The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (the “Act”) was enacted with the objective of ensuring speedy disposal of complex commercial disputes by introducing various reforms in the structure of the judiciary and the procedure followed. One such amendment was to the timeline of filing a written statement[1] under the Code of Civil Procedure (the “CPC”). Appropriate amendments were also made to the CPC.

A written statement is a pleading filed by a defendant in its defence to the plaintiff’s claims (which can also include a counter-claim). The defendant can either admit or deny the facts stated and claims made by the plaintiff, bring material facts and evidence on record, and make legal submissions or raise legal objections against the claims of the plaintiff, or establish its own counter-claim.

Under the CPC, a defendant is allowed to file its written statement within 30 days from the date of service of the writ of summons. Now, by virtue of the amendment, if a defendant fails to file its written statement in a commercial suit within the said period of 30 days, he shall be allowed to file the same within a further period of 90 days (120 days in total from the date of service of summons), as may be specified by the court. However, upon expiry of the said 120 days, the defendant shall forfeit its right to file the written statement and the court cannot allow the written statement to be taken on record.

The question whether this provision is directory or mandatory in nature came up before the Supreme Court of India in the case of M/s. SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors.[2] It was held that the provision mandated a clear penalty and forfeiture of the right for not filing a written statement within the stipulated time period. Therefore, interpreting it in any other manner would be in derogation of the object of the amendments sought to be introduced by the Act.

However, in cases where suits were filed prior to the enactment of the Act and have subsequently been ‘transferred’ as commercial suits to be heard by the commercial division of a court, the Bombay High Court[3] held that the mandatory timeline of 120 days for filing a written statement is not applicable. It has further held that a commercial division or a commercial court, as the case may be, may hold Case Management Hearings in respect of such transferred suits under the newly introduced Order XV-A of the CPC to prescribe new timelines or issue further directions including prescribing a new time period within which a written statement shall be filed.[4]

In the case of a non-commercial suit, the unamended Order VIII Rule 1 of the CPC continues to apply, where the time for filing the written statement within 90 days from the date of service of the writ of summons is directory and not mandatory, and the court has the discretion to condone delay in filing the written statement, subject to such conditions as it may impose.

Since the defendant loses its right to file a written statement, it is easier for the plaintiff to sustain its case on its pleadings. However, the defendant still retains the right to cross-examine the plaintiff and its witnesses, and to make oral arguments before the court. But such cross examination and arguments will be limited to facts deposed by the plaintiff in either the examination-in-chief, or the plaint. The defendant would not be allowed to cross examine on other facts which, by his failure to the written statement, he has not pleaded.[5]

Conclusion

Considering that even courts cannot extend the time for filing a written statement beyond 120 days from the date of service of the writ of summons in a commercial suit, the defendant must be vigilant and file its written statement within the prescribed time limit.

Author:

Cheryl Fernandes, Senior Associate

Footnotes:

[1] Order VIII, Rule 1
[2] Civil Appeal No. 1638 of 2019 arising out of SLP (C ) No. 103/ 2019.
[3]Reliance General Insurance Company Ltd. v. Colonial Life Insurance Company (Trinidad) Ltd. & Anr., Commercial Suit No. 29 of 2013, order dated May 24, 2019
[4] This judgment has been challenged by way of Commercial Appeal No. 543 of 2019 filed before the Bombay High Court and is presently pending.
[5] S. Sinha v. Shivadhari Sinha, AIR 1972 Pat 81