K.S. Chamankar
Infrastructure Pvt. Ltd AIR 2019 SC 2691.
25. The submissions were controverted on behalf of the respondent
thereby submitting that the petitioner was served through whatsapp in
November 2020, however, by way of abundant precaution, he was also
ordered to be served through registered AD which service was completed on
26.12.2020. Nonetheless, the petitioner did not choose to appear before the
learned Commercial Court and was proceeded ex-parte on 29.09.2021. It is
submitted that the said ex-parte order was set aside by learned Commercial
Court by specifically observing that though the application under Order IX
Rule 7 CPC was allowed, however, the issue was kept open whether the
written statement filed subsequently on 19.07.2022 can be taken on record
as the petitioner had appeared on 10.02.2022 and the service was completed.
26. The learned counsel for the respondent submitted that while the
petitioner was served through registered AD post on 26.12.2020, he had
received the entire set of documents. It was submitted that even if it is
assumed for the sake of arguments that the petitioner had received the
complete set of petition along with the documents on 01.06.2022, then also
the period of limitation for filing the written statement commenced on
01.06.2022 but the petitioner failed to file the written statement within 30
days which came to be filed on 19.07.2022 without an application seeking
condonation of delay. Therefore, learned Commercial Court was correct in
its view vide order dated 11.04.2023 not to allow the petitioner to file the
written statement after expiry of 30 days without specifying any reasons to
do so.
27. It was further submitted that subsequently, along with the review
application though the petitioner had moved an application seeking
condonation of delay which also does not inspire any confidence as no
cogent reason had been furnished by the petitioner while seeking
condonation of delay in filing the written statement after 17 days of expiry
of 30 days, thus, same was aptly rejected by learned Commercial Court with
cost.
Analysis & Conclusion
28. The position of law is well settled that the period of 30 days for filing
the written statement is to be reckoned from the date of service of summons
in a suit upon the defendant. The outer limit within the written statement can
be filed by the defendant is of 120 days and thereafter, the Court has no
power to extend the period for filing the written statement after expiry of
120 days. Nonetheless, the Proviso to Order VIII Rule 1 of CPC 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 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.
29. It is not disputed that at the time of passing the impugned order dated
11.04.2023, no application for delay was filed. Apparently, while deciding
the application seeking review of the order dated 11.04.2023, the learned
Commercial Court has not considered the reasons assigned in the
application seeking condonation of delay in filing the written statement but
while dismissing the review application has merely observed that the
application seeking condonation of delay is in the teeth of order dated
05.12.2022. It is pertinent to note that on 05.12.2022, an application moved
on behalf of the petitioner under Order IX Rule 7 CPC was allowed and the
ex-parte order dated 29.09.2021 was set aside, the Court had observed while
passing the order "however it shall not extend the limitation for filing the
written statement. The same would be governed by the judgment of the
Hon'ble Supreme Court in Suo Moto Writ Petition (Civil) No. 03/2020 as
well as judgment of Hon'ble Supreme Court in SCG Contracts India Pvt.
Ltd. v. K. S. Chamankar Infrastructure Pvt. Ltd. & Ors. [AIR 2019 SC
2691].
30. Noticeably, the learned Commercial Court failed to consider the
Proviso to Order VIII Rule 1 CPC, which reads as under:-
"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 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."
31. Thus, without considering the reasons for the delay in filing the
written statement, the learned Commercial Court outrightly dismissed the
application. Relevantly, the learned Commercial Court, while passing the
impugned order dated 11.04.2023 had considered that the petitioner had
received the complete set of plaint along with documents on 01.06.2022 and
period for limitation for filing of the written statement was to commence
after he received the complete set of documents. The court has further
observed that the summer vacations for the court commenced from 06th
June, 2022 to 30th June 2022. As the written statement was not supported
with any application seeking condonation of delay in filing the written
statement and the period for filing written statement had expired even the
period was to be recknoned from 01.06.2022, therefore, the written
statement was not taken on record.
32. However, while disposing of the application seeking review of the
order, the learned Commercial Court failed to consider the said observations
and probably got carried away with the fact that the application seeking
condonation of delay was not to be considered at all.
33. In the case of M/s AP Distributors & Anr. vs M/s OK Play India
Pvt. Ltd. [SLP(C) 9733-9734/2022], the Hon'ble Supreme Court had
considered the application for condonation of delay which was filed beyond
the period of 120 days and allowed the written statement filed on 34th day of
service of notice of summons and held as herein under:-
"Leave granted.
Having heard learned counsel for the respective parties and in the
facts and circumstances of the case and considering the fact that the
written statement was filed on the 34th day of the service of notice of
summons, however, the application for condonation of delay was filed
which was beyond the period of 120 days, the High Court has taken too
technical view in setting aside the order passed by the learned
Commercial Court directing to accept the written statement filed on behalf
of the appellants/defendants. The High Court was not justified in setting
aside the order passed by the learned Trial Court directing to take the
written statement on record.
In view of the above and for reasons stated hereinabove, the
present appeals succeed. The impugned judgntent and orders passed, by
the High Court are hereby quashed and set aside and- the order passed by
the learned Trail Court directing to take written statement on record after
cordoning the delay in submitted the written statement is hereby restored.
The present Appeals are accordingly allowed. No costs."
34. In view of the above, it is necessary to consider the reasons stated by
the petitioner seeking condonation of delay of 17 days in filing the written
statement. Undisputedly, the written statement has been filed though after
completion of 30 days but before expiry of 120 days as provided under the
law. The petitioner has submitted that his counsel in the month of June,
2022 was on vacation and therefore, he could not communicate, meet and
discuss with him about the case for drafting the written statement. The
counsel immediately upon re-opening of the court after summer vacation in
July, 2022 contacted the petitioner. It is also submitted that the printouts of
the documents sent by the respondent were not legible and the same were
not in the power and possession of the petitioner to compare and cross
check their veracity which caused further delay in preparing the written
statement. It is submitted that the particulars of the documents related to the
period of 2017-2018 when the transactions were dealt by the bank with
father of the petitioner and not by the petitioner. The father of the petitioner
had expired on 17.10.2019 and therefore, the petitioner was helpless in this
regard. Hence he had no knowledge of the said documents to prepare
proper defence expeditiously. He took lot of time to collect the information,
required to prepare the written statement, hence the delay of approximately
17 days in filing the written statement which came to be filed on
18.07.2022.
35. The peculiar facts and circumstances of the case are that the father of
the petitioner was infact carrying out the business of garments
manufacturing with financial assistance of the respondent bank. After the
death of the father of the petitioner his firm was closed and the petitioner
has averred that he has no knowledge of the business, which was conducted
by father. In these circumstances, it was submitted that the petitioner was
not prompt in giving the details of the case and the defences to be prepared
on his behalf which had caused the delay of 17 days in filing the written
statement. It is not disputed that the petitioner had received the entire set of
documents on 01.06.2022 and the summer vacations had embarked from
06.06.2022 to 30.06.2022. Therefore, in the peculiar circumstance of the
present case, the petitioner has explained the delay of 17 days in not filing
the written statement within period of 30 days after receiving the complete
set of documents. The learned Commercial Court erred in not considering
the cause of delay as mentioned in the application moved on behalf of the
petitioner while passing the impugned order dated 17.10.2023.
36. In order to avoid another round of litigation, the Court believes that
the respondent can be suitably compensated with costs for the negligence of
the petitioner. Accordingly, the delay of 17 days in filing the written
statement is condoned. The impugned orders dated 11.04.2023 and
17.10.2023 are set aside. The written statement is taken on record, subject
to cost of Rs. 20,000/- to be paid by the petitioner to the respondent before
the learned Commercial Court on the next date which is fixed before it.
37. Consequently, the petition is allowed and pending application stands
disposed of.
SHALINDER KAUR, J.
MARCH 27, 2024
SU/KM
