Karnataka High Court
M/S. Satchmo Holdings Limited vs M/S. Masters Management Consultants ... on 1 July, 2024
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WP No. 13182 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 1ST DAY OF JULY, 2024
BEFORE
THE HON'BLE MR JUSTICE M.I.ARUN
WRIT PETITION NO. 13182 OF 2024 (GM-CPC)
BETWEEN:
1. M/S. SATCHMO HOLDINGS LIMITED,
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT 1956,
FORMERLY KNOWN AS
NITESH ESTATES LIMITED,
HAVING ITS REGISTERED OFFICE AT
NITESH TIME SQAURE,
7TH FLOOR, NO.8,
M.G. ROAD,
BANGALORE 560 001,
REPRESENTED BY ITS GENERAL MANAGER LEGAL,
AND AUTHORIZED SIGNATORY ITS
K.B. SWAMY.
Digitally 2. M/S. NITESH RESIDENCY HOTELS PRIVATE LIMITED,
signed by V
MANJUSHA A COMPANY INCORPORATED UNDER THE
BAI PROVISIONS OF THE COMPANIES ACT 1956,
Location: HAVING ITS REGISTERED OFFICE AT
High Court
of Karnataka 25A, 2ND FLOOR,
IMPERIAL COURT,
CUNNIGHAM ROAD,
BANGALORE 560 052,
REPRESENTED BY ITS SPECIAL OFFICER
MANAGER LEGAL, AND AUTHORISED SIGNATORY
MR. PRADEEP K.P.
...PETITIONERS
(BY SRI. S.S. NAGANAND, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE)
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WP No. 13182 of 2024
AND:
M/S. MASTERS MANAGEMENT
CONSULTANTS INDIA PRIVATE LIMITED
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT 1956,
HAVING ITS REGISTERED OFFICE AT
NO, 70,
NAGINDAS MASTERS ROAD, FORT,
MUMBAI 400 023
AND ITS ADMINISTRATIVE OFFICE AT
NEW UDYOG MANDIR NO. 2,
KAMANAWALA CHAMBERS,
UNIT 7, MOGUL LANE,
MAHIM (W),
MUMBAI 400 016,
REP. BY ITS REGIONAL MANAGER,
MR. VISHNU PRASADA RAO.
...RESPONDENT
(BY SRI. ANIKETH B.C., ADVOCATE)
THIS WP IS FILED UNDER ARTICLE 227 OF THE
CONSTITUTION OF INDIA PRAYING TO CALL FOR THE ENTIRE
RECORDS IN COM OS NO. 9055/2013 ON THE FILE OF THE
LXXXII ADDL CITY CIVIL AND SESSIONS JUDGE BANGALORE
(CCH-NO. 83) AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
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WP No. 13182 of 2024
ORDER
Aggrieved by the order dated 07.03.2024 passed in
Com. O.S.No.9045/2013 on IA No.IV filed under Section 151 of
CPC, the defendants therein have preferred this writ petition.
2. The respondent herein is the plaintiff in
Com. O.S.No.9055/2013. The said suit was filed as regular
Original Suit before the City Civil Court, Bengaluru. The
defendants on the ground that there is an arbitration
agreement between the parties, filed an application under
Section 8 of the Arbitration and Conciliation Act r/w Order VII
Rule 11 (d) of CPC with a prayer to refer the matter to
arbitration. The said application came to be allowed and it was
challenged by the respondent herein by filing
W.P.No.12297/2016, which also came to be allowed by
dismissing the application filed by the petitioners under Section
8 of the Arbitration and Conciliation Act and the orders of this
Court has attained finality. The said order was passed on
01.07.2022. Thereafter, inspite of granting time to the
petitioners herein, they did not file necessary written statement
before the trial Court in the original suit. Thereafter, after
coming into force of the Commercial Courts Act, 2015, the
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original suit stood transferred to the Commercial Court and the
parties were directed to appear before the Commercial Court on
10.07.2023. Thereafter, the petitioners prayed the trial Court
that all the relevant documents produced along with the plaint
by the plaintiff/respondent herein should be made available to
them and the Commercial Court directed the plaintiff to supply
the said documents to the defendants/petitioners herein.
3. It is submitted that the petitioners received all the
relevant documents on 31.07.2023. Even thereafter, the
petitioners did not file the written statement within a period of
30 days and on 06.10.2023. The petitioners made necessary
application by way of IA No.IV to file written statement. Same
has been dismissed by way of the impugned order and the case
is posted for plaintiff's evidence. Aggrieved by the same, the
present writ petition is filed.
4. The case of the petitioners is that the strict rule of
30 days with a grace period of another 90 days is not
applicable to the regular Original Suit filed before the Civil
Court. It is submitted that the same is applicable only to the
Commercial Courts. It is pleaded that under the circumstances
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when the Original Suit has been transferred to the Commercial
Court, the period of 120 days should not be calculated from the
date of service of suit summons to the defendants in the
regular Original Suit, but the Commercial Court ought to have
considered the said period from the date of appearance of
parties before the Commercial Court and after the defendant
was supplied with the entire set of plaint copy along with the
documents as required in accordance with law.
5. It is submitted that the trial Court erred in not
properly appreciating the above facts and has unjustly denied
an opportunity for the petitioners to file written statement and
to contest the Commercial Original Suit. For that reason, it is
prayed that the impugned order be set aside and the
application filed before the Commercial Court be allowed.
6. Per contra, learned counsel for the respondent
justifies the order passed in the Commercial Original Suit and
prays for dismissal of the writ petition. He further submits that
even presuming that the petitioners are entitled to pray for 120
days time to file written statement, they ought to have made
an application on the very next date of hearing after expiry of
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30 days, which they failed to do so in the instant case. On the
said ground, it is prayed that the writ petition be dismissed.
7. No doubt, the amendments made to the Code of
Civil Procedure by virtue of Commercial Courts Act mandate
that the defendant has to ordinarily file the written statement
within a period of 30 days after service of suit summons with a
grace period of 90 more days and it cannot be more than 120
days, which is reiterated by the Hon'ble Apex Court in Raj
Process Equipments and Systems Pvt. Ltd. & Ors. Vs.
Honest Derivatives Pvt. Ltd.1. The Hon'ble Apex Court while
examining the matter which was transferred from regular Civil
Court to the Commercial Court, in paragraph Nos.9, 11, 12, 13,
14 and 16 held as under;
"9. There is no dispute about the fact that at the time
when the suit was filed and at the time when the order
dated 03.07.2018 was passed, the court before which the
suit was pending was a normal Civil Court. It was only after
the order dated 03.07.2018 was passed directing the
matter to proceed ex-parte that the matter got transferred
to a Commercial Court.
10. It is also an admitted fact that the period of 120
days as stipulated in the second proviso to sub-rule (1) of
2022 SCC OnLine SC 1877
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Rule 1 of Order V CPC and the proviso to Rule 1 of Order
VIII expired on 18.06.2018.
11. In other words, the time that was available, if a
strict interpretation is given to the aforesaid provisions, was
nothing because the time of 120 days had expired even
when the matter was pending before the normal Civil Court.
12. Reliance was placed by the High Court on the
judgment of this Court in SCG Contracts India Private
Limited v. K.S. Chamankar Infrastructure Limited (2019) 12
SCC 210, in support of the contention that the time-line
prescribed under the second proviso to sub-rule (1) of Rule
1 of Order V CPC is mandatory and that the appellants have
forfeited their right to file written statements.
13. But we do not agree. The suit that became the
subject matter of dispute in SCG Contracts India Private
Limited, appears to have been filed before the Commercial
Court and not before the normal Civil Court. Insofar as the
normal Civil Courts are concerned, it is the proviso to
Order VIII Rule 1 CPC which applies. In Salem Advocate
Bar Association v. Union of India, (2005) 6 SCC 344, this
Court held that the proviso to Rule 1 of Order VIII CPC is
directory and not mandatory. An exception was carved out
in SCG Contracts India Private Limited to this Rule, by this
Court insofar as the commercial disputes are concerned by
invoking the second proviso to sub-rule (1) of Rule 1 of
Order V. Therefore, to apply the same principle to a matter
where the suit was instituted before the normal Civil Court
and transferred to a Commercial Court after the expiry of
120 days would be to give a complete twist to the
interpretation given by the 3-member Bench in Salem
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Advocate Bar Association, to the proviso to Order VIII Rule
1 CPC.
14. In fact the decision in SCG Contracts India Private
Limited is by a 2-member Bench, which was dealing with
the second proviso to sub-rule (1) of Rule 1 of Order V.
Therefore, when the decision of the 3-member Bench
in Salem Advocate Bar Association was cited before this
Court in SCG Contracts India Private Limited, this Court
held in paragraph 11 that the earlier law on Order VIII Rule
1 has now been set at naught. Therefore, what is to be
applied to normal Civil Courts is Order VIII Rule 1 and the
interpretation given to the same in Salem Advocate Bar
Association.
16. Therefore, the appeal is allowed, the impugned
order passed by the High Court and the order of the
Commercial Court are set aside. The applications filed by
the appellants are allowed and the Commercial Court is
directed to take on record the written statements filed by
the appellants and proceed with the hearing of the suit on
merits."
8. The reading of the aforesaid judgment clarifies that
in the cases of original suit which was pending before the
regular Civil Courts, when they get transferred to Commercial
Courts, the time spent before the regular Civil Court need not
necessarily be considered while deciding as to the time limit
within which, the defendant has to file his written statement.
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9. In the instant case, taking into consideration that
the parties who were required to appear before the Commercial
Court on 10.07.2023 and that the entire set of plaint along with
necessary documents were delivered to the
petitioners/defendants on 31.07.2023 and that the petitioners
made necessary application on 06.10.2023 to file necessary
written statement on the same day, it has to be considered that
the petitioners have sought to file the written statement within
a period of 120 days from the relevant date.
10. The next question that would arise for consideration
is, whether the defendants ought to have made necessary
application before the Commercial Court immediately on the
next date of hearing after expiry of 30 days given for filing the
written statement.
11. Section 4 of Schedule to the Commercial Courts Act
reads as under;
"4. 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
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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."
Bare reading of the aforementioned provision indicates
that after expiry of 30 days, before expiry of 120 days, any
time, the defendant is entitled to make necessary application to
file his written statement and the trial Court is bound to
consider the same.
12. The next aspect that is required to be considered
under the given facts and circumstances of the case is, whether
the trial Court was justified in denying the opportunity for the
petitioners to file written statement.
13. The reasons for denial are summed up in paragraph
No.15 of the impugned order of the trial Court, which reads as
under;
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"15. The contention of the Defendant that he has received
plaint document on 30.07.2023. So, seeking the
permission to file written statement as within a 90 days
from receipt of documents. It is admittedly, this is not a
fresh case instituted by the Plaintiff before this court. This
suit was instituted prior to the Commercial Court Act
coming into force. It is also admitted fact that even after
restoration of the suit also the Defendant has not made
any submission before the City Civil Court regarding
supply of the copies of the document filed by the Plaintiff
to the Defendant. Till 20.04.2023 the Defendant has not
made any submission regarding non receipt of
documents. Only after the transfer of this suit to this
court the Defendant has made submission and received
the document from the Plaintiff."
14. In my opinion, under the given facts and
circumstances, the conclusion arrived at by the trial court is
harsh on the petitioners herein. Admittedly, after service of
summons in the regular Original Suit, the petitioners made an
application under Section 8 of the Arbitration and Conciliation
Act for referring the matter to arbitration, which was allowed by
the trial Court. Thereafter, this Court in the writ petition has
reversed the same and this was in the year 2022. The
petitioners were required to file the written statement
subsequent to it. Thereafter, the matter was transferred to
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Commercial Court and within 120 days, the
petitioners/defendants have kept the written statement ready
and they made necessary application. Under the given facts
and circumstances, this Court is of the considered opinion that
interest of justice would be met, if the petitioners/defendants
are permitted to file the written statement by imposing cost of
Rs.25,000/- (Rupees Twenty Five Thousand Only) payable by
the petitioners to the respondent herein. Hence, the following;
ORDER
i. The impugned order dated 07.03.2024 passed on
IA No.IV in Com. O.S.No.9055/2013 by the
learned LXXXII Additional City Civil and Sessions
Judge, Bengaluru (CCH No.83), is hereby set
aside.
ii. The application IA No.IV filed by the
petitioners/defendants under Section 151 of CPC
is hereby allowed by imposing cost of Rs.25,000/-
(Rupees Twenty Five Thousand Only) payable by
the petitioners to the respondent on the very next
date of hearing before the trial Court.
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iii. The trial Court shall accept the written statement
that has already been filed by the petitioners
before it and proceed with the matter in
accordance with law.
SD/-
JUDGE
PN
