M/S Satyam Composites Pvt. Ltd vs Spig Cooling Towers India Pvt. Ltd
2021 Latest Caselaw 18738 Guj

    C/SCA/13627/2021                                 CAV JUDGMENT DATED: 24/12/2021




               IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                R/SPECIAL CIVIL APPLICATION NO. 13627 of 2021

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE SANDEEP N. BHATT

==========================================================

1 Whether Reporters of Local Papers may be allowed Yes to see the judgment ?

2 To be referred to the Reporter or not ? Yes

3 Whether their Lordships wish to see the fair copy No of the judgment ?

4 Whether this case involves a substantial question No of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== M/S SATYAM COMPOSITES PVT. LTD.

Versus SPIG COOLING TOWERS INDIA PVT. LTD.

========================================================== Appearance:

ABHISST K THAKER(7010) for the Petitioner(s) No. 1 MR. AH MOHAPATRA(6807) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE SANDEEP N. BHATT

Date :24/12/2021

CAV JUDGMENT

(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA)

Heard learned advocate Mr.Abhisst Thaker for the petitioner and learned advocate Mr.A.H.Mohapatra for the respondent.

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

2. The petitioner by filing the present petition, has challenged order dated 25.6.2021 passed by the Commercial Court, Vadodara, below Exhibit 10 in Commercial Suit No.3 of 2020, whereby the Court allowed the defendant to file written statement on payment of delayed cost of Rs.10,000/-.

3. The petitioner- original plaintiff instituted the suit for recovery of money against the respondent- defendant on the ground of breach of contract. The defendant had put purchase orders between the period from 31.12.2017 to 23.6.2019 for different quantities of cables and wires from the plaintiff, who was manufacturer and supplier of such products. As per the case of the plaintiffs, the products were supplied after due testing and they were premium quality products. The defendant failed to make payment leading to institution of the the suit by the plaintiff. The details of the suit controversy is not required to be set out in extenso.

3.1 The respondent was served with the summons on 30.1.2020. The appearance was filed and time was prayed for on 17.2.2020 by the defendant to file the written statement. The written statement was not filed for long period. Thereafter, it was tendered on 20.3.2021 together with application of delay.

3.2 Special provisions came to be engrafted in the statute with in regard to the proceedings of commercial suits including in respect of the limitation to file written statement. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 came into force on 23.10.2015 bringing certain amendments to the Code of Civil Procedure. In Order V, Rule 1, sub-rule (1), for the second Proviso, the following Proviso came to be substituted:

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

"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 days, 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."

3.2.1 Similarly in Order VIII Rule 1, new Proviso was inserted by way of substitution:

"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."

3.2.2 This was re-emphasized by re-inserting yet another proviso in Order VIII Rule 10 CPC, reading as under:-

"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

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on 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."

3.3 In SCG Contracts (India) Private Limited Vs. K.S. Chamankar Infrastructure Private Limited and Others, [(2019) 12 SCC 210], the Apex Court observed thus on the working of the above provisions, stating inter alia that further period of ninety days beyond thirty days, contemplated in the Proviso is a 'grace period'.

"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 VIII Rule 10 also adding that the Court has no further power to extend the time beyond this period of 120 days."

4. The phase from March, 2020 was marked by spread of COVID-19 pandemic. The Supreme Court took note of the situation and the resultant difficulties which may be faced by the litigants across the country in filing their petitions and other proceedings within the period of limitation. Taking suo motu cognizance about the extension of limitation in suo motu Writ

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Petition (Civil) No.3 of 2020, the limitation period was directed to be extended exercising powers under Article 142 read with Article 141 of the Constitution.

4.1 The relevant part of the order is extracted herein below.

"To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such 2 proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings. "

4.2 The limitation period was thus extended with effect from 15.3.2020. The suo motu proceedings were finally disposed of by order dated 8.3.2021 in which the Supreme Court issued the final directions.

"1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.

2. In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.

3. The period from 15.03.2020 till 14.03.2021

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.

4. The Government of India shall amend the guidelines for containment zones, to state. "Regulated movement will be allowed for medical emergencies, provision of essential goods and services, and other necessary functions, such as, time bound applications, including for legal purposes, and educational and job-related requirements."

4.3 There was a second wave in the pandemic. The Miscellaneous Civil Application No.665 of 2021 in the aforesaid suo motu proceedings was filed which resulted into order dated 23.9.2021 whereby, the Supreme Court did not modify the contentions in order dated 8.3.2021, however, final directions were issued to provide that the period from 15.3.2020 till 2.10.2021, shall stand excluded and the balance period of limitation remaining as on 15.3.2021, if any, shall be available with effect from 3.10.2021.

4.4 The directions containing in paragraph No.8 of the aforesaid order are as under.

"8. Therefore, we dispose of the M.A. No.665 of 2021 with the following directions: -

I. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 02.10.2021 shall stand excluded. Consequently, the balance period

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

of limitation remaining as on 15.03.2020, if any, shall become available with effect from 03.10.2021.

II. In cases where the limitation would have expired during the period between 15.03.2020 till 02.10.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 03.10.2021. In the event the actual balance period of limitation remaining, with effect from 03.10.2021, is greater than 90 days, that longer period shall apply.

III. The period from 15.03.2020 till 02.10.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of 5 proceedings.

IV. The Government of India shall amend the guidelines for containment zones, to state. "Regulated movement will be allowed for medical emergencies, provision of essential goods and services, and other necessary functions, such as, time bound applications, including for legal purposes, and educational and job-related requirements."

5. In view of the above orders of the Supreme Court, the period from 15.3.2020 till 2.10.2021 was the period during which the limitation was extended, the balance period of limitation remaining on 15.3.2021 would become available to the litigant from 3.10.2021. In those cases, where the limitation expired within the aforesaid period, that is from 15.3.2020 to 2.10.2021, the uniform extension of ninety days was permitted. The total position emerges by virtue of the above orders was

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

that if in given case, limitation in respect of the filing of any proceedings was to expire on 15.3.2020 or thereafter, the period of such limitation stood extended as above. In other words, in the case where the limitation to do any act or to file any proceedings expire on 15.3.2020 or on subsequent date, the benefit of extending period would become available. If the limitation period for any purpose in given case expired on 14.3.2020 or before that date, the benefit of extension would not be available. The grace period would start after the expiry of actual limitation period. That period could be utilized by litigant for filing of written statement, provided the court is satisfied about the sufficient cause.

5.1 Reverting to the relevant dates in the present case, the respondent was served with the summons in the suit on 30.1.2020 and then he filed appearance. The proviso to Order VIII Rule 1 as amended by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, sets down thirty days as limitation for filing written statement from the date of service of summons. Reckoned accordingly, as the service of the summons was on 30.1.2020, the period of thirty days within which the respondent- defendant could have filed written statement, expired on 28.2.2020. This date fell prior to the date of 15.3.2021 stipulated by the Supreme Court to start run the extension in the limitation period. Thus, the period of limitation for filing written statement had already expired. There will be no benefit of Apex Court orders extending the limitation in the present case.

6. A vehement contention was raised by learned advocate for the respondent that total period within which the written statement could be filed was provided to be one hundred twenty

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

days. It was submitted that this total period would stand extended by virtue of orders passed by the Supreme Court extending the period suo motu. It was submitted that the date of 15.3.2020 from which the period of limitation extended fell within the total period of one hundred twenty days, therefore it was permissible to file the written statement. From the last date of extension provided by Supreme Court which was 3.10.2021, direction No.2 of order dated 23.9.2021 was pressed into service to submit that the period of ninety days from 3.10.2021 would be available to the defendant to file written statement and that the written statement was filed within such extended period.

6.1 The period upto which the delay could have been condoned was one hundred twenty days and not beyond. This outer period of one hundred twenty days would expire somewhere in the end of May, 2020. The defendant sought to file written statement on 20.3.2021 alongwith the delay application. Therefore, from this standpoint also the filing of written statement by the defendant was even after one hundred twenty days.

6.2 The High Court of Calcutta in Siddha Real Estate Development Private Limited Vs. Golden Goenka Credit Private Limited in IA No.GA 2 of 2020 in CS No.246 of 2019 decided on 24.12.2020, correctly explained the working of period of limitation under Order VIII Rule 1. In light and in context of the orders of the Supreme Court extending the limitation during the pandemic period, the Delhi High Court stated that,

"In order to ascertain if the defendant can take recourse to the Supreme Court Order of 23rd March, 2020 by which the limitation period in a large number of actions was extended with

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

effect from 15th March, 2020 till further orders, the said order has to be read in conjunction with the later order of the Supreme Court of 18th September, 2020.

Paragraph 19 of the order of 18th September, 2020 clarifies the earlier order of 23rd March, 2020 in the following manner :

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 proceeding 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.

6.2.1 This position was reiterated in paragraph 23 of the said order :

23. Therefore, the expression "prescribed period" appearing in Section 4 cannot be construed to mean anything other than the period of limitation. Any period beyond the prescribed period, during which the Court or Tribunal has the discretion to allow a person to institute the proceedings, cannot be taken to be "prescribed period".

            (The   emphasis     is     in       the      paragraphs
            extracted) "

7. The submission proceeds on a misconceived notion about concept of limitation. The limitation for filing written statement provided in Order VIII Rule 1 Proviso is thirty days and not one

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

hundred twenty days. The additional period of ninety days is allowed to be utilized for filing the written statement on showing sufficient cause as grace period. It is not the limitation per se.

The ninety days additional period allowed to the defendant, it comes into play, if the defendant had failed to file written statement within the prescribed period of thirty days. The ninety days are the additional window following the prescribed limitation in which the defendant may show the sufficient cause to be considered by the Court, to be allowed to file written statement.

8. In Sagufa Ahmed and Others Vs. Upper Assam Polywood Products Private Limited and Others, [(2021) 2 SCC 317], the Supreme Court explained the concept of extension provided in judgment dated 23.3.2020 in cognizance of extension of limitation, it was held that the said judgment extended the period of limitation and did not extend period upto which the delay could be condoned in exercise of discretion conferred by the statute concerned. In that case, the Supreme Court upheld the refusal of the tribunal to condone the delay in the context of Section 421(3) and Section 420(3) of the Companies Act, 2013, in respect of the application for condonation of delay and dismissal of appeal. The prayer for condonation of delay by placing reliance of order of the Supreme Court in Cognizance For Extension of Limitation in re, was declined.

8.1 Quoting the extracted observations of the Supreme Court,

"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

C/SCA/13627/2021 CAV JUDGMENT DATED: 24/12/2021

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 et 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."

9. As noticed, above, in the facts of the present case, the written statement was not filed by the defendant within the limitation period of thirty days which expired on 28.2.2020. The benefit of extended period of limitation as per the Supreme Court order would not be available to the defendant.

10. In view of the above, the entire reasoning of the Commercial Court in allowing the filing of written statement could hardly be sustained. The petition deserves to be allowed. As a result, the order dated 25.6.2021 passed by the Commercial Court, Vadodara, below Exhibit 10 in Commercial Suit No.3 of 2020, permitting the respondent to file written statement is hereby quashed and set aside.

11. The petition stands allowed.

(N.V.ANJARIA, J)

(SANDEEP N. BHATT,J) Manshi